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Ronald Reagan Presidential Library
Digital Library Collections
This is a PDF of a folder from our textual collections.
Collection: Reagan, Ronald: Gubernatorial Papers,
1966-74: Press Unit
Folder Title: [Welfare] - State Department of
Social Welfare Report, 1970
Box: P39
To see more digitized collections visit:
https://reaganlibrary.gov/archives/digital-library
To see all Ronald Reagan Presidential Library inventories visit:
https://reaganlibrary.gov/document-collection
Contact a reference archivist at: [email protected]
Citation Guidelines: https://reaganlibrary.gov/citing
National Archives Catalogue: https://catalog.archives.gov/
-1-
INTRODUCTION
This document contains 47 items of potential state and county
welfare cost savings defined by two task forces. The document is divided
into six sections, each preceded by a summary sheet of the items in that
section. The sections are as follows:
Administrative Action (State)
State Regulation
Pending State Legislation
New State Law
Federal Regulation
Federal Law
The items in each section are listed in descending order of ex-
pected savings and are briefly described in individual backup sheets.
There is redundancy in savings among the items. Therefore, don't add
the savings of several items. Analyze the items to be certain that
summing is appropriate. One group of items, with a combined expected
State General Fund savings of $110 million, has been so analyzed and
consists of the items on pages 4, 7, 8, 10, 11, 12, 16, 17, 18, 26,
33, and 39.
-2-
TABLE OF CONTENTS
Page
INTRODUCTION
I
ADMINISTRATIVE ACTION
3
STATE REGULATIONS
15
PENDING STATE LEGISLATION
21
NEW STATE LAW
32
FEDERAL REGULATION
42
FEDERAL LAW
51
- 2a -
DETAILED TABLE OF CONTENTS
Page
Introduction
1
Table of Contents
2
Detailed Table of Contents
2a
ADMINISTRATIVE ACTION
3
Homemaker and Attendant Care Services
4
Community Services Division
5
Sample Field Audits
6
$4 Special Need Item for The Aged
7
Reduce Community Services Division Caseloads
8
Unmet Shelter Needs
9
Special Programs
10
Reduce State Department of Social Welfare Budget by 5%
11
Educational Stipends
12
Eliminate Sheltered Employment for the Mentally Retarded
13
Reduce the Intensity of Services
14
STATE REGULATION
15
Eliminate All Special Needs
16
Reduce Personal Needs Allowances for Recipients
Receiving Out-of-Home Care to $5
17
Redefine Unemployment to 30 Hours or Less
18
Utilize Prior Budget Planning for All Aids
19
Work-Related Expenses Fixed at $40
20
PENDING STATE LEGISLATION
21
Maximum Allowable Property Reserves
22
- 2b -
DETAILED TABLE OF CONTENTS
Page
Maximum Allowable Property Reserves
23
Revise Disability Criteria in ATD to 1965 Standard
24
Establish a Lien Law for Adult Aids
25
Exclude Medical Care Component When Calculating Cost-of-
Living Increases
26
Revise the Relatives' Responsibility Scale
27
Make Parents Responsible for Supporting Minor Unwed Mothers
and Their Children
28
State Administration of Public Welfare Programs
29
Establish a Single Adult Aid Standard
30
Welfare Benefits for Strikers
31
NEW STATE LAW
32
AFDC Grant Ceiling at Maximum Participation Base
33
Reduction of Adult Aid Standard
34
AFDC-U Program
35
Reduction of Welfare Grants
36
Real Property Exemptions in Adult Aids
37
Ceiling on Adult Grants
38
Reduced Grant in Shared Living Arrangement
39
Recovery From Estates
40
Fees for Licensing
41
FEDERAL REGULATIONS
42
Fair Hearing Process
43
Net Earnings Vs. Gross Earnings
44
Definition of an Unemployed Father
45
Fair Hearings in Relation to Social Services
46
Welfare Staffing Standards
47
- 2c M3
DETAILED TABLE OF CONTENTS
Page
State Option for Revised Eligibility Method
48
Failure to Take Work While Referred to WIN
49
District Attorney's Costs -- Reimbursement
50
FEDERAL LAWS
51
Cost of Outlawing Durational Residence Requirements
52
Children in Foster Care -- No Federal Sharing
53
Unemployed Father Cases - No Federal Sharing
54
Earned Income Exemption -- Aid to Families with
Dependent Children
55
-3-
ADMINISTRATIVE ACTION
GF
Time to
Savings
Implement
Item
Program
FY 70-71
Change
Eliminate Homemaker and
Disabled (ATD)
$17.5 million
Immediate
Attendant Care Services
Aged (OAS)
Implementation
Eliminate Community
Disabled (ATD)
$11.8 million
Immediate
Services Division
Aged (OAS)
Implementation
Sample Field Audits
County Admin-
$11 million
Immediate
istration
Implementation
Eliminate $4 Special Need
Aged (OAS)
$ 5.9 million
Immediate
Item for the Aged
Implementation
Reduce Various
Disabled (ATD)
$ 4.1 million
Immediate
Community Services
Aged (OAS)
Implementation
Division Caseloads
Non-recipient
Eliminate Unmet Sheltered
All Programs
$ 1.5 million
Immediate
Needs
Implementation
Eliminate Special Programs
State Admin-
$ .6 million
Immediate
istration
Implementation
Reduce SDSW Budget 5%
State Admin-
$ .6 million
Immediate
istration
Implementation
Eliminate Educational
State Admin-
$ .5 million
Immediate
Stipends
istration
Implementation
Eliminate Sheltered
Disabled (ATD)
$ .06 million
Immediate
Employment for Mentally
Implementation
Retarded
Reduce Intensity of
All Programs
Estimate being
Immediate
Service
and County
Developed
Implementation
Administration
-4-
HOMEMAKER AND ATTENDANT CARE SERVICES
SUBJECT:
The Governor's Budget currently contains an item for homemaker and attendant
care services.
ISSUE:
Should the Governor blue pencil' this item in order to save the General Fund
approximately $17.5 million? County savings would approximate $3 million.
DISCUSSION:
Currently, in an effort to avoid institutional placement, the State allows
recipients to hire attendants for housekeeping services, personal needs, etc.
Last year, a new feature, homemaker services was added to the program which
allows counties to hire civil service employees for this service. Six counties
are currently participating in the homemaker aspect of the program on a pilot
basis. Often attendant care services are provided by relatives and friends
and thus payments are made for services that might normally be provided free
of charge. As an offset to the General Fund savings, some recipients no
longer provided homemaker or attendant care services will require out-of-home
care at increased cost. The amount of offset is impossible to determine.
