CalWORKs Reform Boosts Low-Income Families’ Financial Security

Last month, I co-authored an op-ed for the San Francisco Chronicle with Judy Darnell of the United Ways of California, urging the state’s lawmakers to allow participants in its TANF program, CalWORKs, to own a reliable vehicle. Last week, the California state legislature passed its new budget, which modifies the CalWORKs rules to exempt one vehicle worth up to $9500 in equity value, replacing the previous cap of $4650. The new rule also indexes the limit to inflation and excludes vehicles that are received as gifts. This is a small but important step forward toward ensuring that public benefits programs serve as a ladder to financial security for low-income households. This change will have a significant impact for many of the state’s struggling families.

As we noted in the op-ed, there are clear links between vehicle ownership and sustained employment. Having access to a reliable car often makes it easier for low-income Californians to find a job and get to work and thus leave public assistance. Raising vehicle limits in TANF has also been found to have a direct correlation with increased vehicle ownership. By contrast, imposing a low vehicle limit makes it significantly more likely that families must move into an even more economically vulnerable position before accessing short-term help. For example, while only 280 families were denied CalWORKs in Los Angeles County solely because of their vehicles in 2010-2011, 49 of those families reapplied and qualified – on average within the next four months. What this means in practice is that these families, like Melissa’s family, sold their cars to get cash support averaging around $400 per month. This data exemplifies how low vehicle limits are directly counterproductive to TANF’s goal of helping families secure employment.

California’s increase to $9500 is a modest improvement– but still a significant step towards ensuring that CalWORKs helps families in need rather than trapping them in poverty. Under the old rules, for example, this 2006 Hyundai Accent with 95,000 miles on it would have disqualified an entire family, regardless of how little they have in savings. Under the new rules, a family could own this car and have up to $2000 in an emergency fund. This is still far short of the minimum recommended amount of emergency savings, which is one way of conceptualizing the asset poverty level ($4773 for a family of three in 2012). Nevertheless, it is a step in the right direction toward supporting low-income families’ financial security, and reflects growing recognition in the states that their support programs should be aimed at encouraging both short-term job assistance and long-term self-sufficiency.

Thirty-eight states already exempt at least one vehicle per family in their TANF programs. So while an improvement, the modification to the California rule actually falls short of the one-vehicle exemption advocates were hoping for. Still, asset limit policy changes often happen incrementally. In Colorado, for example, the state raised its TANF asset limit to $15,000 before eliminating it altogether in 2011. This reform followed a finding by the state that its caseworkers could save up to ninety minutes during the first 45 days of a new case by eliminating the asset evaluation. With caseworkers responsible for up to 250 cases apiece, these time savings would add up quickly. After California implements its rule change in 2014, it’s very likely than even fewer applicants will be found ineligible for CalWORKs under the new criteria, though caseworkers will still be required to verify each vehicle’s value. Perhaps in time, like Colorado, the state will determine that moving to a simpler exemption policy, such as excluding one vehicle, would result in both greater administrative efficiency and increased support for its programmatic goals. In the meantime, however, this reform should be celebrated as the small but meaningful victory it is.