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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: Issues - Welfare (2 of 3)
Box: P32
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/
HUMAN RELATIONS AGENCY
FOR IMMEDIATE RELEASE
Sacramento, California
Contact: Walter Barkdull
Telephone: (916) 445-6951
December 21, 1970
The Reagan Administration moved today to halt public welfare grants and
Medi-Cal services to unwed, pregnant girls if their family or the child's
father is capable of supporting them.
The action would also have the effect of preventing girls who have adequate
financial resources available from having abortions at public expense, often
without the knowledge of their parents.
"Unwed pregnant minors from middle and higher income families are being
granted aid, often without regard to the resources of their parents or the
prospective father", Lucian B. Vandegrift, Secretary of the Human Relations
Agency, said. "Many use the Medi-Cal eligibility to secure abortions at
public expense."
"The State has no business providing a financial incentive for immorality,
irresponsibility, or family breakup, nor for saddling the taxpayer with
costs that either the girl's family or the father of her unborn child are
perfectly able to pay", Vandegrift said.
"Neither is there any logic to making a girl eligible for welfare on grounds
that aid is needed to protect her unborn child in order that she may have
the fetus aborted at State expense", said Vandegrift.
Vandegrift emphasized that the new policy would not affect aid or reduce
health services to girls with inadequate resources.
Formal notice was published today (December 21) that a hearing will be held
January 22, 1970 on regulations proposed to enforce the change. Meantime,
as a first step in carrying out Administration policy, Robert Martin, State
Director of Social Welfare, urged all county welfare directors to begin
implementation of the new policy immediately.
more
- 2 -
Martin said the regulations will require the county welfare departments to:
1. Determine who are the parents of the minor unwed mother, and who
is the putative father of the minor unwed mother's child; and
2. Contact the parents and the putative father; and
3. Determine the ability of the parents and the putative father to
provide financial support for the minor unwed mother and for the
child of the minor unwed mother, respectively; and
4. Assume the income of the parents or of the unwed father is
available in accordance with the ability to support, if they are
living with the minor unwed mother; or
If they are living apart and refuse to make a contribution in
accordance with their ability, refer the situation to the
district attorney for initiation of proceeding under Penal Code
270 which requires parents to support minor children; and
5. Deny aid if the minor unwed mother refuses to provide information
necessary for the county welfare department to proceed as indicated
above.
The new approach to the problem was taken after an extended critical review
of present welfare practices and their purported basis in law and regulation.
It was estimated the action would save approximately $9 million in welfare
1971-72
and Medi-Cal expenditures in 1970-71.
In the first nine months of 1970, there were 42,000 legal abortions in
California compared with 15,340 for all of 1969. Medi-Cal has paid for
approximately one-third of the abortions.
the 10110wing legislators letters SHOULD De
addressed to the legislator at:
Wilfare
1971
State Capitol Building
Sacramento, Calif. 95814
Senator George Moscone
Senator John Holmdahl
Senator Nicholas Petris
Senator Alfred Alquist
Assemblyman John Vasconcellos
Assemblyman Carlos Bee
Assemblyman March Fong
Assemblyman John Dunlap
Assemblyman Robert Crown
Assemblyman Edwin Z 'Berg
Assemblyman John Miller
Senator Clark Bradley
Senator Alan Short
Attached are sample letters. They are short enough to write
by hand. That is the best way. You may write the letters
exactly, or use your own words, or better yet compose your
own. These are simply aids. Make as much or as little use
of them as you like But please please for the sake of
the patient, his family and the future of an industry of
great social importance write every one of the above
legislators.
Two hours is a very small investment for an enormous amount
of good to be accomplished.
Honorable
State Capitol Building
Sacramento, Calif. 95814
Dear Assemblyman
:
When you return to Sacramento in January I
hope you take some sanity back. The Governor's War on
Welfare is just insane. The Governor is simple minded
if he thinks he can balance the States budget without
Federal revenue sharing. Yet he bucks it at every level.
For the last four years he has fought the youth
in this state who had no vote. Now he is attempting to
tell us that our hearts are running away with our heads
when we attempt to give mere subsistence to the elderly
and minimum medical care to the medically indigent. This
is a political sickness that demands your primary concern.
Sincerely,
Honorable
State Capitol
Sacramento, Calif. 95814
Dear Senator
:
Our Governor's war on welfare is a disgrace. I
don't think the aged, infirm and the disabled and the dis-
advantaged should be destroyed to give the governor a
headline. It is cheap politics to victimize poverty and
medical tragedy.
People know that the Governor uses publicity to
cover up his ignorance while exploiting the irresponsi-
bility of taxpayers. The state has been in deficit for a
long time. Why make the poor and the ill pay for it, they
did not create it.
My mother recently spent a week in a hospital
here at about $95.00 a day. She is now in a nursing home
costing $17.00 a day. As a taxpayer it is clear to mo
that if I have to pay for indefinite care for my mother
or somebody else's I'd much rather get it for seventeen
dollars than ninetyfive dollars. Is that how he saves
money? No wonder they are forecasting a $500 million
deficit for next year.
Sincerely,
Honorable
State Capitol Building
Sacramento, Calif. 95814
Dear Mr. Assemblyman
:
It looks like Nero is fiddling while Rome is
burning. Inflation is eating everybody up. But that
does not prevent fabulous pay raises for the Governor's
staff, a gala inauguration binge to celebrate the fact
that the governor has just out off the subsistance of
the casualties medical and social in our society.
I heard the other day that it costs $11,000
to kill 8 Viet Cong. It costs about $2500 to maintain
a prisoner in a State prison and $3600 for a woman. When
the first dollar out of my wages is taxes, the first heir
in my estate is taxes, and when the first duty of my
child is to offer his life to his country, I think you
can provide a man an honest opportunity to make a living,
and guarantee his dignity when his productive days are
over. Especially provide against medical indigence which
NOBODY can afford.
Sincerely,
HIGHLIGHTS OF CALIFORNIA'S WELFARE REFORM PLAN
1971
How It Affects People
0
Separate elderly, blind and disabled from present welfare
structure and instead provide automated monthly pension checks for
aged and permanently disabled similar to Social Security system.
0
Transfer jurisdiction for all remaining adult recipients from
social worker welfare bureaucracy to the state agency which handles
employment services and job training projects. Able-bodied recipi-
ents will be regarded as "temporarily unemployed," not permanent
welfare dependents.
0
Require able-bodied adult welfare recipients to be either: (1)
Seeking emplyment, (2) Training for a job or (3) Participating in
Public Assistance Work Force as a condition for receiving welfare.
Those who refuse work or training will be dropped from rolls.
0
Increase monthly grants to remaining welfare recipients who
have little or no outside income by reducing or eliminating cash
payments to families whose earned income exceeds 150 per cent of the
established minimum cost-of-living "need" standard.
0
An estimated 65 to 75 per cent of current welfare families
would receive higher grants and 25 to 35 per cent with significant
outside income would have grants reduced or eliminated.
How It Affects Cost and Administration
0
Tighter eligibility standards for welfare and realistic income
limitations aimed at curbing abuses plus other parts of reform could
save estimated $566 million to $836 million per year in state,
federal and local property taxes.
O
Completely rewrite state welfare eligibility regulations and
laws to assure realistic limitations on amount of other income a
family would have and remain eligible for aid.
0
Have State assume entire cost of automated payments and admin-
istration of pension program for elderly, blind and permanently
disabled. Counties would administer AFDC program, under contract
with State.
0
Streamline administration through standardized eligibility and
audits to assure that only truly needy people get welfare.
How It Curbs Welfare Abuses
0.
Clamp a realistic ceiling on spendable income a family could
have and remain eligible for welfare.
0
Terminate welfare aid to illegal aliens and non-residents.
0
Restrict welfare households to a single grant, closing loophole
that has permitted unmarried couples to receive separate combined
grants that are higher than total aid given to legally married couples.
0
Improved legal procedures to trace absent fathers whose families
are on welfare; financial incentives to counties to collect child
support payments from absent parents.
0
Exclude from Food Stamp eligibility able-bodies adults between
18 and 65 such as voluntarily unemployed hippies and college students
above junior college level.
How It Affects Medical Payments
0
Make California's Medicaid Program (Medi-Cal) more comparable
to health benefits working citizens can afford.
0
Medi-Cal gives welfare recipients free two to three times greater
array of health care benefits than average taxpayer has under his
company health plan.