-5-
COMMUNITY SERVICES DIVISION
SUBJECT:
The Department of Social Welfare provides services to the mentally ill and
the mentally retarded through various field offices throughout the State.
ISSUE:
Should the Community Services Division be eliminated by removal from the
Governor's Budget? State General Fund savings would be approximately
$11.8 million.
DISCUSSION:
The Community Services Division could be eliminated but real savings by
this action are considered doubtful. Much of the Division's caseload would
be shifted to other programs (county government under the Lanterman-Petris-
Short Act, regional centers for the mentally retarded, etc.) where the State
General Fund cost would be higher. This item overlaps with the option of
eliminating all adult services--if services were eliminated about 22,000 of
the 24,000 Community Services Division caseload would be eliminated. The
elimination of the Community Services Division would also have a deleterious effect
on the State's capacity to move patients from State institutions into
community facilities.
-6-
SAMPLE FIELD AUDITS
SUBJECT:
The Department of Social Welfare currently operates a field audit program on
the basis of sample case selection, however, claim cuts are only made against
the sample cases and not against the universe the sample represents.
ISSUE:
Should Department of Social Welfare base claim cuts resulting from field
audits on a projection of error in sample cases to total caseload? The
State General Fund saving amounts to approximately $11 million annually.
The counties would lose approximately $40 million in State and federal funds.
DISCUSSION:
Sample auditing can be implemented at the beginning of the 1970-71 fiscal
year. Scientific sample selection already exists, but has never been applied
against the total caseload because of county objections.
-7-
$4
SPECIAL NEED ITEM FOR THE AGED
SUBJECT:
The Governor's Budget contains $4 special need item for OAS recipients.
ISSUE:
Should the Governor "bluepencil" the $4 special OAS need item in the
70-71 Budget? State General Fund savings for this deletion would amount
to approximately $5.9 million. The counties would save approximately
$1 million.
DISCUSSION:
The 1967 Legislature added the $4 special need item to the budget for OAS
recipients. The item was not recommended by the Department in
1967 or subsequent years. It has since been incorporated in the basic
OAS grant as "Community Participation."
-8-
REDUCE COMMUNITY SERVICES DIVISION CASELOADS
SUBJECT
The State Department of Social Welfare's Community Services Division currently
provides nursing home placement for the mentally retarded, and services to former
and potential welfare recipients, and non-aided, non-linked cases.
ISSUE
Should the Governor take action to eliminate funds for mentally retarded nursing
home placements, former and potential and non-aided, non-linked caseloads, and
funds for Family Care from the 1970-1971 fiscal year budget? The State General
Fund saving would amount to approximately $4.1 million.
DISCUSSION
The State Department of Social Welfare is currently attempting to resolve the
mentally retarded nursing home placement question of whether the cost of
nursing home care for the mentally retarded children between the ages of five
and thirteen can be Medi-Cal. This issue will be resolved with the Department
of Health Care Services in the very near future. The State Department of Social
Welfare has the discretion to eliminate services to former and potential aid
recipients and to non-aided, non-linked cases, thus reducing the total Community
Services Division caseload by about 40%. Family Care funds are used to place
people not eligible for categorical aid into community out-of-home care facili-
ties. While the Governor has the discretion to eliminate this expenditure,
there would be an offset cost in the Department of Mental Hygiene since many
of these patients would require continued treatment in state institutions.
-9-
UNMET SHELTER NEEDS
SUBJECT:
The Governor's Budget now contains funds for unmet shelter needs.
ISSUE:
Should the Governor discontinue these payments?
General Fund savings
would amount to approximately $1.5 million; county savings would approximate
$0.4 million.
DISCUSSION:
Public Assistance recipients now receive special allowances for unmet shelter
needs. These funds are available for home repairs of various kinds. It is
within the discretion of the Governor to discontinue these allowances at any
time.
-10-
SPECIAL PROGRAMS
SUBJECT:
The State Department of Social Welfare budget contains several special
programs which are not required by the federal government or State law.
ISSUE:
Should the Governor take action to eliminate the following social welfare
special programs from the 1970-71 budget:
Train recipients in Watts and Venice areas as
($10,000)
licensed day care parents.
Recruit, employ, train 29 case aides in
($53,250)
provision of services to mentally handicapped
persons.
Assist counties to improve welfare administration,
($162,850)
planning, and staffing.
Private-public activities on behalf of children.
($100,000)
Work-study program to employ youth part-time
($3,600)
while in school.
Study patterns of aging welfare recipients.
($10,000)
Nation-wide demonstration program for social
($319,500)
information systems. Includes support for
development of an agency data processing center
and single agency-wide information system.
The total General Fund savings would be approximately $0.6 million. No
county funds are involved.
DISCUSSION:
California has operated demonstration projects for a number of years. The
objective of these special programs is to create and test innovative approaches
to welfare administration and delivery of services.
-11-
REDUCE STATE DEPARTMENT OF SOCIAL WELFARE BUDGET BY 5%
SUBJECT
The State Department of Social Welfare's support budget contains approximately
$20 million for the maintenance of State's staff.
ISSUE
Should the State Department of Social Welfare reduce its 1970-1971 budget by
5%? The State General Fund savings would be approximately $.6 million.
DISCUSSION
The Department is currently obligated to generate salary savings which approximate
6% of the budget. It is estimated an additional savings are achievable in the
magnitude of about 5%.
-12-
EDUCATIONAL STIPENDS
SUBJECT:
The State Department of Social Welfare's 1970-1971 fiscal year budget contains
funds for educational stipends and for field instruction units.
ISSUE:
Should the Governor take action to eliminate funds for graduate social work
training stipends and field instruction units from the 1970-1971 fiscal year
budget? The State General Fund saving would be approximately $.5 million.
DISCUSSION:
Educational stipends are currently offered graduate social work candidates,
emphasizing selection of Negro and Mexican-American students. Field instruction
units enable graduate and undergraduate school of social work to provide field
supervision of students.
-13-
ELIMINATE SHELTERED EMPLOYMENT FOR THE MENTALLY RETARDED
SUBJECT:
The Department of Social Welfare has in its 1970-71 budget funds to provide
employment for mentally retarded recipients not qualified for usual vocational
rehabilitation services.
ISSUE:
Should the Governor take action to eliminate the sheltered employment for
the mentally retarded item from the 1970-71 budget? State General Fund
savings would amount to approximately $60,000. County savings would be
approximately $18,000.
DISCUSSION:
The funds provided for this service are contracted to the Department of
Rehabilitation which provides counseling, work evaluation, and training in
private and non-private workshops.
