Say hello to the new, improved CalWORKs on July 1, 2011.

A package of reforms will move the state’s welfare-to-work program closer to Governor Schwarzenegger’s model of shared responsibility and away from federal penalties for failed client participation rates.

Included in the long-term reforms are increased sanctions for clients who don’t comply with the work participation and time-limit requirements and biannual, face-to-face client reviews. A yearly cost of living adjustment (COLA) has been eliminated as well.

The California Department of Social Services estimates the combined savings from the new policies at $600 million annually starting in Fiscal Year 2011-2012.

The most-publicized change to CalWORKs policy, the short-term demise of the work participation requirement that will save $375 million in general fund costs, will be reinstated in 2011 to coincide with the tougher sanction reforms. 

Sanctions and Incentives To Work

“What we’re trying to do is incentivize work for every CalWORKs participant,” said Lizelda Lopez, spokesperson for the CDSS. “Sanctions are put in place to incentivize people to come into compliance.”

Current CalWORKs policy removes the adult’s grant for failure to comply with the work participation rule. In 2011, the child-only portion of the grant will also be reduced, to a maximum of 50 percent, as a further incentive for families to continue in the program. Adult clients can also lose 50 percent of their grant for failure to appear at a self-sufficiency review.

CalWORKs clients can fulfill the work participation requirement through a combination of subsidized employment, vocational training, education and community service.

Lopez said the CDSS relied, in part, on conclusions from three welfare-to-work studies (RAND Corporation, University of Washington and Princeton-based Mathematica Policy Research) to draft its new sanction policy.

All three studies found evidence that sanctions promote greater compliance with welfare-to-work program rules, said Lopez.

The 2008 RAND study, Sanctions in the CalWORKs Program, commissioned by the DCSS, concluded that sanctions could be more effective if they were imposed earlier and contained a higher financial penalty:

The home visit studies and our other field work suggest that the majority of clients in sanction are willfully noncompliant. It is possible that if the financial penalty for noncompliance were larger, some of these clients would choose to comply.

In the 2004 Mathematica Policy Research study, The National Evaluation of the Welfare-to-Work Grants Program, 80 percent of client families in Illinois and 60 percent of client families in New Jersey came into compliance before a full family sanction was ever imposed.

John Wagner, director of the CDSS, said that California ranks near the bottom, 45th, in the federal work participation rate.

“We also have a higher than national average caseload,” said Wagner at a July 8 press conference in Sacramento. “If you look at our population and as the Governor noted, 30 percent of all families in the country on cash assistance are in California’s program. If you compare us to some of the other larger states, three percent of families on the national program are in Texas and in New York it’s seven percent. So we’re an outlier there as well.”

Wagner said that sanction policies do drive behavior, and California is one of only six states that lack some version of full-family sanctions.

“Our goal is to get people out of poverty and into self-sufficiency,” Lopez said. “Our research shows that for people that work, their income is always going to be higher even if they’re receiving public assistance.”

Different States, Different Sanctions

California has stopped short of withdrawing all funds from families in CalWORKs through full family sanctions, but many states that employ the full family sanction have been successful in decreasing welfare-to-work caseloads and increasing work participation.

“Even though California has adopted a stricter policy it hasn’t cut the family off. California isn’t on the extreme end of strict,” said Caroline Danielson of the Public Policy Institute of California.

Danielson, a research fellow at PPIC and co-author of the most recent welfare-to-work study, Sanctions and Time Limits In California’s Welfare Program (April 2009), said most states eliminate the grant within a few months in comparison to California’s more gradual reduction in grant funding.

Critics of more strict sanction policies cite concerns about increased child poverty, but Danielson said sanctions did not increase child poverty rates. In fact, the study found that increased sanctions would reduce California’s welfare caseload, substantially increase its work participation rate and slightly reduce poverty among children living with single mothers.

“As of 2005, two-thirds of states had a stricter policy. California’s 2011 policy will be more in line with policies that other states have adopted,” Danielson said.

Federal Penalties and Other Challenges

Governor Schwarzenegger voiced his concerns about CalWORKs compliance problems in his July 10 Weekly Radio Address.

“The only problem is that right now, nearly 80 percent of California’s recipients are not meeting simple federal work requirements. But the families still receive the checks and the benefits.”

California has been unable to comply with federal welfare-to-work guidelines for some time and risks millions of dollars in penalties if it continues to fall below the required minimum.

“The federal penalties occur when you do not meet your 50 percent required work participation rates,” said Wagner. “And what happens is, the federal government will sanction a state by taking 5 percent of the TANF, which stands for Temporary Assistance to Needy Families Block Grant and the state is required to backfill that 5 percent. So for California that could add up to as much as $330 million the first year and as a state continues to not meet the federal work participation rate, those penalties increase and accrue each year.”

California’s work participation rate in 2007 was at 22.3 percent, according to Lopez. The state avoided a penalty only because there was an increase in CalWORKs clients who engaged in work between Fiscal Year 2006 – 2007. It’s uncertain if the federal government will continue to make exceptions if the state’s overall work participation rate remains well below the required minimum.

Another challenge to CalWORKs is a growing caseload. It expects an increase of 15 percent in Fiscal Year 2009-2010 to 1.4 million people (573,838 families).

The TANF program is up for reauthorization in 2011, and discussions are already beginning on how and in what ways the program might be restructured. It’s a debate that welfare-to-work policy experts and social services professionals will monitor during the next few years.

“With the new administration in D.C. there’s some thinking that what states will have to measure and report will change,” said Danielson.

Contact Margaret T. Simpson at