Example: Medi-Cal finances more than 20 services, including complete
dental services, chiropractic treatment, occupational therapy, podiatry,
etc., all at no cost to recipient. Typical private plan offers only
five to seven basic hospital and physician cost coverage and taxpayer
usually pays at least part of total cost.
o
Reform program would require adult Medi-Cal recipients between
21-65 to make token co-payment of $1 per doctor or dentist visit, a
step necessary to curb over-utilization and unnecessary costs.
o
Establish a level of eligibility which will assure that the
taxpayers' dollars will be spent to provide health care to the truly
needy only.
WF
capsule
1971
AN OVERVIEW OF THE CALIFORNIA PUBLIC
ASSISTANCE REFORM PROGRAM
In my inaugural address to you January 4, I said that unless
we, as elected representatives of the people, are willing to com-
pletely reform welfare in California, our people will face a tax
increase every year into the future as far as anyone can see.
The fact is, California's welfare and health care system, which
is nothing more than state implementation of federal programs,
is a $3 billion moral and administrative disaster, a way of life
without a goal, a road that can only lead to bankruptcy, unless
we have the courage to turn in another direction - before it's
too late.
Even more important, in human terms it is a tragic failure
for those among us who are destitute and who have nowhere else to
turn for the most basic, minimum requirements of living. It is
replete with inequities that overpay the less needy who have other
income, while underpaying the truly needy who have none. It satis-
fies no one - neither the taxpayer who is forced to shoulder an
ever greater burden to feed its avaricious appetite, nor the person
who depends on it as his only source of life support.
Today, we stand at the crossroads. We can continue to talk
about welfare, complain about it, watch it grow unchecked. Or,
we can take the steps necessary to control it and reform it SO
that instead of destroying our greatest resource - the people of
California - it will maximize human dignity and salvage the
destitute.
Now is the time, perhaps our last chance, to define goals and
assign purposes of our own to this aimless, goal-less federal pro-
gram. After doing so, we can perceive what has to be done for true
reform.
The choice is clear and I ask you to join with me in making
this the year that we put partisanship aside and get down to the
business of controlling the monster that welfare has become.
More than ever before the people want welfare reformed, and
they have a right to expect us to do it.
The Goals
Today, I am proposing for your careful consideration a program
for welfare reform in California.
Its goals are simple and straight forward:
To increase our assistance to the truly needy who have no-
where else to turn to meet their basic needs.
To require those who are able to work to seek work, train
for a job, or serve their community, if asked, as a rea-
sonable condition for receiving welfare.
- 1 -
To place Medi-Cal benefits on an equal footing with the
health care benefits available to our working men and
women who must pay their own health care needs them-
selves.
To strengthen family responsibility as the basic element
in our society.
With these goals in mind, we have adopted a two-fold plan.
First, we must reduce the welfare growth rate by changes in eligi-
bility determination and by a work and training program to move
people into private sector jobs. Second, we must close all possible
legal loopholes that lead to abuse.
The following message will show this to be the most sweeping
and far-reaching program of legislative and administrative reform
ever proposed in California. It will be followed shortly by
specific legislative proposals, at which time any further support-
ing information you may need will be supplied.
I believe it also provides the best answer for solving the crit-
ical problems we face in welfare and Medi-Cal. Countless hours,
over a period of six months, have gone into its formulation and
preparation. We have gone through federal and State laws and
regulations with a fine tooth comb, and we are convinced that our
programs can be implemented - assuming a constructive interpreta-
tion of existing law and regulations by federal administrators.
You will note that our stated goals and purposes do not include
fiscal savings for their own sake. However, it is a fiscally
responsible program. It meets the requirements of a balanced budget,
while at the same time attempting to insure that, for the first
time in history, no California welfare family will have to subsist
below the poverty level.
Welfare's Growth
Today, some 2.4 million Californians are receiving welfare and
Medi-Cal benefits. Recipients fall into four major categories:
Aid to Families with Dependent Children (AFDC), Aid to Totally Dis-
abled (ATD), Aid to Blind (AB), and Old Age Security (OAS).
If present laws and regulations are not changed, California's
welfare rolls could swell by as much as another 600,000 by July,
1972, raising the total welfare population to roughly 3,000,000
persons. It is definitely not a case of "nothing ventured, nothing
gained". It is in fact a case of "nothing ventured, much will be
lost".
This would mean that one in every 7 Californians would then
be on public assistance. No society can long endure a loss of
this magnitude in human resources, dignity, and morale.
As you know, the most rapidly proliferating program is AFDC,
which now counts 1,600,000 persons on its rolls. That number will
rise by another 550,000 persons by the end of fiscal 1971-72 if
no reforms are adopted during the current legislative session.
- 2 -
The numbers are especially staggering when you consider that
only ten years ago the total welfare caseload in California
amounted to only 620,000.
California has only ten percent of America's population, yet
we have 16 percent of the nation's welfare cases.
In addition to slowing the growth of welfare and Medi-Cal
dramatically, the reform program I am proposing will save at least
$600 million in total federal, state, and county expenditures for
public assistance during fiscal 1971-72.
It is useless to hope that the federal government will increase
its share of this burden in time to save us. Even the so-called
long range federal welfare "reforms," which I oppose as being
"more of the same", are hopelessly bogged down in Washington.
Welfare's Budget
If the present unrealistic and inequitable laws and regulations
governing California's welfare system were allowed to continue
unchanged, based on current caseloads and costs, the state's
share of welfare would have to be $898 million during the coming
fiscal year. The budget I have sent to you provides approximately
$677 million in general fund support for this purpose. Clearly,
if the Legislature does not act on welfare reform, our people will
face increased taxes - not only this year, but on into the future,
year after year after year.
In addition to attaining the primary human goals listed previ-
ously, the program I propose for welfare will also save $220
million of the general fund and will enable the state to operate
within the amount of funds we have budgeted for 1971-72.
Let me break it down for you into three major categories:
$100 million would be realized from the adoption of tighter
eligibility standards to assure that only the truly needy
receive welfare.
$90 million would result from the adoption of realistic
income limitations to assure more equitable cash welfare
grants for recipients with outside income.
$30 million would come from reducing or eliminating un-
necessary red tape and paperwork, adopting changes in
administrative procedures such as increased auditing of
abuses, requiring prior month budgeting to determine the
size of welfare grants, flat grant computations and
other factors.
A County-State Partnership
In the development of every facet of this reform program I have
insisted that these reforms cause no net shift of costs to the
already overburdened counties. I am confident that this will not
happen if the entire program is adopted.
The program I propose would relieve the counties of the full
program costs in the AB, ATD, and OAS categories, and relieve them
of the burden of being responsible for the administrative costs of
determining eligibility and grant levels for AFDC applicants by
shifting these costs to the state. These annual costs amount to
$131 million, including $52 million in OAS and AB, $41 million in
ATD, and $38 million in AFDC.
Although the state would assume the complete responsibility and
cost for determining eligibility, I still believe such face-to-face
determinations can best be made at the county level by people who
are most familiar with the needs of the local community. Therefore,
I am proposing that the day-to-day handling of this function be
performed by county employees, by means of contracts with the State
Department of Social Welfare.
I can think of no better or more innovative way of developing
a true partnership between the state and local governments than
by enabling county employees to use their knowledge of the local
scene and their dedication to the welfare of the truly needy in
undertaking this task, with the state maintaining the financial
support and providing necessary control and coordination for the
program.
In order to partially balance the shift of these costs to the
state, I am proposing that the counties assume the responsibility
for an equal partnership in bearing the cost of AFDC grant payments
to recipients. This will require a revision in the funding formula
so that the counties pay 25 percent, the state 25 percent, and the
federal government the rest. This change in the counties' funding
obligations will provide an incentive to them to exercise greater
care in controlling eligibility for the program through tighter
screening of AFDC applicants. The counties will thus assume an
additional cost of $84 million during the coming fiscal year.
In order to provide a more equitable balance in state-county
shifts and to ensure that no counties will suffer a loss, we will
phase the implementation of these shifts during 1971-72 SO that
$92 million is assumed by the state and $84 million is assumed by
the counties. In effect the total cost shift to the counties
will be $8 million less than the expenses shifted from the counties
to the state in 1971-72. In subsequent years the counties will
receive a $47 million per year benefit from these shifts. This
net benefit should more than offset any increased county cost
which could result from possible growth in the AFDC program.
In addition, the counties will pick up the non-federal costs of
providing emergency special needs to recipients at a cost of $5
million. To ease the fiscal burden on the counties, the state is
planning to reduce its mandated requirements for social services
to the minimum required by federal law. This is expected to en-
able the counties to save at least $30 million in 1971-72.
