In this policy brief, we summarize the key features of the Personal Responsibility Act and its potential fiscal effects on California. We conclude that:
Figure 1 summarizes the effect of the PRA on federal funds allocated to California. It shows that the net fiscal effect is estimated to be a loss of $580 million in federal funds in 1995-96 (state fiscal year) and $13 billion over the first five years. It should be noted that in one program--child protection--the state is projected to receive more federal funds under the PRA than under current law.
Figure 2 summarizes the major fiscal effects of the act on state funds. As shown, the net effect varies considerably among the different titles of the act and depends on several variables, including the following:
Thus, the fiscal effect on state funds could range from a cost of about $13 billion over five years, if the state chooses to backfill for the loss of federal funds in order to maintain current service levels, to a savings of roughly $4 billion (net of potential county costs) if the state does not backfill and conforms its policy to the restrictions on the eligibility of immigrants for federally funded programs.
We note that while not included in our estimate of fiscal effects, the act would effectively eliminate federal requirements that states provide matching funds for certain programs--notably AFDC--and would thereby permit the state to operate such programs only with federal block grant funds. Viewed in this perspective, the act would have a potential additional state savings of about $4 billion annually, provided the state chose to reduce service levels accordingly. Much of these savings, however, could be offset by costs at both the state and local levels for general assistance and services such as emergency health care.
Finally, we also note that this analysis includes only the major direct fiscal effects of the act. Thus, some fiscal effects--such as potential state administrative savings (which would not be major in the context of other fiscal effects identified) and the indirect revenue losses that the state would experience as a result of the economic impact of the loss of federal funds--are not included.
Summary: State fiscal effect ranges from (1) costs of $13 billion if state backfills for loss of federal funds to
(2) savings of $4 billion if state does not backfill lost federal funds and conforms its policy to federal restrictions
on aid to immigrants.
Program and Five-Year Fiscal Effects
----------------------------------
Title I:
Temporary Family Assistance
Potential costs of up to $3.9 billion if the state backfills for reduced
federal funds.
Unknown, potentially significant savings due to paternity establishment
provisions and the effect of the work requirement.
Title II:
Child Protection
Potential savings of $250 million to the extent increased federal
funds offset state spending.
Title III:
Child Care and Nutrition Assistance
Child Care: Potential cost of $200 million if the state backfills for
reduced federal funds.
School Nutrition: Potential $578 million cost if the state backfills
for reduced federal funds.
WIC Program: Potential $1.2 billion cost if the state backfills for
reduced federal funds.
Title IV:
Restricting Welfare for Aliens
Potential costs of up to $5.6 billion if the state backfills for loss of
federal funds in order to maintain current eligibility and service
levels.
Potential savings of up to $7.2 billion in SSP, Food Stamps administration,
Medi-Cal, and AFDC programs if state conforms to federal eligibility
restrictions regarding aliens; partially offset by unknown costs,
potentially several billion dollars, due to health and cash assistance
cost shifts to counties.
Savings and costs would be less to the extent aliens become
citizens.
Title V:
Food Stamps and Commodities
Unknown state administrative costs, probably in the tens of millions
of dollars annually.
Potential cost of $1.6 billion if state backfills for federal funds loss.
Title VI:
Supplemental Security Income
Savings of about $250 million due to substance abuse provisions.
Potential cost of $108 million if state backfills for federal funds loss.
Title VII: Child Support
Costs of about $5 million.
Title VIII: Miscellaneous Provisions
No fiscal effect.
Title I of the Personal Responsibility Act (PRA) eliminates all existing federal requirements in the Aid to Families with Dependent Children (AFDC) Program, the Job Opportunities and Basic Skills Program (GAIN Program), and the Emergency Assistance Program, and consolidates federal funding into a Temporary Family Assistance Block Grant.
Figure 3 summarizes the major program changes and Figure 4 summarizesthe work participation requirements under the block grant. Figure 5 describes the principal fiscal provisions of Title I. Finally, Figure 6 summarizes Title I's fiscal effects on California.
