State Budget Update: New Budget Plan Would Shift CalWORKs and Other Programs to Counties

California Senate Democrats put forth a proposal last week to transfer several state programs to local governments as a cost-saving measure. Under the plan, counties would be provided with funding from the state that could be used to offset expenses. According to Senate President Darrell Steinberg (D-Sacramento) the restructuring proposal was designed to close the final $2 billion hole in the Senate's earlier budget plan. 

Among the programs offered for realignment is CalWORKs, the state's welfare-to-work program. Governor Arnold Schwarzenegger's May Revise includes a plan to eliminate the program to save state dollars. Under the senate proposal, CalWORKs would survive as a county program, with counties' share of costs increasing from 2.5 percent to 25 percent. CalWORKs child care would also be shifted entirely to counties. Other state programs that would be shifted under the plan include Public Safety, Drug Courts, and Adult Protective Services.

In return, counties would be given flexibility and incentives to tailor programs to address local needs and establish savings. To finance the shift, legislators would create an estimated $3.2 billion in new revenue streams by:

• Establishing an oil severance tax
• Transferring Vehicle License Funds from the Department of Motor Vehicles to counties
• Maintaining temporary Vehicle License Funds rate increase
• Providing "bridge" funding through a delay of the corporate tax breaks until 2011-2012
• Providing extra bridge funding by shifting part of the state sales tax revenues to counties through 2012-2013

Los Angeles County would be especially hard hit if CalWORKs was eliminated. According to the L.A. County Office of Child Care, Los Angeles could lose as much as $835 million in revenue, while more than 98,000 children could lose access to subsidized child care.

The California Budget Project (CBP), a nonpartisan public policy research group working to improve public policies that affect low- and middle-income Californians, noted the proposal's merits but pointed out potential pitfalls in shifting CalWORKs child care to counties. Counties currently are not involved in the administration of large sections of CalWORKs child care, and do not have contracting relationships and systems in place. The CBP urged legislators to provide sufficient planning and lead time to ensure that the transition was seamless for both families and providers in the current system.

Additional Resources:

• Senate Democrats' Multi-Year Government Restructuring Proposal

• California Budget Project: Senate Offers RealignmentProposal
• L.A. County Office of Child Care: Governor's Budget Proposals for Child Care and Development - Fiscal Year 2010-11 (Office of Child Care fact sheets begin on page 6)

• California State Association of Counties Statement on Restructuring Proposal