As a part of the overall welfare reform program, the counties
will assume another $13 to $33 million in expenses as the result
of a tightened definition of those eligible for "Aid to the Totally
and Permanently Disabled". In narrowing the requirements for
eligibility, some temporarily disabled persons who cannot qual-
ify under the new definition may revert to county general relief
or the AFDC program.
4
$81 Million County Savings
In addition to the favorable balance of savings shifted to the
counties, they can reap at least an additional $81 million savings
if the entire welfare program which I am proposing is adopted.
I have on many occasions affirmed and reaffirmed the policy of
this Administration that we are not going to push the tax burden
onto the counties by making "savings" at the state level. We have
been scrupulously careful in observing this policy during the
planning of this program. And I sincerely hope that the counties
will be able to take advantage of the $81 million in additional
savings - through the full enactment of the program by the
legislature.
A Comprehensive Work Program
One of the most innovative aspects of the welfare reform pro-
gram contemplates separating potentially employable, able-bodied
welfare recipients from those who are non-employable because of
age, physical handicap or other reasons.
If a recipient is determined to be potentially employable, he
will be placed under the overall jurisdiction of the State Depart-
ment of Human Resources Development and assisted in his search for
employment by employment-oriented HRD personnel.
Under the "employables" plan, social workers assigned to employ-
able welfare recipients will work under the direction of HRD with
the primary purpose of placing these recipients in jobs. These
social workers will, of course, receive retraining that will enable
them to effectively stress employment services in their day-to-day
contacts with the employable recipients assigned to them.
If no private or public sector job, or training opportunity is
immediately available to the employable recipient, he will be
expected to participate in public assistance work projects aimed
at helping make California a better place in which to live. But
participation in such work projects will not be a substitute for
a permanent job.
In sum, the public assistance work concept will not only pro-
vide welfare recipients with an opportunity to perform a valu-
able service to their community, but also they will receive some
training along the way and get used to a job routine while await-
ing the opportunity to get off welfare completely.
If, after classification as an employable the recipient refuses
to seek work, or to take an available job, or to participate in a
job training program, or to take part in a public assistance work
program, he will be ineligible for further welfare assistance.
We will seek appropriate administrative changes or legislation
at the state level - and waivers at the federal level, if necessary -
to implement the mandatory work program.
- 5 -
Medi-Cal Reform
I would like to conclude this Overview by drawing your attention
to one of the most significant and comprehensive reforms of our
entire program.
As you know, ever since the state's Medi-Cal program was written
into law six years ago, the working men and women of California
have been forced to underwrite Medi-Cal's virtually unlimited scope
of benefits - a health care program they could not afford to pro-
vide for themselves or their families.
Because the serious flaws in the original structure of Medi-Cal
have been compounded by a caseload explosion in our welfare
system, Medi-Cal costs to the taxpayers have escalated to an
intolerable level.
It is grossly unfair to expect the already overburdened taxpayers
of California to bear the brunt of Medi-Cal's excesses.
As you well know, anyone who gets on welfare automatically
qualifies for the entire spectrum of Medi-Cal services. The Medi-
Cal card provides some 20 different services - every one of them
paid for in full by the taxpayers. They are far more extensive than
those provided in the average health insurance plan available to
those not on welfare or not indigent.
The typical group health plan available to the average taxpayer
and his family covers only about one-third the basic categories
of medical services provided under Medi-Cal. And most of the
private group plans require partial payment by the taxpaying
family for the services they receive. Let me emphasize that this
is above and beyond the basic premium they must pay in the first
place.
But those welfare recipients on Medi-Cal pay absolutely nothing
for a much broader range of services.
To restore fairness and equity to Medi-Cal, I will propose reforms
in the Medi-Cal Program that will bring its benefits more closely
into line with those which the average citizen taxpayer can afford.
The first key element in this program is the provision which
would establish a uniform, statewide level of eligibility to assure
that the taxpayers' dollars are spent to provide health care to
those who are truly in need.
Medi-Cal Coverage
There is currently a variety of health care programs for the poor.
The welfare-linked Medi-Cal program is the largest.
However, another 800,000 indigents who do not qualify for welfare
must obtain their health benefits through county hospitals. Each
county sets its own eligibility standards for these indigent
recipients and determines how much health care each one is entitled
to. Generally, these indigent citizens are restricted to only about
one-third of the benefits available to welfare recipients.
6
The Medi-Cal Reform Program I am proposing would erase this
inequity by establishing a uniform standard of eligibility, which
would have to be applied equally in every county in the state.
The second principal element of our Medi-Cal Reform Program would
be the establishment of a level of health care benefits for both
welfare recipients and non-welfare indigents similar to those generally
available to the average taxpayer through private health plans.
Under the current Medi-Cal program, welfare recipients have
virtually unrestricted access to an unlimited range of services.
But the non-welfare indigent has very limited access to a greatly
reduced - though reasonable -- schedule of services - despite
the fact that the indigent might well have a greater, far more
legitimate need for medical help than the Medi-Cal recipient.
Again, to serve the cause of fairness, I intend to seek legisla-
tion to balance equally the scope of Medi-Cal benefits available to
both indigents and welfare recipients so that their benefits are
brought into line with those the average citizen can now afford.
Co-Payment
The third major provision of our Medi-Cal Reform Program will
require a recipient to exercise a degree of self-control in obtain-
ing his health care benefits.
I will seek legislation to require that every Medi-Cal recipient -
both the welfare recipients and non-welfare indigents --- make a
token co-payment toward the services he receives. This legislation
would require that each recipient would pay $1 per doctor visit,
$1 per drug prescription received, $1 for the purchase of a pair
of eyeglasses, and $3 per day in a hospital or nursing home.
The co-payment would merely be collected by the provider of the
service, who in turn would reduce his bill to Medi-Cal by the same
amount.
- 7 -
PROBLEM
0 The present welfare system in California costs more than $3.5 billion
in tax money each year and represents a staggering financial burden on
the working citizens of this state.
O Legal loopholes mandated by Federal regulation and law have permitted
some families with incomes of $12,000 to $15,000 a year to remain
eligible for welfare benefits that are financed by citizens with less
income.
O Some of the worst abuses involve the Aid to Families with Dependent
Children category of public assistance; a majority of AFDC welfare
cases involve public support of families in which the male parent has
either abandoned his responsibility to provide for his children or is
otherwise absent.
O The present welfare system is a hodge-podge of confusing and sometimes
conflicting regulations which perpetuate welfare as a way of life and
allows outrageous abuses which are unfair both to the truly needy and
to the taxpayer.
SOLUTION
O Governor Ronald Reagan has proposed a comprehensive, 70-point welfare
reform program to completely change the direction of public assistance
in California; key points of the program include:
O Separating the elderly, the blind and disabled from the present
demeaning welfare structure and instead providing these groups with
monthly pension checks through an aútomated system similar to Social
Security.
-2-
0 Treating all remaining adult welfare recipients as potentially
employable and requiring these able-bodied recipients to be either
seeking a job, training for employment or participating in a Public
Assistance Work Force as a condition for receiving welfare.
0 Correcting the flagrant abuses of the present welfare system through
tighter eligibility standards, eliminating red tape, and imposing a
realistic limitation on the amount of outside income a family might
have and remain eligible for aid.
0 Enacting tough new legal steps to track absent AFDC fathers and collect
child support from them to reduce the tax burden on the taxpayer.
RESULT
O This complete overhaul of the welfare system in California will
result in a saving estimated at $566 million in state, federal and
local taxes.
O Governor Reagan has demonstrated rare political courage in undertaking
this massive effort to reform welfare.
O He has the support of responsible working citizens of this State in
trying to bring welfare under control.
STATE OF CALIFORNIA
WELFARE REFORM ACT OF 1971
(Signed into law August 13, 1971)
513 796
ELIGIBILITY FACTORS
Treatment of Income
The bill eliminates the requirement under California law that a recipient
be allowed unlimited exemptions to his earned income for work-related
expenses, etc.
It changes a code section to require that earned income be disregarded
only to the extent required by federal law, rather than the former pro-
vision that it be exempted to the maximum extent permitted by federal law.
Work-related expenses are restricted to a flat $50 per month, plus reason-
able and necessary costs of child care. Previously, state law placed no
dollar limitation on work-related expenses.
Income Considered
Provisions are included to require that income from interest on savings
accounts and casual income be considered in determining eligibility and
grant.