Figure 5
Personal Responsibility Act--House Version
Title I: Temporary Family Assistance Block Grant
Major Fiscal Provisions
Provisions and Amounts
----------------------
Federal Funds
$15.39 billion available nationwide in federal fiscal year (FFY) 1996
and $15.49 billion in FFY 1997 through 2000 for block grants to the
states. The block grants would replace federal financial participation
for AFDC benefit payments, AFDC administrative costs, AFDC emergency
assistance benefits, and the Job Opportunities and Basic Skills program (GAIN).
State's Share of Federal Funds
Beginning in FFY 1996, based on state's share of FFY 1994 outlays.
Potential Adjustments to State Share of Federal Funds
Beginning in FFY 1997, state eligible for a share of an additional
$100 million annually nationwide for states experiencing population increases.
Beginning in FFY 1998, additional funds available to states as an incentive/reward
for reducing the rate of out-of-wedlock births and abortions (illegitimacy ratio).
State's block grant could increase by 5 percent (about $170 million annually in
California) for a 1 percent reduction in the illegitimacy ratio and 10 percent for
a 2 percent reduction (or more) in the illegitimacy ratio.
Federal Loans
Establishes a $1 billion Federal Rainy Day Fund for borrowing by
states under conditions of high unemployment. States must repay the
loans with interest within three years.
Federal Fund Transfers
Permits states to transfer up to 30 percent of the block grant to other
specified block grants.
State Penalties
Up to 25 percent of the quarterly block grant payment for misuse of funds.
Up to 5 percent of block grant for failure to meet work participation rates.
3 percent of block grant for failure to submit an annual report.
1 percent of block grant if state does not participate in certain automated
fraud detection programs.
Figure 6
Personal Responsibility Act--House Version
Title I: Temporary Family Assistance Block Grant
Major Fiscal Effects on California
Effect on Federal Funds to California
----------------------------------
Based on Current Law
Estimated cumulative loss of $3.9 billion (19 percent) in federal funds
over five years (1995-96 through 1999-2000 see Figure 7).
Based on the Governor's Budget Proposal
Estimated cumulative increase of $260 million (1.5 percent) in federal
funds over five years. (See Figure 8.)
Illegitimacy Ratio
Potentially up to $1 billion in additional federal funds (first five years) if
California reduces illegitimacy ratio.
Sanctions
Potential loss of federal funds due to sanctions (including up to
$680 million in the first five years for failure to meet work participation
requirements).
Effect on State Funds
--------------------
Replacing Lost Federal Funds
Potential state costs of up to $3.9 billion over five years if state backfills
for reduced federal funds. (Potential state savings of $260 million over
five years in relation to the Governor's Budget proposal.)
Paternity Establishment
Unknown potentially significant savings, beginning in 1997-98, from the
required grant reductions to families with children unable to establish
paternity.
Work Requirements
Potential unknown grant savings, increased General Fund tax revenues,
and administrative costs due to the effect of the work requirements.
Title II of the act would replace existing categorical programs by establishing a block grant for various child protection programs, including child welfare services, foster care, adoptions assistance, and child abuse prevention. Figure 9 summarizes the major provisions. Figure 10 shows the major fiscal effects.
Figure 9
Personal Responsibility Act--House Version
Title II: Child Protection Block Grant Program
Major Provisions
Program Provisions
-----------------
Federal Requirements
Repeals current federal requirements for various child protection programs,
including eligibility and use of funds, and provides new requirements.
State Plan
State plan must outline the child protection program and certify that specific
components are in place. For example, the state must describe procedures for
reviewing and maintaining case plans for children removed from their homes.
Standards
Establishes minimum standards, including timelines for case reviews.
Citizen Review Panels
States must establish at least three citizen review panels for program oversight.
Reporting Requirements
Includes various data collection and reporting requirements.
