Transcript of Gov. Schwarzenegger Discussing CalWORKs Program Reform Proposal

Now, these reforms will move us closer to what other states are doing all over the United States. And again -- we have, I think it was has handed out on a sheet of paper to you so you can see what other states are doing if people don't comply -- some states bump you off immediately, the whole family. Other states give you an opportunity. They bump you off for one month and then you can go back if you fulfill the requirements. Then, if you again fail the requirements, they bump you off again for another month and then they bring you back on again. And the third time you're off for good. So there are all kinds of different things. We are the most generous of all of the states and so this is what we want to reform.

Now, my proposals, of course, are being met with strong resistance from the legislature.

Well, that is also incorrect, because we have been talking about those reforms since the 2004-2005 budget. As a matter of fact, we have here -- if you'd bring this over here so we can just hold this up -- here are all the various different proposals that we have had in the past, for the last five years. And my assistant, or the staff, can take you through the various different proposals that we had out there so you can see that we have been talking about those reforms for the last five years. There is nothing new. As a matter of fact, in the last budget negotiations that we had in February, these proposals were also talked about, about welfare reform and how we can save money. So there is nothing new there whatsoever.

I can tell you that I have introduced those things over and over again but I also heard the same answers. Whenever we bring that up at the budget negotiations over the last five years we always hear, "Do we really want to make this part of the budget? I think we should do this after the budget, it's not a budget matter."

And then you wait a year and nothing happens and then they again say, "Well, you don't want to do this now with this budget, it will hold up the budget. Why don't we do it legislatively?" And then you wait again after the budget and nothing happens legislatively.

So now, five years later, I say the time has come. When they say let's do it some other day, I say the day is now. I think that this is the year where we finally have to reform the programs. This is the year where we have to stop promising people things that we can't deliver. This is also the year where we finally put our fiscal house in order. That's the bottom line.

So thank you very much and now I would like to bring out Secretary Kim Belshé to say a few words about this. Please.

SECRETARY BELSHÉ:

Thank you, Governor. Thank you, everyone. I'm going to spend a few minutes talking in a bit more detail about the Governor's budget year and longer-term proposals and then Director Wagner is going to talk a little bit about the experience in other states.

As the Governor has emphasized, it is absolutely imperative that we take time now to preserve the work-oriented nature of our CalWORKs program over the short term and the longer term and sustain it to assist and support low-income Californians. So let's break it down in terms of short term and longer term.

In the short term, the Governor proposes to target general fund resources to those families in the CalWORKs program that are meeting federally mandated work participation requirements. How would this work? It would work by giving counties more flexibility in terms of how they allocate resources that are targeted to employment and training, childcare and substance abuse treatment.

Consistent with the workforce orientation of the program, the number one priority population for these resources would be this population -- roughly 22 percent in California. I think that chart shows our most recent work participation rate. That 22 percent would be the top priority for these resources in terms of supporting their continued access to employment and training services, childcare and so forth.

All other CalWORKs recipients would be ineligible for these types of services but they would continue to receive the basic monthly cash aid.

This proposal recognizes that in severe fiscal situations, such as we are in today, all general fund supported programs have to be reduced and that includes the CalWORKs program. Further, the proposal recognizes that, in a context of reduced resources and significant demand, we need to focus those resources on the populations that are meeting the federally mandated work requirements.

By prioritizing employment-related services to this population, as the Governor noted, the budget-year savings would be $753 million.

Let me talk now about the longer term because, as the Governor said, we need to be making changes now to save money and reform this program today and going forward. Over the longer term, the Governor has put forward a series of proposals that, taken together, will further affirm and strengthen the work requirement while incentivizing work and strengthening the accountability provisions for those individuals who aren't complying with requirements.

First, the proposal will increase accountability for CalWORKs recipients by requiring that they come in every six months. Those who aren't meeting the work requirements, they've got to come in every six months, meet with a caseworker to talk about what are the issues and needs of that individual in the family, what are the barriers they're facing to work, what is the support they need to work? And, based upon those discussions, target resources and services accordingly. I'd note, however, that families that do not meet his requirement of meeting every six months would be disenrolled from the program.