In addition, state law will now require that all lump sum income received
by applicants and recipients be considered as income in the month that it
is received.
The new law also provides that the income of any person who has a contract
of employment on an annual basis, but who works and receives income in
fewer than 12 but more than 8 months must be averaged over a 12-month
basis for the purpose of determining eligibility.
Eligibility Determination
The bill also requires that eligibility must be verified through cross-
checking by the County Welfare Department before an applicant receives
welfare. Previously, an applicant was granted aid on the basis of his
simple declaration that he was in need. In addition, all redeterminations
of eligibility as well as initial applications must now contain a written
declaration by the recipient, under penalty of perjury, that all informa-
tion he has given is true.
Personal Property Limitations
The bill places limitations on the amount of personal property a person
may own and still be considered exempt from the eligibility process. Up
until now, there has been no statutory limit on any personal property
other than cash and negotiable securities.
-1-
Personal Property Limitations (Continued)
It allows an applicant or recipient to retain items of personal property
up to a market value of $1,000 plus the value of wedding and engagement
rings, family heirlooms, and clothing. Included is a limitation on furn-
ishings and other household equipment to a reasonable value.
GRANT DETERMINATION
Maximizing Grants
Previously, state law has directed those administering welfare to secure
the maximum amount of aid for the recipient regardless of the techniques
used to achieve it. The new bill deletes the word "maximum" so that the
direction will be to secure the aid to which the recipient is actually
entitled-- no more, no less.
Grant Level
A standard AFDC payment level (flat grant) will now allow maximum effi-
ciency in the delivery of welfare grants. In addition, the AFDC grant
payment level has been increased to a level 30 percent higher than that
paid prior to June of this year. AFDC recipients also will receive
automatic annual cost-of-living increases in grants, based on federal
indices, beginning in 1973. Net income will be subtracted from the
payment level instead of the standard of assistance, thus reducing grants
to those with significant outside income.
WELFARE WORK PROGRAM
The new bill provides for the establishment of a three-pronged work
program.
First, a job development program, set up under the State Personnel Board,
will develop jobs leading to permanent employment for welfare recipients.
Work will be contracted with the State Department of Human Resources
Development under WIN (Work Incentive Program). All jobs developed will
pay the prevailing wage.
Second, career opportunities will be developed for under-educated, low-
income persons employed by the State.
The third portion of the work program is entitled the Public Assistance
Work Force and requires the Department of Human Resources Development to
develop and implement a plan for community work experience programs so
that welfare applicants and recipients may receive work experience that
will assist them to move into regular employment. In this program, if
the adult recipient refuses to accept work, training or participate in
a public assistance work force, his portion of the family's welfare grant
will be terminated.
-2-
RELATIVE'S RESPONSIBILITY
Many provisions of the bill relate to responsibility of relatives in
caring for those persons who have no other source of income. These
provisions are broadly divided into two categories: the responsibility
of a parent to support his or her child; the responsibility for an adult
child to support his or her aged parents.
Parental Responsibility to the Child
The bill includes the requirement that a portion of the stepfather's
income be used for the support of the stepchild. Since California is a
community property state, the wife's interest in the income of the hus-
band is considered available for the support of her children. A second
provision dealing with collection of support monies from absent parents
requires that social security numbers of both parents be placed on birth
certificates to assist in locating the absent parent. Another provision
allows for the enforcement of the support obligation of the absent parent
of an AFDC child by the attachment of his or her earnings or by levying
liens after court proceedings. In the collection of absent parent sup-
port payments, an incentive fund will allow the counties a greater share
of repaid or recovered monies from the collection of absent parent support.
For the first time the absent parent becomes legally indebted to the
county for any aid paid to his children.
Adult Child's Responsibility to Support Aged Parent
The bill requires that the children of a person receiving Aid to the Aged
(OAS) support such person to the extent of their ability. In addition,
the bill increases the amount of support an adult child must contribute
to the county for the support of the parent, under OAS. It changes the
current Welfare & Institutions Code OAS Relative's Responsibility scale
to reflect the increased contributions, while also taking into consider-
ation the adult child's ability to pay.
RESIDENCY
Residence Requirements
The new bill requires that welfare be granted only to California residents
and establishes a one-year residence requirement for recipients under the
AFDC program. The one-year residence requirement takes affect only when
the unemployment rate in the county, in which the recipient resides,
exceeds six percent. At such time, all recipients who have been in the
state for less than one year would no longer be eligible in that county.
Out-of-State Recipients
The bill provides that the continued absence from the state by a welfare
recipient for a period of 60 days creates a presumption that the recipient
intends to establish residence elsewhere and therefore is no longer eligi-
ble for aid in California. The previous system allowed a recipient to
remain out of the state for at least one year before any action was taken.
Under this provision, the counties will now be required to make necessary
inquiries of such recipients when they leave.
-3-
Illegal Aliens
This new law excludes illegal aliens from collecting welfare benefits in
California. An alien, upon application, will receive welfare if he
certifies under penalty of perjury that he is in this country legally or
holds sworn verification from two U.S. citizens of having resided in the
United States for over five years. Verification of his alien status by
the United States Immigration Service will be required.
PROGRAM ADMINISTRATION
Confidentiality
The new law permits the inspection of state income tax records, unemploy-
ment insurance records, and county records by the State Department of
Social Welfare for purposes directly related to the administration of
welfare. These provisions will allow cross-checking to gain factual
data on the income status of applicants, recipients and responsible
relatives alike. In addition, the cross-checking will provide additional
assistance in tracking down absent parents.
Simplified Administration
Another provision allows the State Department of Social Welfare (SDSW)
to contract with the counties, enabling SDSW to simplify and tighten
eligibility and grant determinations.
Restitution for Underpayments, Overpayments, and Fraud
The bill simplifies and standardizes the amount of time for which either
a recipient or the state can reclaim errors in grant determination.
Another provision requires that aid paid to a recipient who later is
proved to be ineligible must be repaid to the state. Counties are
authorized to pay an applicant up to $100 for immediate assistance.
However, verification of the applicant's eligibility must be made within
five days or the county must bear the cost of such payment.
Mismanagement
The new law requires, rather than merely permits, counties to provide aid
in the form of goods or services (in-kind) to recipients when a recipient
has mismanaged the welfare payments that he has been receiving.
Funding of Programs
Beginning in 1972, the State will assume 50 percent of the non-federal
share of county administrative costs in eligibility and grant determination.
In addition, the State will pay 100 percent of grant payments in the aged
and blind programs, and 50 percent of the grant payments in the disabled
programs, beginning in 1972.
-4-
AB949
MEDI - CAL REFORM ACT OF 1971
(Signed into law August 13, 1971)
Eligibility
For the first time, about 800,000 needy Californians also will be able
to obtain a uniform, broad spectrum of health care services under Medi-Cal.
Heretofore, they were able to obtain limited assistance from county facil-
ities only. About 250,000 of them are under 21 years of age. This will
bring the total under the program to more than three million persons.
Formerly, the health care for these patients was financed with state and
county dollars. Now federal financial participation will be available.
Services
The bill establishes a basic schedule of benefits estimated to cover 95
percent of health care needs. A supplemental schedule of benefits pro-
vides for remaining "catastrophic" care.
It also institutes utilization controls based on a maximum of 24 annual
visits for services rendered by most health care vendors, and requires
*departmental approval for a wide range of non-emergency services and for
services above normal usage.
Co-payment
The new law encourages patient responsibility by requiring co-payment for
approximately 50 percent of the beneficiaries. These beneficiaries have
certain resources and income which indicate their ability to meet part of
their cost of health care.
Co-payment will require $1 for each visit to a provider of health services
and 50 cents toward the purchase of each drug prescription. This feature
is a two-year experiment in California and is scheduled to end June 30,
1973.
The bill strengthens provisions for establishment of pre-paid health plans
under which health care providers furnish services as a group as an alter-
native to the present system of unorganized fee-for-service arrangements.
The *department is given flexibility in developing a variety of pre-paid
plans. Other sections of the bill provide incentives for the movement of
patients and providers into pre-paid systems. The department would remove
certain payment and administrative restrictions which are placed upon
other health care services.
The legislation also requires establishment of uniform accounting and
cost reporting systems for providers of health care services to accurately
determine and control Medi-Cal costs. It establishes a 17-member commis-
sion to make recommendations to the director on:
1. The Medi-Cal budget;
2. Reimbursement rates for services;
3. Proposed regulations.
The commission is to be composed of representatives of health care
providers, the public, the counties, the Legislature, affiliated
departments,_and_the_consumers,
*Department of Health Care Services
-5-
8-17-71
Wilfare
January 8, 1971
Mr. Jenkins:
The following was dictated to me, over the telephone, for your
information.