Fiscal Provisions
---------------
Block Grant
Consolidates funding for various programs into a block grant, which would
eliminate current entitlement funding for the foster care and adoptions assistance
programs. The block grant for states consists of two components: (1) a
capped entitlement and (2) an "additional grant" subject to annual appropriation.
Block Grant Amount
Provides that the entitlement portion of the block grant shall be $3.93 billion
nationwide in FFY 1996 and includes annual increases through FFY 2000. Also
provides that the "additional grant" shall not exceed $486 million each year
(nationwide) in FFY 1996 through 2000.
State's Share
Defines the state share of the block grant as the greater of (1) the proportion of
federal funds received for the block grant programs in FFY 1994 or (2) one-third
of the proportion of funds received for the programs for fiscal years 1992-1994.
Transfer of Funds
States may transfer up to 30 percent of the funds to other specified block grant
programs beginning in FFY 1998.
Maintenance of Effort
States must maintain nonfederal spending at no less than the amount spent in
FFY 1995, during the first two years of the block grant.
Penalties
Penalties for misuse of funds, failure to submit a specific report, failure to meet
the maintenance of effort, or violation of interethnic adoption provisions.
Figure 10
Personal Responsibility Act--House Version
Title II: Child Protection Block Grant Program
Major Fiscal Effects on California
Effect on Federal Funds to California
----------------------------------
Increase in Federal Funds
California will receive approximately $329 million more in federal funds
over the next five years than under current law (see Figure 11).
The increase occurs primarily because (1) the state's initial allocation is
based on the state's share of FFY 1994 expenditures and caseload
growth since that time has been low relative to other states and (2)
projected caseload growth is relatively low under current law.
Effect on State Funds
--------------------
Offset to State Spending
Potential state savings of up to $250 million over five years, to the
extent that the increase in federal funds offsets state spending in the
program, after accounting for the maintenance of effort provision for the
first two years.
Title III consolidates funding of child care and nutrition programs into three block grants a Child Care and Development Block Grant, a School-Based Nutrition Block Grant and a Family Nutrition Block Grant. First, we discuss the child care block grant.
Child Care.The act would redirect funding from seven federal child care programs into the existing Child Care and Development Block Grant (CCDBG). California receives funding through five of these programs, as follows: the existing CCDBG, the AFDC/JOBS child care program, the AFDC Transitional Child Care program, the AFDC At-Risk Child Care program, and the Dependent Care Grant program. The act also would modify the program provisions of the CCDBG. Figures 12 and 13 summarize the major provisions and their fiscal effects. Figure 14 describes the existing federal child care programs operating in California.
Figure 12
Personal Responsibility Act--House Version
Title III: Federal Child Care Programs
Major Provisions
Program Provisions
-----------------
Existing Set-Asides
Eliminates existing set-asides for program improvement (5 percent of
the state grant) and for specific center-based care (20 percent). The bill
also would eliminate detailed health and safety requirements that apply
to the existing block grant programs.
Administrative Cap
Sets an administrative cap of 5 percent. Under current law, most services are
afforded 15 percent for state and local administration.
Other Changes
Increases state reporting requirements and reduces the time the state
may take to obligate and expend funds. Illegal aliens would not be
eligible for subsidized child care services under this bill.
Fiscal Provisions
---------------
Funding Cap
Eliminates the existing entitlement to child care for families receiving
AFDC who are working or are in an approved training or education
program. The bill also would eliminate the required state match for
these services.
Spending Authorization
Authorizes funding for the new block grant at $2.1 billion annually
through 2000, which is about 5 percent below what is currently spent by
the federal government through the existing programs. The program
authorization would not increase over the five-year period.
Transfer of Funds
Permits states to use up to 20 percent of the new block grant for the
support of five block grants created in the act, including the income
support, child protection, and nutrition block grants.