-14-
REDUCE THE INTENSITY OF SERVICES
SUBJECT:
The State Department of Social Welfare, through county welfare departments,
offers the welfare recipients a variety of social services.
ISSUE:
Should the State Department of Social Welfare administratively adjust the
intensity of service? State General Fund savings would be small, however,
since social services are almost exclusively provided through the county
welfare departments, and the cost of these services is borne almost entirely
by county and federal governments.
DISCUSSION:
Administratively the State Department of Social Welfare can adjust the inten-
sity of services in a variety of ways -- reducing frequency of follow-up and
inspection, eliminating outreach efforts, providing services only on requests,
redefining the scope of allowable services, etc.
-15-
STATE REGULATION
GF
Time to
Savings
Implement
Item
Program
FY 70-71
Change
Eliminate All Special Needs
All Programs
$15,600,000
3 Mos.
Reduce Personal Needs
Aged (OAS)
$ 5,500,000
3 Mos.
Allowances for Recipients
Blind (AB)
Receiving Out-of-Home
Disabled (ATD)
Care to $5
Redefine Unemployment to
Families (AFDC)
$ 1,500,000
3 Mos.
30 Hour or Less
Utilize Prior Budget
All Programs
Impossible
3 Mos.
Planning for All Aids
to Estimate
Work-Related Expenses
Families (AFDC)
Estimate Not
3 Mos.
Fixed at $40
Available
-16-
ELIMINATE ALL SPECIAL NEEDS
SUBJECT:
State regulations make available a variety of special need allowances to all
aids depending on individual circumstances.
ISSUE:
Should the Director revise regulations to delete payment for a variety of
special need allowances such as supplementary transportation expenses,
restaurant meals, special diets, etc., State general fund savings would be
approximately $15.6 million; county savings, $1.1 million.
DISCUSSION:
Special allowances have been added to the grant programs because of
demonstrated need and/or pressure from the Legislature, the counties, and
special interest groups; many are of long standing. The rationale for
addition has been equitable treatment of individuals, prevention of physical
deterioration, maintenance of healthful and/or safe living conditions.
Car the be permission?
-17-
REDUCE PERSONAL NEEDS ALLOWANCES FOR
RECIPIENTS RECEIVING OUT-OF-HOME CARE TO $5
SUBJECT:
State law provides for a personal needs allowance for persons living out of
their own homes; the amount is established by state regulation.
ISSUE:
Should the Director take action to revise the personal needs allowance to
$5 per month? State General Fund savings for this change would be
approximately 5.5 million, county savings appoximately 0.9 million.
DISCUSSION:
The amount for nursing home and hospital care was established by the department
at the maximum allowable under state law. Amounts allowable in other congregate
care facilities are determined within the total grant maximum by regulation.
The amounts involved could be reduced without affecting the general level of
care provided by the facility.
-18-
REDEFINE UNEMPLOYMENT TO 30 HOURS OR LESS
SUBJECT:
HEW regulations require states to use a minimum of 30 hours per week in the
definition of unemployment for the AFDC program.
ISSUE:
Should the Department change its current requirement defining unemployment
at 35 hours or less to 30 hours or less and reduce the number of eligible
recipients. General fund savings would amount to approximately $1.5 million;
counties would save $0.5 million.
DISCUSSION:
The decision for adoption of the 35-hour standard was based on the
typical earnings which would equate to the welfare grant level. HEW regula-
tions currently allow a 30-hour or less standard to be utilized in determining
eligibility for federal participation. For the lowest income families
involved, such as the migrant farm laborers, this would cause an increase
in the utilization of county General Relief or surplus commodities.
-19-
UTILIZE PRIOR BUDGET PLANNING FOR ALL AIDS
SUBJECT:
In determining grants, county welfare departments have the option whether
to use actual income from the immediate past period or estimated income for
the month of the grant.
ISSUE:
Should the Director take action to mandate utilization of the prior month
actual income data for grant computation?
DISCUSSION:
It is impossible to estimate savings directly attributable to this change.
It would firmly fix the amount of income and, therefore, substantially reduce
the number of adjustments to grants. Coupled with an automatic statement of
earnings from the recipient, this change would remind the recipient of the
reporting requirements, assist in the prosecution of fraudulent claims for
aid, reduce the number of instances for which appeals could be filed, and
increase consistency between counties in reporting eligibility.
-20-
WORK-RELATED EXPENSES FIXED AT $40
SUBJECT:
HEW regulations and court decisions require the State to allow for work-
related expenses in determining grants.
ISSUE:
Should the Department adopt regulations to allow for reasonable work-related
expenses and define these to be $40 per month? Although there would be
considerable General Fund savings for this change, available data does not
enable a specific estimate.
DISCUSSION:
California was forced to comply with the basic federal regulation by a
court order in the Nesbitt VS. Montgomery decision. In a number of other
states the flat work-related amount for expenses of employment has been
utilized. We believe that a similar method is possible in California even
in consideration of the decision in the Nesbitt VS. Montgomery case.
-21-
PENDING STATE LEGISLATION
GF
Time to
Savings
implement
Item
Program
FY 70-71
Change
Eliminate All
All Programs
$504 million
Immediately
Welfare Programs
upon adoption
of AB 1752
Maximum Allowable
All Adult
$36.4 million
Immediately upon
Property Reserves
Categories
adoption of AB 1316
Revise Disability
Aid to the
$27.6 million
Immediately upon
Criteria in ATD to
Disabled
adoption of AB 1315
1965 Standard
Establish a Lien Law
All aids except
$14.2 million
Immediately upon
for Adult Aids
Families with
adoption of AB 1360
Dependent Children
Exclude Medical Care
All Programs
$2.1 million
Immediately upon
Component When
adoption of AB 1360
Calculating Cost of
Living Increases
Revise the Relatives'
Old Age Security
$1.9 million
Immediately upon
I ponsibility Scale
adoption of AB 1360
Make Parents Responsible
Aid to Families
$1.65 million
Immediately upon
for Supporting Minor
with Dependent
adoption of AB 1360
Unwed Mothers and Their
Children
Children
State Administration of
All Programs
Indeterminate
Immediately upon
Public Welfare Programs
adoption of AB 186
or SB 89
Establish a Single
All Adult
Indeterminate
Immediately upon
Adult Aid Standard
Categories
adoption of AB 1988
Welfare Benefits
Aid to Families
Indeterminate
Immediately upon
for Strikers
with Dependent
adoption of SB 852
Children - Unemployed
-22
ELIMINATE ALL WELFARE PROGRAMS
SUBJECT
States are not required to establish and maintain welfare programs.