"Since signing my final decision of January 8, 1971 in
this matter, I have received a telegram dated 1/8/71
from Ronald Reagan, Governor of California, requesting,
on behalf of the State of California, that proceedings
in this matter be staid pending a determination of two
cases in the courts of the State of California. A copy
of this telegram is attached.
It appearing from the requestof the State of California
that, although the State is yet to take any action that
would correct the lack of conformity with Federal require-
ments of its program of Aid to Families With Dependent
Children, it has taken steps to achieve such conformity
and intends to do so if permitted as result of the final
resolution of defending State court proceedings, I hereby
withdraw and rescind my final decision of January 8, 1971.
John D. Twiname
Administrator Social and
Rehabilitation Services "
The above was issued January 8, 1971.
P.B.
FYI
January 5, 1971 - Dictated by Lucian Vandegrift's secretary
Letter dated
January 4, 1970
To: Mr. Twiname
From: Robert Martin
Regulation 44-313, maximum state participation base -- children's
programs, is in effect. Implementation of the regulation has
been delayed by a preliminary injunction against the use of an
equitable adjustment (California Welfare Rights Organization vs.
Martin) and a temporary restraining order (Levine VS. Martin and Orr).
It is my intention to implement regulation 44-313 when I am
legally free to do so.
Sincerely,
Robert Martin
Wilfare
2 letters dicated 2-25-71 by Jane Sudderth, Washington, D.C.
To: Wilbur Mills, Chairman, Ways and Means
Russell Long, Chairman, Senate Finance
Dear Mr. Chairmen:
The Winter Legislative Session of the National Governors
Conference does not entertain resolutions or motions of
affirmation.
However, following the breakup of yesterday's final plenary
session, I was able to contact individually 27 of my fellow
governors. Twenty-four of them signed the attached letter to
you. Three of them will contact you directly. I will notify
the remaining 23 of this action, and afford them the opportun-
ity to join us.
Our sense of urgency in this matter, which I know you share,
has dictated this unusual procedure.
The names and states represented by the signatories are as
follows:
Richard B. Ogilvie, Illinois
Thomas J. Meskill, Connecticut
John A. Love, Colorado
Stanley Hathaway, Wyoming
Carlos Camacho, Guam
John A. Burns, Hawaii
Cecil D. Andrus, Idaho
Daniel Evans, Washington
Russell W. Peterson, Delaware
Robert Scott, North Carolina
Ronald Reagan, California
Jack Williams, Arizona
Tom McCall, Oregon
Edgar D. Whitcomb, Indiana
Arch A. Moore, West Virginia
Linwood Holton, Virginia
Robert Ray, Iowa
John West, South Carolina
Deane C. Davis, Vermont
Marvin Mandel, Maryland
Nelson Rockefeller, New York
Walter Peterson, New Hampshire
William Milliken, Michigan
Francis Sargent, Massachusetts
2-2-2-2-
We hope this expression of concern and support from the governors
will be of assistance to you and your committee.
Best personal wishes,
Sincerely, RR
CC: James Hall
James Crumpacker
Jerry Martin
2-25-71
Dear Mr. Chairman:
The undersigned respectfully request immediate Congressional
action to provide the governors necessary authority to cope
with the current and rapidly expanding crisis in the existing
welfare system.
Several necessary reforms cannot await development of overall
reform, namely:
--a realistic and workable feeling on total amounts which
can be retained by welfare recipients under the "thirty and a
third" formula.
--a - more effective state and local review authority to con-
trol eligibility determination.
sufficient authority to implement a workable public work
force program for employable recipients.
-congressional encouragement for the state to apply for,
and the Department of Health, Education and Welfare to grant,
the necessary waivers to allow states enough flexibility to
explore solutions to present defects by instituting innovative
demonstration projects.
Enclosed for your urgent consideration is a copy of the Report
of the Committee on Human Resources of the National Governors
Conference which outlines the fiscal crisis faced by the states
and their localities and makes specific recommendations to the
Congress for providing desperately needed fiscal relief.
FROM THE OFFICE OF
March 15, 1971
SENATOR CLAIR W. BURGENER (R-Rancho Santa Fe)
Room 5091
IMMEDIATE RELEASE
State Capitol Building
Sacramento, California
Contact: Bruce Gray
916 445-3731
Senator Clair W. Burgener (R-Rancho Santa Fe) and Assemblyman
William Campbell (R-Hacienda Heights) said today they will introduce
legislation to completely reform and overhaul California's welfare and
Medi-Cal programs.
The Rancho Santa Fe lawmaker said he will introduce a package of
three welfare reform bills this afternoon. Co-authors with Senator
Burgener are Senator Fred Marler (R-Redding) and Assembly Minority Leader
Robert Monagan (R-Tracy).
Assemblyman Campbell will introduce the Medi-Cal reform legislation.
It will be co-authored by Senator Robert Lagomarsino (R-Ventura).
The overall legislative program was presented to the legislature
by Governor Ronald Reagan in a 180 page message March 3.
The program is designed to assure that the truly needy receive
the assistance and care they require at a cost the taxpayers can afford.
The three welfare reform bills deal with:
1. The need to strengthen the family as the basic unit of our
society, by re-establishing the basic concept---parents
support of, and responsibility for, their children.
2. The need for redirection and reform of the present welfare
system.
3. The need for accountability in the system.
The first two measures require a 2/3 vote for passage because of
the proposed assumption by the state of county costs. The third bill
needs a simple majority.
-2-
The Medi-Cal reform legislation proposes to alter the way
health care is delivered, the way it is used, and the way it is
financed---under the current Medi-Cal system.
Outlines of the bills are attached.
###
WELFARE REFORM LEGISLATION
A.
Family Responsibility Act of 1971
1. Absent parent
2. Stepfather support obligation
3. OAS Responsible Relative Scale Revision
4. Adult child responsible for parent
5. Property lien on estate of recipient
ive
6. Child protection services
7. Social Security number on birth cirtificate
B.
The Fair Share Act of 1971
(1) State to assume responsibility for ATD, AB, OAS
(2) Establish flat grants
(3) Work related expenses
(4) Equitably adjust grants
(5) Funding of special needs
(6) Spendable income limit
(7) Treatment of recipient income
(8) Single grant to ATD
(9) Inclusion of all income in determining
eligibility and grant
(10) Lump sum payment as income
(11) Revise maximum grant concept -- Section 10500
(12) Income averaging
(13) County-State formula change
(14) Redefine totally disabled
(15) Modified equit. apportionment for ATD
(16) College students on aid (AFDC) Sec. 11253
(17) Limit ownership of income producing property
(18) Spend property reserve for special needs
(19) Maximum limit on exempt property
(20) Standardize eligibility requirements
C.
Accountability Act of 1971
(1) Residency and aliens
(2) Reduce period of absence from state
disqualifying recipient
(3) Uniform welfare fraud penalties
(4) Revise confidentiality statutes
FAMILY RESPONSIBILITY ACT OF 1971
Summary
Under existing law a significant amount of public assistance is
directly attributable to a disintegration of family responsibility.
For example, in 1970 there were about 230, 000 welfare families
with absent parents and only about 15% of the absent parents were
making a contribution to their children's support. Their total
contribution was $36.5 million and averaged out to about $75 per
parent. If all absent parents contributed the same average amount,
about $240 million -- rather than $36.5 million -- would have been
realized in child support payments.
Similarly, significant sums are expended every year because of
the need to protect children from the violence or neglect of their
parents, because of the need to provide support to aged persons
who have adult children with good incomes, and because of the
need to provide support for children who have stepfathers with
good incomes.
While it is not possible to enforce all aspects of family responsi-
bility by law, it is possible to provide more effective and mean-
ingful enforcement of the basic support obligation of the parent
to the child and of the adult child to the parent.
Analysis of the Act
The effect of the Act can be most easily understood by dividing
it into the five general areas with which it is concerned. These
areas relate to:
1. The absent parent,
2. The stepfather support obligation,
3. The adult child support obligation,
4. Property liens on estates of recipients of aid, and
5. Child protection services.
The Absent Parent
The bill would amend seven code sections and add one new section
to provide for more prompt and effective enforcement of support
obligations and to require additional information to facilitate
locating the absent parent. To these ends:
1. Section 10125 of the Health and Safety Code is amended to
require the social security numbers of the father and mother to be
placed on birth certificates.