Figure 13
Personal Responsibility Act--House Version
Title III: Federal Child Care Block Grant
Major Fiscal Effects on California
Effect on Federal Funds to California
----------------------------------
Loss of Federal Funds
Compared to current law, federal funding to California for child care services
under the bill would be reduced by about 9 percent, or $23 million, in
1995-96 and 16 percent or $200 million over the five-year period 1996-2000.
Effect on State Funds
--------------------
Replacing Lost Federal Funds
If the state replaces the lost federal funds with state funds, the costs would
be up to $200 million over the five-year period.
Figure 14
Personal Responsibility Act--House Version
Existing Federal Child Care Programs
Operating in California
Child Care and Development Block Grant
Subsidizes child care programs for low-income families through SDE-operated programs.
AFDC/JOBS Program
Provides child care for AFDC recipients who are working or attending
approved job training or education programs.
Transitional Child Care Program
Provides child care assistance to AFDC families who terminate welfare by
getting a job.
At-Risk Child Care Program
Subsidizes child care services for families who are likely to go on welfare.
Dependent Care Grant
Supports the operation and improvement of resource and referral agencies, which provide information and counseling to families in need of child
care services.
The act would replace nine existing nutrition programs (see Figure 17) with two new block grants, a School-Based Nutrition Block Grant and a Family Nutrition Block grant. The School-Based Nutrition Block Grant supports school nutrition programs, including breakfast, lunch, and summer meal programs administered through schools and other agencies. The Family Nutrition Block Grant provides the funding for the Special Supplemental Food Program for Women, Infants, and Children (WIC) or the Family Nutrition Programs. Figures 15 and 16 summarize the major provisions and fiscal effects of these two block grants. Figure 17 describes existing federal nutrition programs operating in California.
Figure 15
Personal Responsibility Act--House Version
Title III: Federal Nutrition Programs
Major Provisions
Program Provisions
-----------------
Nutrition Standards
Repeals current federal nutrition requirements and authorizes
states to use model nutrition standards determined by the National
Academy of Sciences or set their own nutrition standards.
Other Changes
Mandates collection and reporting of specified program data. In
addition, the bill would make illegal aliens ineligible for nutrition program services.
Fiscal Provisions
---------------
Funding Cap
Eliminates the funding entitlement of all of the school nutrition programs.
There is no funding entitlement for the WIC program.
Spending Authorization
Authorizes $11.3 billion as the total amount for nutrition programs
funded from the block grants in 1996, which is about 3.8 percent
below what is currently spent by the federal government through
the existing programs. The program authorization includes annual
increases of about 4 percent through 2000.
State Share
Provides states in FFY 96 with the same share of federal funds as the state
received in the previous year. Beginning 1997, an increasing amount of state
allocations would be based on the state's share of (1) meals served in the
previous year under the School-Based Nutrition Block grant or, (2) individuals
assisted in the previous year under the Family Nutrition Block grant. By 2000,
5 percent of state allocations from the two nutrition block grants would be
based on meals served or individuals assisted.
Transfer of Funds
Permits states to transfer up to 20 percent from the nutrition block
grants to other block grants or programs.
Figure 16
Personal Responsibility Act--House Version
Title III: Nutrition Block Grants
Major Fiscal Effects on California
Effect on Federal Funds to California
----------------------------------
Loss of Federal Funds
Compared to current law, California would receive about 12 percent, or
$200 million less in federal funds in 1996. Over the five-year period of
1996 2000, federal funding to the state would be reduced by about
$1.8 billion, or 18 percent.
Future Federal Fund Share
Potential gains or losses in federal funding in future years may result if
other states increase or decrease their share of the number of meals
provided or individuals served relative to California.
Effect on State Funds
--------------------
Replacing Lost Federal Funds
Depending on state policy choices, the nutrition portions of Title III could
result in significant state costs.
-School Nutrition Programs-
Significant General Fund (Proposition 98) costs would result
if the state desired to maintain the existing level of
support for nutrition programs operated by schools and other agencies.
Because existing funding for school nutrition programs is included in
both block grants, we assumed that 20 percent of the Family Nutrition
Block Grant would be transferred to support school nutrition programs.
