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Press Release · January 25, 2002

State Policies Slow Californians’ Exit From Welfare Rolls

After Welfare Reform, California Still has Bigger Caseload than Most of Nation

SAN FRANCISCO, California, January 25, 2002 – Since federal welfare reform was passed in 1996, the number of people receiving public assistance in California has declined more slowly than it has in every other large, high-immigrant state except New York. According to a study just released by the Public Policy Institute of California (PPIC), the reasons for this lag lie in California’s relatively generous policies about who can receive assistance, how much assistance is provided, and how welfare recipients are sanctioned for failing to comply with program requirements.

In Does California’s Welfare Policy Explain the Slower Decline of Its Caseload?, Thomas MaCurdy, David Mancuso, and Margaret O’Brien-Strain, examine the four other states with populations over 10 million and with at least 900,000 foreign-born residents. They find that between 1996 and 2000, the caseload dropped by 70 percent in Florida, 62 percent in Illinois, 50 percent in Texas, and 40 percent in New York. California came in near the bottom with a 43 percent drop.

Author O’Brien-Strain says that California’s lag in the post-reform era is clearly due to policy choices: “States now have flexibility in how they design their programs, and they differ a great deal in the benefits they provide and how severely they sanction people who don’t follow program rules.”

A key example: California policy allows children to continue receiving assistance after their parents have been sanctioned or hit time limits. In contrast, Florida and Illinois have adopted a stricter policy of cutting off an entire family from welfare the first time a recipient fails to comply with program requirements. “California policymakers made an intentional choice to protect children, and this is one reason for the lower decline in our caseload,” says O’Brien-Strain. In fact, the authors calculate that if California had imposed full family sanctions, the welfare recipient rate here might have declined by 79 percent rather than 43 percent.

California is also one of the most generous states in both the maximum amount of money it provides welfare recipients and the income level at which it cuts people off from receiving benefits. For example, according to the study, a California family can earn up to $1,589 per month without losing benefits, while a Texas family loses benefits if their earnings exceed $308 per month.

“States with low benefits and strict sanctions have certainly reduced their caseloads faster, but California’s decision to maintain a safety net for children and to provide greater rewards for welfare recipients who work may be more successful in the long run,” says O’Brien-Strain. “We do not yet know the price families pay under the stricter policies in terms of well-being; that should be considered before we decide which programs are successful.”

Within the context of the entire country, California’s 43 percent decline falls under the national median of 50 percent. California ranks 36th out of the 50 states and Washington, D.C. in the percentage decline of its caseload between 1996 and 2000, and it has the third highest total welfare recipiency rate in the nation, behind Washington, D.C. and Rhode Island.

The Temporary Assistance for Needy Families (TANF) program, created under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, is currently authorized only through September 30, 2002. The reauthorization process will review funding levels for block grants to states and reopen many welfare policy issues, including the goals of the TANF program. The authors note that the reauthorization process comes at a vulnerable time for California’s TANF program, known as CalWORKs. Just as the first wave of adult CalWORKs recipients approaches the mandatory five-year time limit on cash assistance, the recent economic downturn is likely to increase the state’s welfare caseload.

The Public Policy Institute of California is a private, nonprofit organization dedicated to objective, nonpartisan research on economic, social, and political issues that affect the lives of Californians. The Institute was established in 1994 with an endowment from William R. Hewlett. David W. Lyon is President and CEO of PPIC.