2. Section 11265 of the Welfare and Institutions Code is
amended to require that the certificate of eligibility now required
for welfare families include the name, social security number, and
present location of the absent parent.
FAMILY RESPONSIBILITY ACT OF 1971
Page 2
3. Section 11353 of the Welfare and Institutions Code is
amended to require the absent parent to include in the statement
now required from him, a description of his real and personal
property, an estimate of its value and his social security number.
4. Section 11476 of the Welfare and Institutions Code is
amended to require the county departments with respect to an
absent parent whose location is known:
a. to, upon receipt of the application for assistance,
immediately serve the absent parent with notice of his
responsibility rather than to interview him as soon as
possible; and
b. upon failure to respond to the notice within five days
or upon response, but with failure to obtain a support agree-
ment within 30 days, to refer the matter to the District
Attorney; and
C. to refer immediately all cases to the District Attorney
involving absent parents where he so requests.
Related amendments would also require the development of
appropriate forms, prompt cooperation between counties and prompt
action by the District Attorney.
5. Section 270 of the Penal Code is amended to add punish-
ment by imprisonment for five years to the alternatives available
for willful failure of a father to provide support, and language
relating to being out of state or failure to comply with court
orders which become unnecessary is deleted.
6. Section 11489 is added to the Welfare and Institutions Code
to allow enforcement of the support obligation of an absent parent
by attachment of his earnings and to provide that a claim for
exemption is not effective against such attachment. A conforming
amendment to Section 690.6 of the Code of Civil Procedure relatint
to exemption from attachment is also included.
FAMILY RESPONSIBILITY ACT OF 1971
Page 2a
7. The act also contains an incentive to the counties to
pursue enforcement of child support by providing that they will
receive 75% of the state-county share of the support money
collected. Under existing law they receive only 32.5% of such
money.
8. In addition, each county grand jury would annually review
the county's nonsupport program and the functioning of the agencies
related thereto. Child support would be given priority over other
debts owed to creditors in dissolution and related proceedings.
In the conciliation court law procedures, there would be provision
for a financial referee and supportive staff who could work with
each family with children for the purpose of obtaining agreement
subject to judicial review. Provision is made for immediate entry
of a support order by the conciliation court on welfare cases.
The presence of the parents would be required at all support
proceedings. Any document served on a parent in connection with
a child support proceeding would specify the amount of child
support requested. Provision for awarding fees to the prevailing
party as a means for reducing capricious and vindictive petitions
has been incorporated. Provision is made the the court will have
discretion to order the payment of reasonable attorney's fees and
court costs where the District Attorney is required to enforce a
child support order pursuant to Section 4702 (c) of the Civil Code.
FAMILY RESPONSIBILITY ACT OF 1971
Page 3
The Stepfather Support Obligation
Existing law provides for consideration of the stepfather's
income in determining the amount of the grant to a welfare family
and refers to the stepfather's obligation of support. The U.S.
Supreme Court, however, in Lewis V. Martin found that California
regulations were invalid because they were in conflict with
federal law which allows consideration of stepfather support only
if he is legally obligated under state law for such support or
if he actually makes contributions. This bill would amend the
law to conform it to the court's decision and to provide for
enforcement of his obligation. To these ends:
1. Section 11351 of the Welfare and Institutions Code is
amended to provide that eligibility for aid and the amount of
grant shall be based only upon actual contributions from the step-
father but that if a child is not receiving support, the matter
must be referred to the District Attorney.
2. Section 11350.5 is added to the Welfare and Institutions
Code to provide that the term "parent" as used in Section 11350,
relating to the authority of a county to recover assistance pay-
ments from a parent with sufficient assets, includes a stepfather.
3. Section 11351.1 is added to the Welfare and Institutions
Code to provide that a wife's community property interest in her
husband's earnings shall be liable for the support of her children --
his stepchildren.
4. Section 11490 is added to the Welfare and Institutions
Code to provide that the term "parent" as used in Article 7,
relating to the enforcement of support liability by the District
Attorney, includes a stepparent.
The Adult Child Support Obligation
As a result of a California Supreme Court decision (County of
San Mateo V. Boss) adult children cannot be required to contribute
to the support of their parents under Sections 12100 and 12101 of
the Welfare and Institutions Code. A change in the law is required
to remedy this situation. Also, the existing contribution scale
is unrealistic and should be increased. To these ends:
1. Section 206 of the Civil Code is amended to make it clear
that a child has a responsibility to maintain his parents when
in need.
FAMILY RESPONSIBILITY ACT OF 1971
Page 4
2. Section 12101 of the Welfare and Institutions Code is
amended to increase the contribution scale amounts and to provide
for annual adjustment to reflect cost of living changes.
3. Section 12101. 1 of the Welfare and Institutions Code is
added to provide that any contributions will be paid to the
counties as recoveries on aid granted.
Property Liens
There is no provision under existing law for recovery of money
paid in welfare from the estate of the recipient. In fact,
recipients are allowed to build up various reserves in real and
personal property which goes to their heirs or designees. This
bill would provide that aid granted to an OAS recipient would
constitute a lien on his estate. Thus:
1. Section 11007.5 is added to the Welfare and Institutions
Code to impose a lien upon the estate of an OAS recipient to the
amount of the aid or to the extent to which the estate exceeds
$20,000, whichever is less.
2. Section 11007 of the Welfare and Institutions Code is
amended to delete the provision that aid shall not constitute a
lien upon any property of the recipient.
Child Protection Services
It is necessary in some cases to provide protective services to
children as a result of abuse or neglect of the parents. Existing
law provides for holding financially responsible parents liable
for the cost of the care and maintenance of such children. There
is doubt as to whether existing law adequately covers the period
of time after the child is removed from the home and prior to the
entry of a court order. Also liability should extend to all
necessary social services rendered the child. To these ends:
1. Section 903 of the Welfare and Institutions Code is amended
to make it clear that liability commences when the child is removed
from the home or taken into custody.
2. Section 903.15 is added to the Welfare and Institutions
Code to provide that liability exists even if the court refuses to
make the child a ward of the court unless the court finds the
child was taken into custody unlawfully.
FAMILY RESPONSIBILITY ACT OF 1971
Page 5
3. Section 914 of the Welfare and Institutions Code is
amended to provide that the value of social services rendered
to the child shall be included in determining the amount of
liability.
MEMORANDUM Re: Provisions of Fair Share Act of 1971
The following is a discussion of problems within the existing welfare system
which are intended to be corrected by the Fair Share Act of 1971. Reference
will be made to the specific changes within the act as they relate to these
problems.
1) Loopholes related to recipient income.
One of the basic unfair characteristic of the existing welfare system is that
it permits the disregarding of much of the income at the recipients disposal in
determining eligibility and grant amount. As a result, the benefits received
by a recipient frequently bear little relation to the resources at his disposal.
This means that a truly needy recipient, without financial resources in addition
to welfare, might receive little, if any, greater welfare benefit than a similarly
situated recipient who might have hundreds of dollars of monthly income, and
therefore a much greater amount of spendable income. The following
are proposed:
a) Amend Section 10008 to modify the provision stating that earned
income of a recipient shall not be considered to the maximum extent
permitted by federal law.
b) Repeal Sections 11009 and 11009.1 providing for the disregarding of
certain forms of income, and amend Section 12157 which permitted the
disregarding of certain casual income.
c) The present system permits the disregarding of certain lump sum income.
Amendments to Sections 11262 and 12657 are intended to expand the
categories of lump sum income required to be utilized by the recipient
to meet his needs. Section 12052 is amended to delete the provision
-2-
for considering certain lump sum income as personal property.
d) Under the present system, with the numerous deductions and
exemptions from gross income available to a recipient, it is
possible to be eligible for aid even with an income of $1,000 a
month. The addition of Section 11008.2 would restrict the
eligibility of any recipient if his total gross income exceeded
150% of the standard of need for such recipient.
e) Under the present system, a person who, because of the nature of
the type of his employment, is subject to seasonal unemployment,
might be eligible for assistance regardless of the amount of money
earned during that portion of the year he was employed. Examples
are teachers, members of the construction and lumbering industries,
and cannery workers. To correct this abuse, Section 11266 is added
to require consideration of an applicant's annual gross income.
f) Under the present system, a recipient may deduct as "work-related
expenses" many expenses which relate to everyday living. To restrict
such deductions to a reasonable level, Section 11008.1 is added to
permit the Department to specify standard deductions for work-related
expenses.