ISSUE
Should the State of California eliminate its public assistance programs. This
would reduce state expenditures by 504 million during FY 70-71 if programs were
eliminated by September 1970.
DISCUSSION
The Federal Social Security Amendments relating to Social Welfare do not require
the states to adopt a welfare system. The purpose of these amendments is to
provide funds in order to enable and encourage the several states to more
adequately provide for the general welfare of its citizens.
-23-
MAXIMUM ALLOWABLE PROPERTY RESERVES
SUBJECT
State law currently allows recipients of adult aids to retain personal and/or
real property not to exceed $1,200 for a single person or $2,000 for a married
couple.
ISSUE
Should the Governor take action to reduce this maximum allowable reserve? And
if so, to what level should it be reduced?
Reducing the reserves to $600 per single recipient and $1,200 for a married
couple would net the state $36.4 million for fiscal year 1970/71 if implemented
by September 1970. This provision is currently incorporated in AB 1316.
DISCUSSION
Under current federal regulations almost all property limitations are expressed
in terms of maximum but not minimum amounts which a state may allow a recipient
to retain. Property reserve allowances in other states range from $00 to the
maximum allowed under federal law. California has one of the highest reserve
maximums in the nation.
-24-
REVISE DISABILITY CRITERIA IN ATD TO 1965 STANDARD
JBJECT
The definition of total disability is set forth in the Welfare and Institutions
Code. Since the program's implementation in 1957, the definition has been
liberalized twice, in 1961 and 1965.
ISSUE
Should the Governor take action to restrict the definition and thereby reduce
the number of persons eligible for the program? By adopting the definition
of totally disabled that was in effect in 1965, the State general fund would
save $27.6 million in fiscal year 1970/71 if implemented by September 1970.
The counties would save approximately $4.5 million. This change is currently
incorporated in the Administration sponsored bill SB 1315.
DISCUSSION
There has been rapid growth in the ATD caseload in the past several years, to a
current total of more than 168,000 persons - almost three times greater than the
total in New York State and at more than three times the cost. The caseload in
California is almost 40% of the national total, and its cost more than 28%.
Adopting the 1961 definition would result in greater saving within the ATD
program, but the net effect could be added cost to the state general fund
if mentally retarded recipients, no longer eligible for ATD, were returned
to state hospitals at state expense.
-25-
ESTABLISH A LIEN LAW FOR ADULT AIDS
SUBJECT
The welfare laws of several states provide that public assistance payments be
considered a lien against property owned by the recipient. The State of California
has no such provision.
ISSUE
What action can the Governor take to provide that aid paid to recipients of public
assistance under the adult categories shall be considered a lien against real
property owned by such recipients? Adoption of a lien law for adult aids would
save the state general fund $14.2 million during fiscal year 70/71, if implemented
by September 1970, and would save the counties $2.5 million. This alternative is
contained in the administration-sponsored bill (AB 1360).
DISCUSSION
A lien provision does not penalize the recipient nor does it deprive him of the
full use of his property while he or his spouse require it. Moreover, the
imposition of a lien is equitable to all taxpayers. The present practice allows
an heir of the deceased recipient to recoup more than his fair share of the tax
contribution made for the support of recipients of public assistance.
-26-
EXCLUDE MEDICAL CARE COMPONENT WHEN CALCULATING COST OF LIVING INCREASES
SUBJECT
Under present statutes, public assistance grants are adjusted annually to reflect
cost of living increases. The cost of living index, as published by the U. S. Bureau
of Labor Statistics is the basis for determining needed adjustments and includes
a factor for medical care. Since public assistance recipients receive free medical
care, inclusion of the medical care component results in unwarranted increases.
ISSUE
What action can the Governor take to eliminate the medical care component from
consideration? The statutory changes necessary are proposed in the administration
sponsored bill, AB 1360. This would save the state general fund $2.1 million if
implemented by September 1970 and would save the counties $325,000.
DISCUSSION
The state attempted to eliminate administratively the medical component but was
precluded from doing so by a 1969 court decision (Daly vs. Montgomery).
-27-
REVISE THE RELATIVES' RESPONSIBILITY SCALE
SUBJECT
Section 12101 of the Welfare and Institutions Code contains a relatives' responsi-
bility scale in the Old Age Security program. The scale has not been revised
since 1965.
ISSUE
What action can the Governor take to increase the rate of contributions by
responsible relatives with adequate incomes to the care of elderly welfare recipients
and reduce the burden on the state taxpayers? Section 69 of the administration
sponsored Assembly Bill 1360 would update the scale to increase the liability of
adult children to contribute toward the support of their parents by amounts ranging
from $5 to $40 per month, depending on their net income. The saving to the state
general fund would be approximately $1.9 million if implemented by September 1970,
and the counties would save $330,000.
DISCUSSION
The major difficulty with the relatives' responsibility law over the years has been
the fact that the major element of enforcement has been placed upon the recipient
of aid to inform the County Welfare Department that the employed son or daughter
was not making required contributions. AB 1360 would require the employed
son or daughter to make the payment to the County Welfare Department to offset the
expenditures for aid, and the recipient would receive the full amount of aid
without regard to the contribution from the responsible relative.
-28-
MAKE PARENTS RESPONSIBLE FOR SUPPORTING MINOR UNWED MOTHERS AND THEIR CHILDREN
SUBJECT
Under present California law, minor girls who become pregnant may apply for
and receive public assistance without regard to the financial status of their
parents.
ISSUE
What can the Governor do to make parents of such minor girls responsible for
their support and that of their illegitimate children? Section 59 of the
administration sponsored AB 1360 would make this responsibility a matter of
law. This would save the state general fund $1.65 million, and would save
the counties $750,000 during fiscal year 1970/71, if implemented by September
1970.
DISCUSSION
Young girls can, if pregnant, qualify for state financial support and services.
With it they can establish their own households at taxpayer expense, regardless
of the financial status of their parents. The Department of Social Welfare
estimates that there are 14,600 such cases now receiving aid, and that parental
support averaging approximately $70 per month would be available for half of
them.
-29-
STATE ADMINISTRATION OF PUBLIC WELFARE PROGRAMS
SUBJECT
At the present time, County Welfare Departments administer public welfare programs
under the supervision of the State Department of Social Welfare and subject to
state and federal regulations. This necessitates three government levels of
administrative control.
ISSUE
What action can the Governor take to reduce the complexity of welfare administration
in California as well as effect the substantial savings in costs estimated by
the State Legislative Analyst if the state assumes direct administration? Senate
Bill 89 and Assembly Bill 186 both propose the transfer of welfare administration
to the state. Although the savings could be substantial, the State Department of
Social Welfare doubts that the Legislative Analyst's estimate --$56 million --
could be realized in F.Y. 70-71.