Second, the proposal will strengthen existing sanction policies to be much stronger and much quicker for noncompliance and we do this through two principal ways under the Governor's proposals.

I'd note in closing that the Governor's plan reflects a belief that it's time for California to revisit some of the policy choices that were made long ago and have continued throughout the years, policy choices related to sanctioning for noncompliance and policy choices related to the amount of time that families can stay on aid. These are choices that have contributed to our state having a larger caseload, higher costs and longer-term dependency.

Now is the time, the Governor believes, for California to step up and really strengthen the work focus of this program, to strengthen the accountability provisions, to reduce time on aid and better position California to meet the federal requirements and avoid hundreds of millions of dollars in penalties.

California is not alone in grappling with these issues. Different states make different policy choices; those policy choices do drive behavior and they do drive outcomes.

So we're now going to ask Director Wagner to say a few words about the experience in other states, principally comparing California to some of the other large states. And as you'll see, we see very different experiences in terms of work participation and dependency. John?

DIRECTOR WAGNER:

Thank you, Secretary. And also thank you, Governor, for reintroducing these reform proposals for our CalWORKs program. I'd just like to add a couple of points to the comments made both by the secretary and the Governor.

First, I believe that public policy does drive behavior and it's true for all of us. It's also true for families who are on CalWORKs, who are no different than us. We've seen tremendous success, as the Governor mentioned, since the implementation of welfare reform in the mid-1990s. Both nationally and in California families have left cash assistance and moved into work.

But in several important ways California has been an outlier in these reforms, reflecting policy decisions, as the Secretary mentioned, made many years ago, policy decisions that have really led us to a lower than average work-participation rate.

The Governor mentioned our work participation rate right now is about 22 percent and the U.S. average of all states is 32 percent, so we're ranked very near the bottom, 45th, in the federal work participation rate.

We also have a lower than national caseload decline. If you look at the period of time over the last 10 years, roughly 1995 to 2005, our rate decline of caseload is 44 percent, compared to the national rate of just about 49 percent and this leaves California ranked 29th in the country on caseload decline.

We also have a higher than national average caseload. If you look at our population and as the Governor noted, 30 percent of all families in the country on cash assistance are in California's program. If you compare us to some of the other larger states, 3 percent of families on the national program are in Texas and in New York it's 7 percent. So we're an outlier there as well.

And as the Governor mentioned also, because of our policies, people on cash assistance stay on cash assistance longer in California. Over 40 percent of our families are entering their fifth year on aid.

The final point I'd like to make concerns the sanction policy that's included in these reform proposals. You know, none of us here today have a goal of sanctioning CalWORKs families. But our sanction policies do drive behavior. California is one of only six states in the country that does not have some version of full-family sanction, wherein ongoing noncompliance results in full closure of a family's case.

In Massachusetts, where I had an opportunity to work before coming to California, we did have full-family sanctions. What was interesting in Massachusetts was that after the adult portion of adult aid was removed from the grant, the family came into compliance with the program, most families came into compliance. And I think the most recent data I've looked at in Massachusetts is that at any given time in any given month, only 3 or 4 percent of the caseload is actually receiving a full-family sanction.

If you compare that to our sanction rate in California, ours is almost twice that. In fact, in 2008 the Rand Corporation did a study on California and concluded that, "Noncompliance is a pervasive feature of our program," and they brought up the size of our sanction as an issue.

So in conclusion, I think this package of reforms is very responsible and a way to protect our CalWORKs program, moving the program in a direction that incentivizes work and work-related activities and is responsible, given the current environment we're all in. Thank you.

QUESTION/ANSWER:

GOVERNOR: Thank you. So if you have any questions to any of us -- like I said, Kim and John can go into more details on those things -- but please feel free.

QUESTION: Governor, can I ask you a broader question, just about the reform plans that you're pushing forward? One of the observations being made inside the Capitol is that one of the reasons you're pushing these more is that you're worried about, or concerned about, or focused on your legacy as governor and that the budget problems could be part of your legacy as governor. That's not to say these aren't important but could you talk about how much that factors into your thinking of this year versus last year?