2) The present system permits a recipient to be eligibleeven if owning certain
income-producing property. Amendements to Sections 11151 and 11152 would
require the consideration of income-producing property in determining eligibility.
3) The present system permits a considerable value of property to be held ar
a reserve, without affecting eligibility. In addition, it permits unlimited
ownership of certain types of exempt property, such as furnishings, jewelry,
-3-
boats, and certain other personalty. Amendments to Sections 11154 and 11257
would require use of a portion of the personal or real property reserve to
meet nonrecurring special needs. Amendments to Sections 11155 and 11258 would
limit the value of property which could be excluded in determining eligibility.
4) Sections 11403, 11451.5 and 15200 are amended to change the state-county
AFDC participation ratio from 67.5-32.5 to 50-50.
5) In 1965 the definition of permanent and total disability was expanded to
include impairments substantially precluding the individual from engaging in
useful occupations within his competence. As a result, a person whose only
disability is social instability might receive benefits. Furthermore, a
heavy reliance has been placed on the individual's own evaluation rather than
on medical review. An amendment to Section 13501 would return to the pre-1965
definition of totally and permanently disabled.
6) Section 10500 provides that persons administering aid shall, among other
things, secure for every recipient, "the maximum amount of aid to which he is
entitled". When liberally construed, this has been interpreted by some persons
as requiring presumptions in favor of increasing a recipient's aid. The amend-
ment to Section 10500 would delete the word "maximum".
7) Under the present system, a family unit may be receiving aid in more than
one category. For example, the father may be disabled and receiving an ATD
grant, and the children qualify for an AFDC grant. When such grants are
administered separately, certain of the items which comprise the minimum basic
standard of adequate care or need may be duplicated. Section 11452.5 is added
to prevent such duplication in determining aid grants.
-4-
8) Under the present system, each county performs its own independent operation
to determine who is or is not eligible to receive public assistance. This has
resulted in a situation where persons who might be declared eligible in one
county would be ineligible in another, further resulting in recipients moving
from one county to another to take advantage of a more liberal interpretation.
Amendments to Sections 10800, 10804 and 11050 will make the State responsible
for the determination of eligibility, providing that the Department may contract
with the county for the actual performance of this function. The amendment to
Section 11056 will require actual verification of need and determination of
eligibility.
9) The present system provides for a limit on benefits under AFDC known as the
maximum participating base (MPB). This implemented by Section 11450. This act
will repeal the existing Section 11450 and add a new section of the same number
to eliminate the MPB concept, and equitably apportion the total dollars available
for the AFDC program by applying a uniform adjustment factor to the appropriate
minimum basic standards of adequate care in determining grants. The adjustment
factor would be a percentage by which appropriations meet estimated expenditures.
10) The present system calculates the grant on the basis of a minimum standard
of need, and in adding certain other needs called "special needs". Many of
these "special needs" are in fact common to the majority of needy persons. An
amendment to Section 11452 would provide, for the AFDC program, that such common
recurring special needs be averaged and be provided for as a flat grant. The
addition of Sections 11452.1 and 11452.2 will provide that the counties make
grants for such special needs that are not common to the majority of needy
persons, or are of a nonrecurring and unusual nature.
-5-
11) Sections 15201, 15202, 15203 and 15204 have been amended to provide that
the State assume full financial responsibility for the adult aid categories,
that is, the ATD, OAS, and AB programs.
12) Under the present system, an AFDC recipient, ordinarily only eligible to
age 18, may remain eligible for aid until age 21, if attending school. The
amendment to Section 11253 would provide for eligibility of an AFDC recipient
student until leaving high school or attaining the age of 18, whichever is
later.
13) The amendment to Section 13702 provides for an increased grant to ATD
recipients in the event funds appropriated exceed expenditures for the program.
ACCOUNTABILITY ACT OF 1971
BILL SUMMARY
Residency and Aliens
Court decisiors have invalidated state durational residence
requirements. An applicant for welfare only needs to indicate
an intent to remain in California to qualify for welfare. As
a result, many aliens not legally within the United States have
applied for and become eligible for welfare assistance.
The bill will ensure that only those aliens who have legally
established a permanent residence in California could qualify
for welfare assistance, (Sec. 9)
Period of Absence from State
Under current interpretations of residency laws it is possible
for public assistance recipients to leave California for extended
periods of time and still remain eligible for welfare aid. The
bill provides that the continued absence of a recipient from
California for 60 days or more (rather than one year) shall be
prima facie evidence of his intent to have changed his residence
to another state (Sec. 8). The bill requires counties to re-
determine residence of recipients who have been continuously
absent from California for 30 days (Sec. 8).
It is also possible for a public assistance warrant mailed to a
California address to be deposited in a California bank by some-
one other than the recipient, who may be in another state. The
bill requires public assistance warrants to be personally
indorsed by the recipient payee (Sec. 11).
Uniform Welfare Fraud Penalties
The criminal penalties for welfare fraud under present law vary
depending upon the program involved. In some cases the fraudulent
obtaining of welfare funds is a misdemeanor although theft of the
same funds from a private agency would be a felony. The bill pro-
vides for uniform penalties for welfare fraud similar to those
provided in the Penal Code for perjury, grand theft, and petty
theft (Secs. 7, 10, 12-18).
BILL SUMMARY
Page 2
Under current law, one method of recovering an overpayment of
aid is to adjust the recipient's grant, but only two monthly
grants may be adjusted in this manner. The bill (Sec. 6) would
extend this from two months to six months and to one year in the
case of willful fraud. The bill includes provision for the
recipient's right to a hearing prior to such a reduction in aid
and sets forth criteria for any such reduction.
Confidentiality Laws
Existing law does not permit welfare officials to examine tax
records or the records of HRD of applicants for public assistance
to assist in determining eligibility for aid. The bill would
permit access to such records for the purposes indicated (Secs. 1-4).
The existing confidentiality law is so restrictive that counties
can't even obtain information from other counties about recipients.
This has resulted in some recipients receiving aid in more than
one county at the same time. The bill will permit welfare records
to be released to other county welfare departments, the Department
of Social Welfare, and other public agencies for purposes directly
connected with the administration of public social services (Sec. 5).
MEDI-CAL REFORM LEGISLATION
This legislation proposes to alter the way health care is delivered,
the way it is used, and the way it is financed under Medi-Cal.
With these changes, we propose to broaden eligibility, place some
responsibility for the use of services upon those eligibles, provide
a uniform scope of benefits, increase federal matching funds, reduce
county costs and attract prepaid health programs.
ELIGIBILITY
1. Medi-Cal Reform proposes to continue to cover all Welfare cash
grant recipients as it has done before as well as another segment
called the Medically Needy Only. This group is eligible for Welfare
except that they have too much income. The Welfare categories are
Old Age Security, Aid to the Blind, Aid to the Disabled and Aid to
Families with Dependent Children.
2. In addition, the same uniform scope of benefits proposed for
Welfare recipients would be extended to about 800,000 poor who are
now eligible for varying levels of care from county or state and
county-sponsored programs. This group includes about 270,000
persons under the age of 21.
BENEFITS
Historically, Medi-Cal has offered every officially-recognized
health service available without restriction. The cost has doubled
in less than five years - from $600 million to $1.2 billion.
During this time, every provider of service except hospitals
(exempt by Federal law) has been placed under some kind of fee
limitation. No restriction has been placed on the user.
Under Medi-Cal reform, these services would continue to be available
under separate but related plans. A basic schedule of benefits
would cover the vast majority of patients. For example, 65 days
of hospitalization is proposed which statistics show would cover
95 per cent of the need. For those with major illnesses, a
supplemental scope of benefits would be available. Under this
supplementary schedule, for example, there would be an additional
300 days of hospital care.
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USER RESPONSIBILITY
Medi-Cal Reform proposes that the user under Medi-Cal make some
decisions about his health needs just as taxpayers with privately-
paid plans do. This would be accomplished in two ways:
1. The Medi-Cal beneficiary would be allowed 24 visits yearly for
physician office visits, therapy and the like, with a maximum of
four physician visits per month and two for all other services.
In addition, he would be allowed two drug prescriptions per month.
These limits, of course, do not apply while the person is in the
hospital where he may get laboratory and x-ray treatment as pre-
scribed as well as medicines.
2. Co-payment would be required where it is not prevented by
federal law or regulations on four services. This will give the
user some responsibility for health services just as many private
health plans provide.
It would require $1 for each visit to a provider, for each pair
of eyeglasses, for each drug prescription and $3 for each day of
hospital or nursing home care. Of course, if it is determined that
the individual has no income, these token co-payments would be
eliminated.