DISCUSSION
The Administration is on record in opposition to the passage of both bills, on
the basis of the desirability of maintaining local interest and participation
in welfare problems, and also because both bills would destroy the existing
authority for contracting with private employment agencies for job referrals
for welfare recipients.
-30-
ESTABLISH A SINGLE ADULT AID STANDARD
SUBJECT
At the present time, aid standards among the adult categories of public
assistance vary from one program to another, under various provisions of the
state Welfare and Institutions Code.
ISSUE
What action can be taken by the Governor to effect savings by adopting a
uniform standard of assistance for adult aid categories? Assembly Bill 1988
would eliminate minimum and maximum grants in the aged and blind categories,
and would establish a uniform maximum average grant as currently provided
for the Aid to Disabled program. The grant amount is unspecified in the bill,
so, potential savings cannot be estimated.
DISCUSSION
The proposal contained in Assembly Bill 1988 has the backing of the County
Supervisors Association of California. It can be assumed that there would
be reduced administrative costs, but the net financial effect of the uniform
standard would depend on the level at which the standard is set.
-31-
WELFARE BENEFITS FOR STRIKERS
SUBJECT
Under current department regulations, welfare benefits are paid to strikers who
are otherwise eligible for Aid to Families with Dependent Children - Unemployed
Group, and who are engaged in a strike declared bona fide by the Human Resources
Development Department.
ISSUE
Should striking workers who are otherwise eligible for Aid to Families with
Dependent Children - Unemployed Group, receive welfare benefits?
DISCUSSION
Positive action will be necessary if a precedent of nine years is to be reversed.
Three alternatives are available:
1. Pass legislation which would declare all strikers ineligible for welfare
benefits. Senate Bill 852, Cologne, does this, although it does exempt
strikers engaged in state or federally sponsored job training.
2. Establish regulations which declare strikers ineligible for aid.
Continue aid for strikers engaged in legitimate strikes, but tighten existing
policy by designating a single agency, either by law or executive action,
responsible for declaring the legitimacy of a strike.
-32-
NEW STATE LAW
GF
Time to
Savings
Implement
Item
Program
FY 70-71
Change*
AFDC Grant Ceiling at
Families (AFDC)
$37,000,000
4 mos.
Maximum Participation Base
Reduction of Adult Aid
Aged (OAS)
$33,600,000
4 mos.
Standard
Blind (AB)
Disabled (ATD)
AFDC-U (Unemployed Parent
Families (AFDC-U)
$33,000,000
4 mos.
Eligibility)
Reduction of Welfare Grants
All Programs
$25,600,000 (5%)
4 mos.
$51,200,000 (10%)
Real Property Exemptions in
Aged (OAS)
$10,800,000
4 mos.
Adult Aids
Blind (AB)
Disabled (ATD)
Reduce Grant Allowances for
All Programs
$ 5,400,000
4 mos.
Shared Living
Ceiling on Adult Aids Grants
Aged (OAS)
$ 5,250,000
4 mos.
Blind (AB)
Disabled (ATD)
Recovery from Estates
Blind (AB)
No estimate
4 mos.
Disabled (ATD)
Available
Fees for Licensing
All Programs
No estimate
4 mos.
Available
*Assumes prompt enactment of emergency legislation, signature by the Governor,
parallel preparation of implementing regulations for emergency adoption, and
changes operational by October, 1970.
-33-
AFDC GRANT CEILING AT MAXIMUM PARTICIPATION BASE
SUBJECT:
Current state law defines a scale of family "need" which exceeds the allowable
AFDC grant. Families with income may supplement the grant up to this scale of
need.
ISSUE:
Shall the Governor seek an amendment to state law to delete the scale of need,
which would have the effect of placing a ceiling on all AFDC grants at maximum
participation base except for exempt earnings? State general fund savings
will appriximate $37 million for 9 months of F.Y. '70-71. Counties will save
approximately $17.8.
DISCUSSION:
State law currently defines family "need" on a scale which exceeds the maximum
participation base. This allows families to apply their non-exempt (unearned)
income to their needs in excess of the maximum participation base. Only when
grant plus income exceeds need is the excess income used to reduce the grant.
Families with no outside income receive only the maximum grant allowed, which
is less than the need.
The 1967 Social Security Act amendments require that the first $30 of earned
(exempt) income plus 1/3 of the balance be disregarded when computing the
grant. This provision precludes completely wiping out the inequity between
families with and those without income, but would reduce the disparities and
would generate substantial savings within current federal constraints.
The Administration sponsored AB 1360 deletes the scale of need and raises the
current scale of payments for Aid to Families with Dependent Children. The
proposal would cost the State $24 million. Also included in AB 1360 is a
proposal to exclude from eligibility families whose gross income is higher
than that earned by 25% of California families.
If enacted, these provisions would modify the projected general fund and county
savings cited in the "Issue" statement.
-34-
REDUCTION OF ADULT AID STANDARD
SUBJECT:
Reduction of the average California aid payment for aged, blind, and disabled
persons to the average payment for like programs in the State of New York.
ISSUE:
Should the Governor seek a change in state law to reduce the average categorical
aid payment for aged, blind, and disabled persons to the average payment level
in the State of New York? State general fund savings for the change would
approximate $33.6 million for 9 months of F.Y. '70-71. Counties would save
approximately $6 million for the same period.
DISCUSSION:
The Social Security Act and HEW regulation leave the option of aid payment
level open to each state. In the State of New York the level of aid for aged,
blind, and disabled recipients is lower than that for California. In his
February, 1970 report to the Assembly Ways and Means Committee, Mr. A. Allan
Post suggested California reduce its average payment level to that of the
State of New York.
-35-
AFDC-U PROGRAM
SUBJECT:
Federal law does not require California to provide for families of unemployed
parent (s) within the AFDC program.
ISSUE:
Shall the Governor seek deletion of the AFDC-U program as defined in existing
state law? State general fund savings would approximate $33 million during
9 months of F.Y. '70-71. Counties will save approximately $5.5 million.
DISCUSSION:
Federal law provides for federal participation in the costs of an unemployed
parent program within AFDC, but does not require it. In 1965, the California
Legislature enacted legislation to include families of unemployed parents in
the AFDC program on the basis that the action would reduce desertions and help
families remain intact. The federal law does not require continuation of this
program.