Under this assumption, replacing the lost federal funds with state funds
for school nutrition programs would require up to $578 million over the
five-year period.
-Special Supplemental Food Program for
Women, Infants, and Children (WIC)-
Significant General Fund (non-Proposition 98) costs would also
result if the state desired to maintain the existing level of
support to local service providers. Assuming that 20 percent of the
Family Nutrition Block Grant would be transferred to support school
nutrition programs, state backfill of federal funding losses for the WIC
program would cost the General Fund up to $1.2 billion over the five-year period.
Figure 17
Personal Responsibility Act--House Version
Existing Federal Nutrition Programs
Operating in California
National School Lunch Program
Provides free and reduced price meals to needy children.
School Breakfast Program
Provides morning meals to needy children.
Summer Food Service
Provides meals to needy children when they are not in school.
Child and Adult Care Food Program
Enables child care centers and family day care homes to provide meals
and snacks to children 12 years of age and under.
Special Milk Program
Provides milk to children in public and private nonprofit schools and
child care institutions that do not participate in another federal meal
program.
Special Supplemental Food Program for Women, Infants, and Children (WIC)
Provides food, nutrition education, counseling, and health care referrals
to low income women and children up to age 5.
Federal Commodities Aid
Provides additional resources to the federal nutrition programs in the
state in the form of goods such as meat, dairy products, and fruits and
vegetables.
Nutrition Education and Training
Establishes nutritional and professional standards and provides training
for meal service providers in the state.
State Administrative Expense
Provides funds to the state to manage and coordinate the federal
nutrition programs.
Title IV of the act would make all illegal aliens and most immigrants ineligible for federal benefits in five programs: (1) Supplemental Security Income (SSI), (2) the Temporary Family Assistance Block Grant, (3) the Title XX Social Services Block Grant, (4) Medicaid, and (5) Food Stamps. Figure 18 summarizes the major program and fiscal provisions of this title. Figure 19 summarizes the title's fiscal effects on California.
Figure 18
Personal Responsibility Act--House Version
Title IV: Restricting Welfare for Aliens
Major Provisions
Program and Fiscal Provisions
---------------------------
Eligibility Restrictions
Makes immigrants (except as noted below) ineligible for federal benefits in five
programs one year after enactment of the act: Supplemental Security Income
(SSI), Temporary Assistance for Needy Families, Title XX Social Services Block
Grant, Medicaid, and Food Stamps.
Makes illegal aliens ineligible for all federal, state and local means-tested public
benefits programs except emergency assistance and certain housing assistance.
Makes nonimmigrant aliens (people admitted for temporary periods and limited
purposes such as tourists, diplomats, and temporary workers) ineligible for all
federal and state means-tested public benefits programs except for emergency
assistance.
Authorizes states to limit eligibility of immigrants for state and local means-tested
public benefits programs (for example, General Assistance).
Exceptions
Refugees for the first five years of residency in the U.S.
Refugees and legal immigrants over age 75 who have lived in the U.S. for five years.
Legal immigrants who are veterans.
Legal immigrants unable to comply with naturalization requirements because of a
physical, developmental, or mental impairment (including Alzheimer's disease).
Temporary agricultural workers.
Sponsorship
Extends indefinitely the period of time for which a sponsor's income is deemed
available to support an immigrant and makes this a legally binding requirement.
Authorizes government agencies to recoup from sponsors federal, state, and local
government benefits paid to immigrants (except certain housing assistance).
Figure 19
Personal Responsibility Act--House Version
Title IV: Restricting Welfare for Aliens
Major Fiscal Effects on California
Effect on Federal Funds to California
----------------------------------
SSI Program
Reduction of up to $2.4 billion over the first five years of the act.
Food Stamps
Reduction of up to $1.5 billion over the first five years of the act.
Medi-Cal
Reduction of up to $1.7 billion over the first five years of the act.