GOVERNOR: As I have said earlier, that I have tried to get those reforms done since I came into office and they have met always tremendous resistance by the legislature with all kinds of excuses, from, "Let's not make this part of the budget, " to "Let's do it legislatively and not make it a budget issue," to "Let's do it some later time because it takes time to debate, these are very complicated issues," and so on.

But now it's five years later. And what happened five years later is not that it's five years later alone but it is that we have the worst financial crisis right now in the history of California and now we are short of $26 billion. And so, therefore, I have to be creative, more so than ever. Where in the past it was one of the many issues that I wanted to get accomplished, now it becomes, under this financial crisis, a very important issue to get accomplished because it will help us with the current fiscal year. And it will help us also with the proposals that we put forward with the out-years. And we know that we have an increase in our structural deficit in the out-years and this is how we're going to bring it under control.

And this is why I'm talking about the In-Home Support Services fraud and abuse, that's why I'm talking about how we can cut down on those programs like welfare. To help people -- always it's important to have a safety net there for people but to use this safety net but not to abuse the safety net. That's what this is all about.

So we want to go and comply and go and get close to what other states are doing all over the country. And they have done really well. The average is much better than ours in some states. And we are talking about, like I said earlier, Massachusetts where Uncle Teddy is from and they have a policy that if you don't comply the entire family goes off immediately and you can only come back if you comply.

So that's the way it ought to be. I mean, why are we going to hand out money that is very important taxpayers' money, that people have worked -- all of you that are standing here in the press, you all work hard from morning to night and many times to midnight or the next morning, when you do night shifts and now your money goes to people that don't do anything, that don't go for the interview twice a year because that's maybe too much, or they don't want to fulfill those work requirements.

And the work requirements are very simple. They don't say that you have to work. It just says if you can't get a job -- like, for instance, right now in this economic crisis it's hard to get a job -- but then go and do community work. Go to school and learn something. Do on-the-job training. Do something that you show that you're participating, so when the economy comes back that you right away can get a job and that you're smart enough and you have the talent to go and get a job. That's what we're saying here.

So we are not trying to be tough on anybody. We're just trying to make ends meet and to let the taxpayers know that your money is spent wisely rather than wasted. That's what it is.

QUESTION: That does sound like your legacy. That's the point.

GOVERNOR: I don't think about legacy as much as I think about -- remember one thing. What is wonderful about my job here is and why I enjoy it more than anything else I've ever done is because I'm fighting for something that is bigger than me. My whole life I always fought for things that were about me; my body, my muscles, my career, my makeup, my hair, my this, my that and all those kinds of things, you know, how much money I make and so on.

But now, this is about something much bigger than me; California. I'm just passing through, I'm one of the guys that passes through here. And this is what makes it really a terrific and rewarding to fight for this, because it's the right thing to do. And you know it's the right thing to do and you all know it's the right thing to do. That's the bottom line.

Yes, please.

QUESTION: Governor, yesterday the Speaker's press office said your press secretary was insulting the intelligence of women lawmakers. And then today, Assemblywoman Noreen Evans said you, Governor, should be more respectful to Speaker Bass and women in the legislature. So what I'm wondering, is this what the budget battle is coming down to, personal attacks, name calling, playing the gender card?

GOVERNOR: As I have said earlier, that I respect the Speaker and I think she's a passionate woman and a passionate lawmaker and that I will always support her. I think it's very difficult under the circumstances right now that we are in to deal with the caucuses, if it's Republicans or Democrats alike, if they are in the Senate or if they are in the Assembly. It's really tough. You have a tremendous amount of pressure, you have enormous deficits, there is an enormous amount of pressure from the outside groups, from the special interests. You see what's going on outside there. They are worried about TV ads going up and all of those things play in.

So to me what is important is not what so-and-so said and what so-and-so said to me. Only one thing is important and that is to solve the budget, that every day we've got to come up with new ways and new ideas, how do we get there and how do we solve this $26 billion deficit.

