With new money available for California’s current and former foster youth in the form of no-strings-attached monthly cash payments, advocates and legislators are feverishly trying to ensure there aren’t unintended consequences; specifically, they don’t want the added income to leave young people ineligible for other public assistance programs.
While steps have been made toward this goal, the problem is not yet solved.
A universal basic income pilot program that began last year for 24-year-olds in Santa Clara exposed the dilemma. The 72 young people enrolled in the program were required to choose between the monthly $1,000 income known as UBI and receiving other government assistance.
“We did one-on-one benefits counseling with participants prior to enrolling,” said Melanie Jimenez Perez, who manages the UBI program for Santa Clara County. “We broke it down to the dollar — how much they’d be losing in CalFresh and other income.”
Ultimately, she added, most of the foster youth they talked to chose universal basic income over other benefits, such as food stamps, medical benefits and welfare payments.
In July, California created the first statewide UBI, with monthly payments of up to $1,000. The $35 million program, which will prioritize residents who age out of extended foster care or who are pregnant, included language that would help with any possible disruptive influence. The state has directed that the UBI payments be disregarded as income when considering eligibility for public benefits programs, but requires a waiver from the California Department of Social Services for that to happen for CalWORKs welfare support and CalFresh food stamps.
Cities and counties must apply to the department and if approved, it exempts UBI payments from CalWORKs entirely. With CalFresh, the waiver requires that counties find private dollars to offset the cost of food stamps.
Los Angeles County, which is also starting a guaranteed income program for transition-age youth next month, has established a waiver to ensure eligible youth can participate in the program with no impact on their other benefits.
Another issue is that the UBI money is subject to taxes. In Santa Clara County, for example, 1099 forms were issued to recipients, and they have been required to pay tax on the benefit. Jimenez Perez said local recipients were advised to put aside money every month. But the tax hit ended up leaving the young people with a benefit of about $700 a month, rather than the $1,000 intended.
A California Department of Social Services spokesperson told The Imprint that to date, five counties have submitted waivers, and several others have inquired but have yet to submit a formal income exemption request.
Jimenez Perez said Santa Clara County has not yet requested a waiver, but may do so in the future. Still, a longer-term fix is needed, she added, and that will require legislation to reduce barriers faced by local agencies aiming to launch UBI programs.
Several statewide bills that would have eliminated the need for a waiver have not progressed this session. Assemblymember Evan Low (D) authored Assembly Bill 1338, which would have disregarded income from any demonstration or research programs in determining eligibility for the CalFresh or CalWORKs program.
Democratic Sen. Dave Cortese’s Senate Bill 739 included similar language that, if passed, would have disregarded the UBI payments as income for an even broader list of public assistance programs. The bill is still active as a two-year bill, meaning legislators will revisit it during next year’s legislative session, an aid from Cortese’s office said.
Other outstanding issues remain for UBI recipients, including former foster youth who receive college loans that could work against eligibility.
“Federal public benefits require a federal waiver, which are time-consuming,” Amy Lemley, executive director of the San Francisco-based John Burton Advocates for Youth, said in an email. “Ideally, the state could have secured this instead of leaving it to locals to pursue.”
The issues are not unfamiliar to the federal government, which is now addressing conflicts related to another program, the John H. Chafee Foster Care Independence Program, which helps foster youth make the transition to independent living.
In an August letter to local officials, the Administration for Children and Families encouraged states to use their additional Chafee program funding to provide unrestricted direct cash assistance to current and former foster youth, to help them pay living expenses such as rent, utility and car payments.
“We understand that receiving these cash payments may have the unintended impact of decreasing other benefits some young adults might be receiving,” the letter said. But, while not mentioning UBI payments specifically, it noted that states have the flexibility to disregard direct payments or other emergency assistance when determining eligibility or benefit amounts for children and families receiving federal benefits.
Lemley said the difficulties around income conflicts for foster youths’ eligibility could be avoided if the benefit was structured differently, such as a California Earned Income Tax Credit, specifically for foster youth.
“By organizing the benefit through the tax code, it has the added benefit of ensuring that foster youth receive all of the tax credits and refunds they are entitled to,” she said.
Jeremy Loudenback contributed to this report.