Citizenship Effects
The actual reduction could be significantly less than indicated, depending
on the number of immigrants who become citizens.
Effect on State Funds
--------------------
Replacing Lost Federal Funds
Potential costs of up to $5.6 billion over five years if the state backfills
for loss of federal funds in order to maintain current eligibility and
service levels.
SSP Program
Potential savings of up to $350 million from the General Fund in
1996-97 and $470 million annually thereafter in SSP grants unless state
backfills to maintain current service levels.
Food Stamps
Potential savings of up to $15 million annually from the General Fund,
beginning in 1997-98, from lower administrative costs due to reduced
caseloads unless state backfills to maintain current service levels.
Medi-Cal
Potential savings of up to $650 million from the General Fund in
1996-97 and $900 million annually thereafter unless state backfills to
maintain current service levels.
Temporary Family Assistance (AFDC)
Potential state savings of about $400 million in 1996-97 and
$550 million annually thereafter to the extent the state chooses to
conform to federal eligibility restrictions on block grant funds.
Impact on Counties
Unknown costs to the counties potentially in the hundreds of millions of
dollars annually to the extent additional aliens use general assistance
and county health services (if the state does not backfill for federal fund loss).
Citizenship Effects
Savings and costs indicated above could be significantly less than
shown, depending on the number of immigrants who become citizens.
Sponsorship Provisions
Minor savings from recoupment of benefits from alien's sponsors.
Title V of the act would set a cap on annual increases in food stamp expenditures, terminate food stamp benefits after 90 days for certain able- bodied recipients without children, and combine several food distribution programs into one consolidated grant. Figure 20 summarizes the major program and fiscal provisions of this title. Figure 21 summarizes the title's fiscal effects on California.
Figure 20
Personal Responsibility Act--House Version
Title V: Food Stamp Reform and Commodity Distribution
Major Provisions
Program Provisions
-----------------
Work Requirement
Requires the termination of benefits after 90 days, for able-bodied
adults between the ages of 18-55 with no dependents and not employed at
least 20 hours per week.
Authorizes a waiver of the work requirement if (1) the unemployment
rate exceeds 10 percent in all or part of the state, or (2) the state does
not have a sufficient number of jobs to provide employment for individuals
subject to the requirement. (Waiver determinations would be made by the
Secretary of the Department of Agriculture.)
Eliminates the food stamp employment and training program (currently
$75 million nationally) and instead provides $75 million nationwide
annually for operation of "workfare programs."
Specifies that the Governor determines standards for employment and
training.
Quality Control
Makes more restrictive the threshold for determining whether states are
subject to penalties for errors in calculating food stamp eligibility.
Electronic Benefit Transfer (EBT)
Authorizes states that have a statewide EBT system to elect to receive
food stamp benefits as a block grant. Maryland is the only state that has
EBT statewide.
Fiscal Provisions
---------------
Inflation Adjustment
Caps annual increases in the maximum food stamps benefit at
2 percent per year beginning in FFY 1996. (Under current law, increases
in the maximum benefits are determined by a specified inflation index.)
Income Deductions and Resource Limits
Freezes the standard deduction and the excess shelter deduction at
$134 and $231 respectively (current levels).
Changes the treatment of state energy assistance and payments from
the Low Income Home Energy Assistance Program (LIHEAP) for
calculating available income in determining benefits.
Freezes the vehicle allowance at $4,550 for purposes of determining
eligibility (current level).
Commodities
Repeals and revises certain commodities programs (for charitable and
other institutions) and authorizes $260 million annually nationwide in
FFY 1996 through FFY 2000 for commodities and $40 million annually
for related administration.
Figure 21
Personal Responsibility Act--House Version
Title V: Food Stamp Reform and Commodity Distribution
Major Fiscal Effects on California
Effect on Federal Funds to California
----------------------------------
Inflation Adjustment
Reduction of $25 million in 1995-96 and $600 million over the first five years.