And I think that we have to go and do this for the people of California. That's what we promised, that we're going to go live within our means, that we make the changes, we make the system more efficient and we are not going to raise taxes and we're going to make the necessary cuts. What all the dialogue is and all the Kabuki that's going on, I pay no attention to it.

QUESTION: Governor, on the budget itself, as you know, the marijuana -- sorry. The Marijuana Policy Project is running TV ads up and down the state, essentially saying if we were to legalize and tax marijuana it would be at least a partial solution. I know you've said in the past it's worth talking about but does the idea itself have merit? What's your view?

GOVERNOR: I'm a strong believer, when it comes to marijuana, that the current laws ought to stay in place. But I also said that I'm always interested in having dialogue about new ideas. And so that's where I am still today. I think that we must protect the current laws and I don't think that we ought to go and, because we could make a few dollars, that we ought to change the law just because of financial reasons.

I think what we are doing here today, this is wise, to go and to make sure that we are giving people a safety net but also letting people know that if you don't comply with the work standards and what we need, that you go to interviews and all of those things, that you can't continue getting paid and therefore save $753 million. That is wise. That's a great, great policy.

But to go all of a sudden and say OK, let's legalize marijuana, just because we can make some money, I think is the wrong direction to go.

QUESTION: For Secretary Belshé, last year you wrote a letter to Senator Feinstein complaining about the federal methodology that was used to arrive at that 22 percent number. You said it discounted valid efforts of people who were working towards self-sufficiency. Now you're proposing to use the same 22 percent number as a dividing line for people who receive certain services and who don't.

BELSHÉ: Actually --

QUESTION: Are you not using an unfair dividing line, by your own judgment?

BELSHÉ: I would suggest we are not using the 22 percent as the dividing line, we are using work participation as the dividing line. So we would love nothing more than that 22 percent to be a significantly larger number. And --

QUESTION: The 22 percent was the work participation, right? That was the number, the work participation rate, as determined by the federal rules?

BELSHÉ: Absolutely. And the Governor's plan is saying, in an environment of scarce resources and competing priorities, we need to preserve the CalWORKs program, we need to continue to provide monthly cash assistance to everyone.

But in terms of the additional resources for employment and training, childcare, substance abuse, those dollars need to go to those individuals who have stepped up and are meeting federal work participation requirements as currently defined.

We have, I have and will continue to press the federal government to bring greater flexibility to how they define work participation. But until the federal government steps up and does what we believed then and believe now is the right thing, that's the standard we're going to need to utilize.

The message here is, the Governor is focusing on the population fully compliant with federally mandated requirements. If they're willing to give the flexibility we and other states have argued for, then there will be additional people that would meet that standard and that would be a good thing.

GOVERNOR: You maybe want to just briefly address another thing, which is that we have been threatened by the federal government that we'll lose money, federal money, because we don't comply.

BELSHÉ: Do you want to talk about the work participation, the federal penalties, John?

WAGNER: The federal penalties occur when you do not meet your 50 percent required work participation rates. And what happens is, the federal government will sanction a state by taking 5 percent of the TANF, which stands for Temporary Assistance to Needy Families Block Grant and the state is required to backfill that 5 percent. So for California that could add up to as much as $330 million the first year and as a state continues to not meet the federal work participation rate, those penalties increase and accrue each year.

GOVERNOR: Thank you very much. You have a good day.

QUESTION: (Inaudible) are you concerned the lawmakers are focusing on that instead of working on the budget?

GOVERNOR: Well, it's obviously very sad that we are in the biggest financial crisis and we are way overdue to get the budget done and we face a $26 billion deficit and I ask over and over and over the legislators upstairs to just focus on the budget and here they are, they're debating over the definition of honey. And a week ago they debated over cow tails and, a few weeks before that, they debated over should we have a Blueberry Commission in the state of California and all those kinds of things.

So again, I think it's ridiculous. I think they should get serious and they should just do nothing else but address the budget, because that's what the people of California demand. Thank you very much.