The Administration sponsored AB 1360 excludes only families whose parents are
not eligible for federal sharing in grant costs. If enacted, this provision
would exclude approximately 7390 families with a saving of $13.5 million to
general fund and $6.7 approximately for counties.
-36-
REDUCTION OF WELFARE GRANTS
SUBJECT:
Reduction of Welfare Grants in California is a state option.
ISSUE:
Should the Governor seek a change in the law to reduce the level of all
categorical aid grants by from 5 to 10%? State general fund savings would
approximate $25.6 for 9 months of F.Y. '70-71, the counties would save
approximately $10 million for a comparable period at the 5% level; $51 million
state general funds; $20 million county saving at the 10% level.
DISCUSSION:
The level of welfare grants in California is set by State standards. An
across-the-board reduction of all categorical aid grants of a particular
percentage could effect substantial savings.
-37-
Real Property Exemptions in Adult Aids
SUBJECT:
State law permits an applicant or recipient to retain personal property, without
reference to its value, which serves as his home. In addition, the law permits
retention of other real property used to provide income for his support.
ISSUE:
Should the Governor initiate legislation which limits the ownership of real
property used as the home to a maximum assessed value of $5,000 (less encumbrance)
and eliminate the provision for the retention of income producing property?
For 9 months of F.Y. '70-71, State general fund savings resulting from this
change would total approximately $10.8 million. Counties would save approximately
$1.8 million for the same period.
DISCUSSION:
The savings will accrue not only from the ineligibility of a number of current
recipients, but in the reduction in the number of persons who would be eligible
under existing provisions.
-38-
CEILING ON ADULT GRANTS
SUBJECT:
Under state statutes and regulations, a basic assistance grant plus a special
allowance for attendant care may exceed the costs allowed for comparable care
in a group living facility (i.e. Boarding Home for Aged or Institution for Aged).
ISSUE:
Should the Governor initiate legislation to establish a grant ceiling for all
adult aids at a level not to exceed assistance payments to or on behalf of
recipients in group facilities? State general fund savings for this change during
9 months of F.Y. '70-71 would be approximately $5.25 million. For counties the
savings would be approximately $.9 million.
DISCUSSION:
Currently an adult aid recipient living in his own home under exceptional
circumstances, may be allowed actual costs up to $300 for an attendant to
assist in housekeeping and personal care in addition to his basic grant.
This could result in a total grant for the single recipient in excess of $400.
The maximum grant allowed for an adult aid recipient needing "extensive care
and supervision" in a non-medical facility is $226.00.
-39-
REDUCED GRANT IN SHARED LIVING ARRANGEMENT
SUBJECT:
Grants for two or more recipients with a shared living arrangement.
ISSUE:
Should the Governor initiate legislation to provide a reduction in the grants
for two or more recipients who can realize economies under shared living
arrangements? State general fund savings for a period of 9 months in F.Y.
70-71 would be approximately $5.25 million. County savings would be approximately
$.9.
DISCUSSION:
Pending legislation (Section 49 of AB 1360) proposes such authorization for
married couples only when both are recipients of the same or different adult
aid programs. This proposal would extend the concept to all aids and all
recipients whether married couples, siblings, parent-child, or room mates.
-40-
RECOVERY FROM ESTATES
SUBJECT:
State law currently authorizes the department only in the aged program (OAS) to
recover the cost of aid from the estate of a recipient when ineligibility is
discovered after death.
ISSUE:
Should the Governor initiate legislation to extend this recovery provision from the
estates of ineligible recipients of the AB and ATD programs? No estimate of
savings available.
-41-
FEES FOR LICENSING
SUBJECT:
No fees are charged by the Department of Social Welfare or county welfare
departments for licenses issued for facilities caring for children and the aged.
ISSUE:
Should the Governor initiate state legislation which authorizes the Department
of Social Welfare and the county welfare departments to charge licensing fees?
The total licensing program represents an annual state general fund expenditure
of approximately $1.9 million. The net off-sets to such costs, beyond the
minimal additional costs involved in fee collection, would depend on the
schedule of fees to be charged.
DISCUSSION:
The two other state departments with licensing programs, Public Health and Mental
Hygiene, currently have licensing fees. An interdepartmental task force is
already developing the framework for a standard approach to the setting of
licensing fees.
-42-
FEDERAL REGULATIONS
Gen Fund
Months to
Savings
Implement
Item
Program
FY 70-71
Change
Fair Hearing Process
All Programs
$8.8 million
2
($10.6 full year)
Net Earnings vs.
AFDC
$3.4 million
3
Gross Earnings
($4.5 full year)
Definition of an
AFDC-U
$2.8 million
3
Unemployed Father
($3.8 full year)
Fair Hearings in
AFDC
*
3
Relation to
Social Services
Welfare Staffing
All Service
*
3
Standards
Programs
State Option for
AFDC
*
1
Revised Eligibility
Method
Failure to Take Work
AFDC
*
3
While Referred to WIN
District Attorney's
AFDC
*
3
Costs--Reimbursement
*No estimate has been made of these items.
-43-
FAIR HEARING PROCESS
SUBJECT:
To take effect July 1, 1970, HEW proposes regulations to require states to
change from a two-step process for fair hearings to a one-step process.
ISSUE:
Shall California oppose this proposed change and press for continuation of the
present fair hearing procedures? If the regulations are placed in effect, our
state costs will increase by an estimated $10,600,000, and county costs by
$1,000,000.
DISCUSSION:
In the present two-step fair hearing process, many cases are fairly disposed of
at a preliminary "evidentiary" hearing and do not have to be processed through
the formal "fair" hearing. The "evidentiary" hearing is conducted by the
county; the "fair" hearing by the state. The U. S. Supreme Court supported
the legitimacy of the evidentiary hearing in Goldberg v. Kelly and in Wheeler
V. Montgomery.
The proposed one-step process would require that all cases go through the state
formal fair hearing. In addition to the cost of hiring many more hearing
officers and supporting staff to handle this workload, aid payments pending
outcome of the hearing would have to be continued to recipients subsequently
found ineligible for aid.
For fiscal year 1970-71, additional staff to hear public welfare cases would
cost approximately $2.9 million in state funds. Continued aid payments to
recipients later found ineligible would cost an estimated $4.8 million in
state funds (plus an additional $1.0 million in county funds).
In addition, the Welfare Department has been notified by Health Care Services
that they intend to remove approximately 40,000 cases from the Medicare case-
load. The resulting need for additional hearing officers and supporting staff
is estimated to represent added state costs of another $2.9 million, bringing
total state costs to $10.6 million.