Deductions
Freeze in deductions and vehicle allowance: Reduction of $20 million in
1995-96 and $500 million over the first five years.
Energy Costs
Change in treatment of state energy and LIHEAP payments: Unknown
reduction, probably in the range of $15 million in 1995-96 and
$85 million over the first five years.
Work Requirements
Reduction of up to $45 million in 1995-96 and $420 million over the first
five years.
Commodities
Unknown effect on federal funds, probably an increase or decrease of
less than $5 million over five years.
Effect on State Funds
--------------------
Replacing Lost Federal Funds
Potential cost of $1.6 billion over five years if the state backfills for loss
of federal funds in order to maintain current service levels.
Quality Control
Unknown potential costs associated with more restrictive error rate threshold.
Work Requirements
Unknown costs, probably in the tens of millions of dollars annually for
administration of workfare programs and monitoring work effort.
Title VI of the act makes major changes in the Supplemental Security Income (SSI) Program. Figure 22 summarizes the major program and fiscal provisions of this title. Figure 23 summarizes the title's fiscal effects on California.
Figure 22
Personal Responsibility Act--House Version
Title VI: Supplemental Security Income (SSI)
Major Provisions
Program and Fiscal Provisions
---------------------------
Substance Abuse
Eligibility. Eliminates drug addiction and alcoholism (DA/A) as a qualifying
disabling condition for SSI and Medicaid benefits beginning
October 1, 1995. Effectively eliminates DA/A as a qualifying criterion for
the State Supplementary Program (SSP). (Current law imposes a three-year limit on eligibility.)
Funds for Treatment and Research. Appropriates $100 million annually
nationwide in FFY 1997 through FFY 2000 for drug treatment ($95 million)
and research ($5 million). Funds would be allocated to the states based on
the formula used for the existing alcohol and drug treatment block grant.
Disabled Children
Eligibility. Eliminates benefits to children (existing and new cases) who
are relatively less disabled. (Currently, children may be eligible on the
basis that an impairment exists that precludes them from performing age-appropriate activities.)
New Cases. Applicants would qualify for cash benefits only if the child is
severely disabled and needs institutionalization or full-time attention by
parent. Other applicants (not needing institutionalization but who meet
specified eligibility criteria) would not receive cash benefits but would be
eligible for block grant services.
New Block Grant. Establishes a new block grant, beginning in January
1997, for services to children remaining eligible for cash benefits and
applicants not eligible for cash benefits but who qualify for SSI based on
disabling medical conditions.
Block Grant Services. Requires the Commissioner of Social Security to
develop a list of authorized services that can be provided using new block
grant funds.
Block Grant Amount. Specifies that the state's share of the block grant is
determined by a formula based on the number of children eligible for block
grant services.
Maintenance of Effort Requirement. Requires states to maintain previous levels
of nonfederal expenditures, adjusted for inflation, for children receiving new block grant services.
State Supplementary Program
SSP Maintenance of Effort Requirement. Eliminates the maintenance of
effort requirement.
Figure 23
Personal Responsibility Act--House Version
Title VI: Supplemental Security Income
Major Fiscal Effects on California
Effect on Federal Funds to California
----------------------------------
Substance Abuse Eligibility
Loss of $100 million in 1995-96 (state fiscal year), about $135 million in
1996-97 and 1997-98, and about $80 million annually thereafter.
Drug Treatment Funds
Gain of about $9.5 million in 1996-97, and $12.6 million in each of the
next three years (1997-98 through 1999-2000).
Restrictions on Children
Loss of $60 million annually ($15 million in 1995-96) for elimination of SSI
benefits to children not meeting more restrictive definition of disability.
New Block Grant
Gain of about $90 million in 1996-97 and $180 million in each of the
next three years (1997-98 through 1999-2000).
Effect on State Funds
--------------------
Replacing Lost Federal Funds
Potential cost of $108 million over five years if the state backfills for loss
of federal funds in order to maintain current service levels.