REFORM FINANCING
The basic scope of benefits for Medi-Cal recipients under Welfare
eligibility would be financed:
1. 50 per cent with federal funds
2. All other costs would be financed by 70 per cent state funds
and 30 per cent county funds.
Under the present schedule, Medi-Cal is financed 50% by federal
funds, 40% by state funds and 10% by county funds. This does not
necessarily include the cost of health care for all of those 800, 000
proposed to be brought under the new program. Some counties now
pay for this group entirely: others have chosen to share the cost
with the state.
Under the reform the 270,000 children's health care costs could be
matched by federal funds.
For the major illness portion of health care costs, the state and
county would share the burden at a constant ratio of 70-30%
respectively if federal funds were not available. This method
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would cover the poor adults who are not eligible for welfare.
ADMINISTRATION
Medi-Cal Reform proposes that the state establish standards, and
administer a basic schedule of benefits on a fee for service
basis.
The county would continue to determine eligibility and administer
the supplemental schedule of benefits which covers major illnesses.
The county would be responsible for seeing that this supplemental
health care is provided on a prepaid basis -- that is, a fixed
amount for each eligible in its jurisdiction.
The county could act as its own prepaid health care organization
or it could contract out any or all of the services, providing a
choice of three variations to the user.
Welfam
FOR RELEASE ON DELIVERY
APRIL 19, 1971
AT 11:30 A. M., APRIL 19, 1971
Office of the White House Press Secretary
(Williamsburg, Virginia)
THE WHITE HOUSE
TEXT OF AN ADDRESS BY THE PRESIDENT
REPUBLICAN GOVERNORS' CONFERENCE
WILLIAMSBURG, VIRGINIA
The last time we were together we talked about revenue sharing. Our seven
legislative proposals for revenue sharing have now gone to the Congress, and
I would say I am more optimistic about success now than I was then.
Revenue sharing, when it is enacted, will go far toward alleviating the
financial burdens of State and local government. But it is hardly enough to
make such great efforts to solve these problems on one hand, while on the
other we pursue policies which compound the problem. I am speaking of the
present disastrous system of public welfare. Rising welfare costs are not
only placing heavier and heavier burdens on the Federal budget, they are
crushing our States and cities. And they will continue to do so until some-
thing is done about it.
What we need is not a tinkering with the present welfare system which would
merely relocate the financial disaster areas from the States and cities to
Washington. We need an entirely new approach that will reach to the reasons
for soaring welfare costs, and not deal simply with the results as we are
doing now.
As you know, we have an entirely new approach in this administration's
proposal for welfare reform which is before the Congress. I consider it
our most urgent legislative proposal, because the welfare problem, allowed
to run unchecked, would soon erode the benefits to be gained from reform
in other areas. The House of Representatives has recognized its importance
by designating it House Resolution number one. And it is going to be White
House Priority number one until it is enacted.
We in this administration have urged welfare reform for three years. We
discussed it in the 1968 campaign, and the country responded -- and I mean
the whole country -- not just the taxpayer who sees his money going down
the drain, but also many of the welfare recipients who see their lives going
down the drain.
While we're trying to bring some order into this chaos at the Federal level,
some of you have moved on your own at the State level with the same purpose.
I want especially to commend Governor Reagan and Governor Rockefeller for
their efforts in this area -- for biting a bullet the entire country is going to
have to bite if we are going to bring the financial -- and worse, the human --
costs of the present welfare system under control.
The abuses in the system are not only unconscionable, but contagious as well.
It is a system which not only destroys the incentive of those who are on
welfare to get off it, but attacks the motivation of those who are not on
welfare -- the working poor -- to stay off.
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It is incredible that we have allowed a system of laws under which one person
can be penalized for doing an honest day's work and another person can be
rewarded for doing nothing. It can happen and does happen under the present
system. The person on welfare can often have a higher income than his
neighbor who holds a low-paying job. Tragically, these situations often
exist in the same neighborhood, side by side in the same apartment houses --
and the effect is corrosive. It creates bitterness on the part of the worker.
In the end, I suspect, it causes resignation and we end up with another
person on welfare.
At a time when we see all about us the problems of the disintegration of the
family, we continue with a system that encourages family disintegration.
A man out of work, or one struggling to support his family on a low income,
sees that his family can have a higher income on welfare and yet he is torn
by the knowledge that they cannot qualify as long as he is there. So he leaves.
His children grow up either entirely without a father, or with a father who
sneaks in and out of the house one step ahead of the welfare worker. What
conclusion should his children draw about the morality and the compassion
and the justness of a system which forces their father to desert them in order
to feed them?
The fact is that the welfare establishment and system in the United States
is a monumental failure. It makes the taxpayer furious. It makes the
welfare recipient bitter, and it inflicts the distillation of all this anger and
bitterness on the children who will inherit this land. It is a disgrace to the
American spirit.
So I do not advocate broadening welfare. I do not advocate simply refining
the system. I advocate a fundamental change of direction.
I do not advocate putting more people on welfare rolls as some have
contended I advocate getting more people off welfare rolls. And the way
to get them off is to provide incentives and disincentives which will make
them get off while providing an opportunity for people to recapture the
sense of dignity that comes with knowing that what you have, you have earned.
I have been guided from the outset by that principle and I reaffirm my
commitment to that principle now.
I do not believe in a guaranteed annual income. I do believe in a system
which insures that a man is rewarded for working and not penalized, and
I think it is a very sensible investment to insure that that reward is there
in order to keep people safely out of the reach of welfare.
I advocate a system which will encourage people to take work. And that
means whatever work is available. It does not mean the attitude expressed
not long ago at a hearing on welfare by a lady who got up and screamed:
"Don't talk to us about any of those menial jobs. 11 I am not sure what she
considers a menial job but I have probably done quite a few in my lifetime.
And I never thought they were demeaning.
If a job puts bread on the table and gives you the satisfaction of providing
for your children and lets you look everyone else in the eye, I do not think
that is menial. But it is just this attitude that makes others -- particularly
low-income workers feel somehow that certain kinds of work are demean-
ing. Scrubbing floors or emptying bed pans is not enjoyable work, but a lot
of people do it and there is as much dignity in that as there is in any
other work to be done in this country - including my own. In the course
of reforming the welfare system, we have to re-establish the recognition
of that fact.
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I do not think we can tolerate a system under which working people can be
made to feel like fools by those who will not work. To the contrary, I think
those who refuse to register for work and accept work or training should
be ineligible for welfare payments, and we have written such a stipulation
into our welfare reform proposal.
In addition, we have urged including in this proposal the language of
Section 208 of the Social Security Act which clearly defines fraud, and
establishes fines and other appropriate criminal punishment for abuses of
the new welfare system.
So to those who see our present welfare reform proposal as a simple refine-
ment of the old program, let me say as strongly as I can that this is not
the case. We have no intention of measuring the success of this Nation's
welfare programs by the money spent and the number of people supported.
We are going to measure it by the money saved and the number of people
who are given back the incentive and the opportunity to support themselves.
We are going to measure it by the dignity it promotes, and not by the dole
it provides.
One of the great strengths of America has always been that we believed
in the value of work -- and we need a system of caring for the poor that
rewards and encourages work.
Another great strength of America is that we believe in a helping hand for
those in genuine need. The Bible tells us that charity is the greatest virtue --
and, by charity it means love. It blesses both the giver and the receiver.
But it is not charity to maintain a system which permits or encourages
human beings to let die within themselves the energies, the dignity, and
the drive that give meaning and satisfaction to life itself.
It is not charity to bind human beings into a cycle of despair and dependence
when with a little courage and a little imagination and a little common sense
we can end this cycle.
A long time ago this Nation proudly acquired a reputation as a refuge for
the tired and the poor. Those "huddled masses" who sailed into New York
Harbor so they might hold their heads up again have their counterparts
today in slums all over this Nation -- and our task, together, is to provide
a system that will help them to raise their heads in pride and dignity a
system fair to the poor, fair to the taxpayer, and true to the spirit of
independence that has built America and made it great.
#
#
#
WELFARE
Press Cont.
6-9-71
Do you consider your program dead?
A. No, as long as there is a welfare program working. They
killed mine and submitted this other. My concern was I don't
want to answer questions as most of the writing press has departed.
I want it perfectly clear that his attempt to portray this
as a compromise is not a compromise at all. It is an entirely
different concept and nothing but a bundle of band aids and will
not reform welfare.