-44-
NET EARNINGS VS. GROSS EARNINGS
SUBJECT:
HEW regulations require states to use gross earnings rather than net
earnings as a basis for determining the size of welfare grants.
ISSUE:
Shall the Governor request HEW to change this federal regulation to
permit states to use net earnings as a basis for determining welfare
grants? This would reduce the number of welfare recipients who have
high gross incomes, i.e., the Alameda County situation.
State general fund savings for this change would amount to approximately
$4.5 million. The counties would save approximately $2 million.
DISCUSSION:
California was forced to comply with this federal regulation by a court
order in the Nesbitt vs. Montgomery decision. We believe that the HEW
regulations which prescribe the method to be used in determining the
amount of earned income which must be disregarded exceed requirements of
federal law.
Example Assuming Gross Earnings $300, Total Work Expense $75
Gross Method
Net Method
Gross Earnings
$300
Gross Earnings
$300
Minus $30
-30
Minus Work Exp.
-75
270
225
Minus 1/3 bal.
-90
Minus $30
-30
180
195
Minus Work Exp.
-75
Minus 1/3 Bal
65
Amount to be applied
105
Amount to be applied
130
against need standard
against need standard
in arriving at grant
in arriving at grant
-45-
DEFINITION OF AN UNEMPLOYED FATHER
SUBJECT:
Federal regulations require states to consider as "unemployed" any parent who
is working less than 30 hours per week, for purposes of eligibility for AFDC,
and permit the states to consider as unemployed any person who is working
less than 35 hours per week.
ISSUE:
Shall California request HEW to adopt regulations defining unemployment as
any employment of less than 20 hours per week? This would create an
estimated savings of $3,759,000 in state funds during 1970-71 and county
savings of $1,809,900.
DISCUSSION:
The Social Security Act permits the secretary of HEW to determine the stand-
ards of unemployment for eligibility purposes in the AFDC-Unemployed Parent
program. The House Ways and Means Committee, in their report on HR 16311,
indicate that 30 and 35 hours per week sets the limit too high. Their
report states, "It may be an incentive for many families to restrict their
work activities."
-46-
FAIR HEARINGS IN RELATION TO SOCIAL SERVICES
SUBJECT:
HEW regulations require states to provide for a fair hearing under which
applicants and recipients of AFDC may appeal Agency actions which: deny or
exclude them from a service program; fail to take into account their choice
of services; require them to participate in a service program.
ISSUE:
Should California protest this requirement which entails an indeterminate
minor workload increment for the Department's hearing officers?
DISCUSSION:
There is no basis in the federal law for the Secretary to require any fair
hearing process in the social service program. Fair hearing requirements
in all of the Titles of the Social Security Act, including Title IV (AFDC),
very specifically limit this to matters relating to money payments.
-47-
WELFARE STAFFING STANDARDS
SUBJECT:
Federal regulations on staffing standards have the effect of forcing California
to maintain the level in effect in 1967-68; namely, one social worker for every
60 cases and one supervisor for every five workers.
ISSUE:
Shall California request HEW for a change in regulations to remove the obstacles
preventing states from determining the staff required to carry out their own
social service programs? This should result in savings to the state, but we
have not been able to estimate their amount.
DISUCSSION:
No current federal law specifies a staffing standard. The above ratios were
federally mandated in 1962. In 1968, federal regulations were adopted that
did not specify a caseload or supervisory figure, but required of states,
instead, an explanation of how the quantity and quality of services will be
maintained in instances where the number of professional staff performing
eligibility and/or service result in caseload or workload higher than that
in effect in 1967-68.
In July 1968, California obtained permission to modify standards to apply
the 60-to-1 and 5-to-1 ratios on an averaging basis within counties, thus
giving some workload flexibility in larger counties, but very little in
smaller counties.
-48-
STATE OPTION FOR REVISED ELIGIBILITY METHOD
SUBJECT:
By July 1, 1970, the secretary of HEW will decide, by federal regulation,
whether the states must use the new simplified eligibility methods for
determining AFDC eligibility (1) statewide, (2) statewide on an optional
county basis, or (3) not at all.
ISSUE:
If the secretary of HEW does not prohibit states from using the new method
shall the Governor press for a federal regulation to permit the states to
exercise an option? If the secretary decides to impose the new method on
the states, additional costs are likely to occur in amounts that cannot
yet be estimated.
DISCUSSION:
The simplified method of determining eligibility opens the possibility
of increased fraud as well as non-fraudulent overpayments that could go
undetected. The method involves a self-declaration system of application
for aid, unverified except for spot-checks. This is similar to the honor
system of filing income tax reports except that it lacks substantiation such
as the W-2 Form provides for tax reports. A test of the method in California
is due for completion July 31, 1970. Results are still inconclusive.
-49-
FAILURE TO TAKE WORK WHILE REFERRED TO WIN
SUBJECT:
When a welfare recipient has been referred to the Work Incentive Program (WIN)
and refuses an offer of employment without good cause, he is taken out of the
grant, but welfare payments must still continue to be paid to his family
through vendor or third party payments. This holds true even though he is
only in a "holding" status in the WIN program with no work or training
activity going on. Currently there are about 30,000 recipients in a holding
status.
ISSUE:
Should California urge the Secretary of HEW to change his regulations so as to
permit states to discontinue all aid to the family where a man in WIN holding
status refuses employment without good cause?
DISCUSSION:
Prior to the enactment of the 1967 amendments of the Social Security Act,
states were permitted to discontinue aid for families when the father refused
employment without good cause. In enacting the WIN program, Congress specified
that persons referred to WIN who refused employment would be removed from the
grant, with aid continuing to the rest of the family through vendor or third
party payments.
However, federal regulations define "referrals" to WIN so broadly that it
covers the individual in WIN "holding" status who is neither working nor
receiving training. This results in a situation where a person whose time is
not constructively applied to anything can simply refuse to be employed, with-
out jeopardizing welfare income to the other members of his family. Although
he himself is removed from the allowed budget, nothing prevents him from
sharing in the family's remaining allowance.
The Secretary's regulations are in accord with a literal interpretation of the
law. However, we do not believe that the Congress intended that this provision
should be applied to the many thousands of persons who are in a "holding
status".
-50-
DISTRICT ATTORNEY'S COSTS -- REIMBURSEMENT
SUBJECT:
HEW regulations create inequities in reimbursing district attorneys for their
cooperative activities in obtaining child support from absent parents of
families on welfare.
ISSUE:
A proposal by SDSW to correct this matter is under study by the HEW Legal
Counsel. 1) Shall California press for an immediate decision on the proposal?
2) As an alternative or concurrently should California press the Secretary
of HEW to delete the restrictive language in the regulation?