Substance Abuse Eligibility
The Governor's Budget assumes this policy change, effective October
1995, for a state General Fund savings of $52 million in 1995-96 and
$70 million in 1996-97 and 1997-98. Ongoing savings of roughly
$40 million annually. Unknown, costs (potentially in the tens of millions
of dollars annually) to county indigent health and general assistance
programs to serve persons no longer eligible for SSI/SSP and Medi-Cal.
Disabled Children
Unknown state costs or savings, depending on potential effect of
increase in state costs to the AFDC Program.
Disabled Children's Maintenance of Effort
Minor increased General Fund cost for mandatory inflation adjustments
using specified index.
Elimination of SSP Maintenance of Effort
No direct effect, but increases state flexibility to achieve major savings
by reducing grants.
Title VII of the Personal Responsibility Act includes numerous provisions related to child support enforcement. Figure 24 summarizes the key provisons and Figure 25 summarizes the fiscal effect on California.
Figure 24
Personal Responsibility Act--House Version
Title VII: Child Support Enforcement
Major Provisions
Program Provisions
-----------------
Case Registry and Disbursement System
Requires a centralized registry of child support cases and centralized
disbursement of collections. California is developing a centralized registry as
part of its automation system. Payments are disbursed through the counties.
New Hire Directory
Requires implementation of a new hire directory for all occupations, effective
October 1997, designed to assist in locating noncustodial parents. California
currently requires a directory for some occupations.
Interstate Enforcement
Includes provisions to enhance interstate coordination.
Fiscal Provisions
---------------
$50 Pass-Through
Eliminates the requirement that the first $50 of monthly collections for AFDC
families be distributed to the custodial parent, effective October 1995.
(Instead, the $50 would offset grant expenditures.)
Arrearage Payments
Requires that collections on arrearages in specified cases be paid to the
custodial parent rather than used to offset government expenditures for
AFDC grants, effective October 1999.
Federal Incentive Payments
Replaces the collections-based federal incentive payments with "performance" incentives.
The new incentive payments would be a percentage of administrative costs, ranging from
0 to 24 percent, as determined by the Secretary of HHS, based on the state's performance
in establishing paternity and other performance measures, effective FFY 1999.
--Requires the Secretary of HHS, in awarding incentive payments, to
ensure that the nationwide cost not exceed the corresponding cost as of
June 1994 unless aggregate performance improves.
Maintenance of Effort
Establishes a maintenance of effort provision for state funding, based on
FFY 1996, beginning in FFY 1997.
Automation Funding
Establishes a nationwide cap ($260 million over five years) on enhanced
federal funding for automation requirements included in the act.
Figure 25
Personal Responsibility Act--House Version
Title VII: Child Support Enforcement
Major Fiscal Effects on California
Effect on Federal Funds to California
----------------------------------
Loss of Federal Funds
Reduction of about $85 million in federal funds during the first five years
due to changes in federal incentive payments.
Effect on State Funds
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Incentive Payments
State costs of about $85 million during the first five years due to the
change in federal incentive payments. This assumes that California will
receive half of the maximum amount of incentives and will increase
state funding to offset the anticipated reduction in federal incentive
payments. State costs could be more or less, depending on the state's
performance with respect to the incentive payments.
$50 Pass-Through
State savings of $110 million over the first five years due to elimination
of the $50 monthly "pass-through" of collections to the custodial parent.
Arrearages
Unknown state costs, probably about $20 million during the first five
years, due to the change in the procedures for distributing collections on
arrearage obligations.
Ongoing Costs
After the first five years, estimated state costs of roughly $45 million
annually due to the ongoing net effects of the above provisions.
Other Provisions
Unknown potential savings annually to the extent the act's other provisions
(such as enhanced interstate child support enforcement) result in increased
collections, particularly for AFDC families.
This report was prepared by Bill Lucia, Alva Johnson, Agnes Lee, and Daniel Kim, under the supervision of Chuck Lieberman and Paul Warren.
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