Thursday, January 19, 2012

Guest Post: Cuts to CalWorks

Cuts to welfare budgets have become a reality across nations. A reality that NZ has so far avoided. Elaine Hirsch looks at cuts to California's Temporary Assistance to Needy Families (TANF) programme, CalWorks:

Scheduled Cuts to CalWorks

The state of California was among the hardest hit by the bursting of the subprime housing bubble and the events which followed: a global financial crisis, national recession, and a weak economic recovery. As a result, annual revenue plunged and the budget deficit exploded, reaching a peak of $40 billion for the fiscal year 2009-10. Since taking office in January 2011, Democratic governor Jerry Brown has sought to impose fiscal discipline on the budgetary process through a combination of cuts to social services and higher education. Among these were cuts to CalWorks (California’s welfare program) the program which moves poor families from temporary financial assistance to work.

According to the non-profit advocacy group
California Budget Project, these changes include an overall cut to CalWorks of about $1 billion (16% of its budget,) an 8% cut for direct cash assistance to needy families, a lowering of the earning limit for enrollees (from 112% of the poverty line to 88.7%,) a reduction of the lifetime cap from 5 to 4 years, and cuts to welfare-to-work transitional programs such as child care and job training. The cuts are expected to have a significant impact on many families, especially parents who may be forced to drop out of state-funded job training programs without yet having secured a job. Although these cuts will hurt public sentiment in the short run, it will also be a source of motivation for individuals to seek out new education opportunities such as community colleges or online MBA programs. Another significant budget decision was the one year suspension of Cal-Learn, the program which paid for transportation and other costs for pregnant and parenting teens to complete high school.

Non-profits such as
Catholic Charities have struggled to meet the increased need. Its Los Angeles chapter, for example, saw a 21% increase in clients during 2008-09, and another 13% increase in 2009-10. The charity maintained its budget by increasing its appeals to foundation grants and private donations, as well as relying more heavily on volunteers. The United Ways of California is also preparing for greater demand for services, criticizing the proposed cuts and predicting that many California children would lose access to health care as a result.

Non-profit partnerships with counties are responding to the changes as well. The Community Services Agency, for example, which partners with Stanislaus County to administer the county's CalWorks programs (StanWorks), has used $3.4 million in state funding to hire an additional 41 employees to stem the tide. Positive responses from private-sector entities are a much-welcomed sight to see during times of fiscal deficits.

Though cuts to CalWorks have saved the state approximately $3.5 billion since 2008, including about $940 million projected for fiscal year 2011-12, the most recent budget cuts are only accelerating a long term trend. Since 1996, when legislation signed by President Clinton converted the federal welfare program into a block grant for states and implemented welfare-to-work standards for those receiving assistance, the percentage of the state's budget devoted to welfare has fallen by more than 50%, according to
Jean Ross of the California Budget Project.

Unfortunately, many of the federal law's provisions which were friendliest to needy families -- such as subsidized child care, job training, and other support for families in transition -- have been scaled back due to the new fiscal reality. It is highly questionable whether the budget can ultimately be balanced by cuts to social services that so many families depend on. Rather, the true measure of the state's fiscal health is its long-term economic outlook. The one number from Governor Brown's 2011 budget that politicians made the most of is 4, as in $4 billion in additional revenue projected over the next fiscal year. That's the rosy scenario the Governor is counting on to make the numbers work as the state tends to its future.

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