DISCUSSION:
1) Present regulations limit reimbursement to those costs of a district
attorney's activities above the level in effect prior to the federal law
permitting cooperative arrangements with welfare agencies. District attorneys
who have always made extra efforts to deal with the child support problem are
penalized by the provision that only additional activity is reimbursed. Those
who have made very little effort are rewarded for any increased action.
Currently, this district attorney activity is reimbursed at 50 percent, while
welfare agency activity to obtain child support is reimbursed at 75 percent.
The SDSW proposal to HEW is for a trade; namely, to forego the 75 percent for
welfare action and obtain a flat 50 percent reimbursement for all costs of
actions to obtain child support, whether the action is taken by welfare staff
or by district attorneys.
2) The alternative approach would be to have HEW delete the references in the
regulation to "increase" effort for "additional" staff time. Under this
approach the state would continue to receive 75 percent reimbursement for
welfare agencies' child support activities.
HEW based their restrictive regulation on their reading of the intent of Congress
on this matter in 1967. However, the House Ways and Means Committee in report-
ing out HR 16311 took a very hard line on the obligation of deserting parents.
The whole tenor of their report is such that it can be assumed they would look
with favor on the use of federal funds without the current restrictions, to
support the efforts of the district attorneys in this endeavor.
-51-
FEDERAL LAWS
Gen Fund
Months to
Savings
Implement
Item
Program
FY 70-71
Change
Costs of Outlawing Durational
All
$3.5 million
Residence Requirements
Programs
(14.1 full year)
9
Children in Foster Care --
AFDC-BHI
$1.6 million
9
No Federal Sharing
(6.5 full year)
Unemployed Father Cases --
AFDC - U
$1.0 million
9
No Federal Sharing
($4.2 full year)
Earned Income Exemption --
AFDC
*
9
Aid to Families with Dependent
Children
*
Savings here would depend upon the limit imposed
-52-
COST OF OUTLAWING DURATIONAL RESIDENCE REQUIREMENTS
SUBJECT:
As a result of a Supreme Court decision, states are prohibited from imposing
any durational residence condition for the receipt of aid. As a result
millions of dollars will be spent by the state and counties in the next
fiscal year to support an additional 36,800 persons on public assistance who
have not established the California residence formerly required.
ISSUE:
Should California press the Congress for immediate action in this session to
reimburse states for the added costs directly attributable to the Supreme
Court decision on durational residence? Such change in federal law would
save the state general fund $14.1 million for the total fiscal year 1970-71.
The counties would save approximately $4.2 million.
DISCUSSION:
In April 1969, a ruling by the U. S. Supreme Court prohibited states from
making residency a requirement for receiving public assistance. This permits
families and individuals to enter California's welfare rolls who would not
have been eligible to do so under conditions prior to that ruling. No pro-
vision was made to relieve states of the financial burden that would be added
by this decision.
Last year, Senator Murphy, with Governor Reagan's support, introduced legis-
lation for federal reimbursement to the states, on a time-limited basis, for
the added costs directly attributable to this court decision. The proposal
was not enacted into law. It is not known whether such a proposal is now
before the Congress.
-53-
CHILDREN IN FOSTER CARE -- NO FEDERAL SHARING
SUBJECT:
Californis is providing payments on behalf of almost 26,000 needy children in
foster homes and institutions without any federal reimbursement because of the
restrictive definition of such children under current federal law.
ISSUE:
Should California press the Congress for immediate action in this session to
amend Section 408 of the Social Security Act so as to give federal support
for all needy children in foster care? It is estimated that such a change in
federal law would result in general fund savings of $6,455,300 for the full
fiscal year 1970-71. The counties would save approximately $16.2 million.
DISCUSSION:
By federal law, federal reimbursement for the cost of supporting a needy child
in a foster home or institution can be paid only if the child has been placed
in such care by court order. Therefore, California cannot claim reimbursement
for the majority of children being supported in these living arrangements,
since relatively few of them receive this care as a result of court action.
A child whose family situation is such as to require foster care, whether or
not this is ordered by a court, has in effect been deprived of the care of
both parents. It would be a more equitable policy to give federal support
for such children in the same proportion as is now given through the AFDC
program for children deprived of only one parent who are living in their own
home.
-54-
UNEMPLOYED FATHER CASES -- NO FEDERAL SHARING
SUBJECT:
California is providing AFDC-U payments to over 7,000 families without any
federal reimbursement because state law provides a broader definition of
eligibility than permitted by federal law.
ISSUE:
Should California press the Congress for immediate action in this session to
amend Section 407 of the Social Security Act so as to restore to the states
the right to define the eligibility requirements for this program? It is
estimated that such an amendment to the federal law would save the state
$4,183,200 for fiscal year 1970-71.
DISCUSSION:
A 1967 amendment to federal law restricts federal matching for unemployed parent
cases to families where the father has already established a close connection
with the work force and is not receiving unemployment compensation. If he does
not meet the definition in this law, he cannot be referred to WIN, and the
state cannot be reimbursed for aiding the family. Many such families are re-
ceiving welfare assistance in California because of the broader definition in
state law. Being younger, these fathers tend to be those most in need of the
training that WIN provides.
-55-
EARNED INCOME EXEMPTION -- AID TO FAMILIES WITH DEPENDENT CHILDREN
SUBJECT:
Under current federal law, there is no limit on the amount of gross earnings
subject to the mandated $30 and 1/3 earned income disregard. This makes it
possible for some families to remain on aid despite inordinately high total
incomes.
ISSUE:
Should California press Congress for immediate action in this session for a
change in Section 402 a(8) of the Social Security Act so as to place accept-
able limits on the total income a family can have and still receive public
assistance.
DISCUSSION:
The 1967 amendments to the Social Security Act required states in calculating
the amount of AFDC payments to exempt the first $30 of family earnings plus
1/3 of the balance. This provision was designed to provide the incentive of
monetary gains to encourage recipients to seek and accept employment as an
alternative to remaining on aid. The basic defect in the law is its completely
open-ended nature. This has the result of allowing a relatively few families
to remain on aid despite total gross income from all sources, sometimes as
much as $800 or $1,000 or more per month.
During the current consideration by the Congress of HR 16311, considerable
concern has been expressed regarding this problem, and it can be anticipated
that the Congress would be receptive to proposals to deal with it. A more
equitable approach which would preserve the incentive features within limits
would be a gradual reduction in the proportion of earnings exempted as earning
capacity increases, and the family's income situation approaches a level of
adequacy in relation to its size, with this level being established as a
cut-off point for exempting any earned income.