Executive Summary

Overview of Social Services Programs and Expenditures

A Wide Array of Services. California’s major social services programs provide a variety of benefits to its citizens. These include income maintenance for the aged, blind, or disabled; cash assistance and welfare–to–work services to low–income families with children; protection of children from abuse and neglect; home–care workers to assist the aged and disabled in remaining in their own homes; collection of child support from noncustodial parents; and subsidized child care.

Expenditure Growth Averages About 3 Percent Per Year. For most of this decade, expenditures for social services programs have represented an average of about 11 percent of all General Fund outlays. Despite caseload increases in many programs, from 2001–02 through 2008–09 combined social services expenditure growth was modest, averaging about 3 percent per year. The growth rate of individual programs has varied. Growth in spending in the California Work Opportunity and Responsibility to Kids (CalWORKs) program has been relatively flat. However, the In–Home Supportive Services (IHSS) program has increased by an average of 11 percent per year.

Balancing the 2009–10 Budget

Governor Proposes $3 Billion in Budget Reductions. For social services, the Governor proposes $3 billion in General Fund budget solutions for 2009–10. Grant reductions and cost–of–living adjustment (COLA) suspensions in the CalWORKs and Supplemental Security Income/State Supplementary Program (SSI/SSP) programs account for about half ($1.5 billion) of the total solution. Proposed benefit terminations for children on CalWORKs and legal noncitizens would provide an additional $800 million in budget solutions. Other major solutions include redirecting Proposition 10 cigarette tax revenues to offset General Fund costs in programs for children ($275 million), and reducing wages for IHSS providers ($267 million).

LAO Approach to SSI/SSP Grants. The Governor proposes reducing benefits to the minimum required by federal law, resulting in savings of $1.1 billion. We present two alternatives which achieve less total savings, but are less likely to negatively impact recipients. Specifically, we propose (1) reducing the state portion of the SSI/SSP grant by the amount of the January 2009 COLA, and reducing grants for couples, which are currently well above the poverty level, down to 125 percent of the poverty level. Combined, these alternatives result in savings of $530 million in 2009–10.

LAO Approach to IHSS Wages. The Governor proposes to reduce state participation in wages to the minimum wage for a savings of $266 million. We propose either reducing state participation to $10 per hour and/or reducing state participation in the wages of close relative providers to the minimum wage. Together, these alternatives could save over $200 million.

LAO Approach to CalWORKs The Governor proposes grant reductions, benefit terminations for children, and other changes that would result in savings of almost $1.1 billion. At a minimum, we recommend that the Legislature adopt $207 million in CalWORKs savings and seriously consider making a 10 percent grant reduction for additional savings of $294 million. About one–third of this grant reduction would be offset by an increase in food stamps benefits.

LAO Approaches to Obtaining More Federal Funds Pursuant to Recently Enacted Legislation. Recent federal legislation creates opportunities to draw down federal funds to offset state costs. Specifically, with respect to the Kinship Guardian Assistance Payment program (Kin–GAP), we estimate that up to $37 million in net General Fund benefit can be achieved by accessing new federal funds pursuant to the recently enacted Fostering Connections to Success and Increasing Adoptions Act of 2008. In addition, we find that the SSI Extension for Elderly and Disabled Refugees Act creates an opportunity for the state to obtain federal funding (about $17 million) to offset General Fund costs for legal noncitizens in the state–only funded Cash Assistance Program for Immigrants (CAPI).

Other Reform Proposals

To improve the cost–effectiveness and delivery of social services programs we present two program reforms.

Adoptions Assistance Program (AAP). The AAP provides ongoing cash assistance payments to all parents who adopt foster children, regardless of whether the foster children are difficult to adopt. We recommend a series of reforms to better target AAP resources toward parents who adopt children with special difficulties.

IHSS Time Cards. The IHSS recipients are the employer of their providers and responsible for signing and verifying the time cards their providers submit for hours worked. To increase oversight and accountability in the IHSS program, we recommend the enactment of legislation requiring providers to (1) document on their time card the actual hours that they provide services and (2) turn in their time cards within one month of providing care.