State’s Poor Take Pounding in New Budget

Republicans called it reform. Democrats called it a retreat.

By either interpretation, programs for the poor, blind and disabled, took a financial pounding in the Legislature this year, signaling the biggest changes for state social services since the early 1980s.

As Democrats and Republicans tried to resolve a budget impasse, welfare payments were cut back 4.4%, a state program to provide temporary aid to unemployed families was abolished and an emergency homeless assistance program was partially dismantled.

Furthermore, welfare recipients and the aged, blind and disabled saw their automatic annual cost-of-living increases suspended for five years, while foster care group homes saw theirs dropped for one year.

In all, lawmakers approved changes and reductions in programs for the poor that are expected to produce $5.2 billion in savings for the state over the next five years and affect more than 3 million people--2.2 million on welfare and 869,271 who receive aid to the aged, blind and disabled. The Western Center on Law & Poverty Inc. estimates that as a result of the budget actions the total loss to poor families in combined federal, state and county aid in five years will be $7 billion.

For both Democrats and Republicans, the cuts were far more than simple budget slashing; they represented a major retrenching in California’s social services.

“The group that was the weakest got hit the hardest. We basically balanced our budget by taking more and more from the poor,” said Tom Bates (D-Oakland), chairman of the Assembly Human Services Committee, who articulated the Democratic view. “Philosophically it was not so much left and right as it was top and bottom--and the bottom got squeezed.”

Republicans who steadfastly insisted that welfare reductions had to be part of any budget compromise saw it differently. “This is the first time there’s been a budget in over 12 years . . . that has real reform in it,” said a pleased Assemblywoman Tricia Hunter (R-Bonita), who championed, in the lower house, Gov. Pete Wilson’s proposals for revamping welfare. “For those of us who believe that the state government has grown at a phenomenal rate over and above what it should have, this is a significant change. “

Translated into human terms, a poor mother with two children will find $31 less in her monthly welfare check after Sept. 1. Instead of the $694 a month she now gets to support herself and her children, she will receive $663.

However, in the complex world of federal rules and regulations, that cut in welfare grants is interpreted as a “reduction in income,” so it will entitle her to about $10 more a month in federal food stamps.

Even more significant in the long run to her family budget will be the five-year suspension of the annual cost-of-living adjustment, called a COLA, which for most of the past 20 years has automatically boosted welfare payments to help incomes for the poor keep pace with inflation. This year the COLA adjustment would have increased welfare payments by 5.5%; for a mother with two children that would have added $38.17 to her monthly aid check.

Without the suspension in the COLAs, poverty advocates estimate that aid payments for the typical welfare family of three would have soared to $969 by 1996 assuming a 5% annual inflation rate. But with the suspension forcing basic benefits to remain static, they estimate that by 1996 28% of the value of the welfare payment will have been lost to inflation.

“Mothers with children who just now are being abandoned by their husbands are in real trouble because rents and taxes are going up and the benefits are going down. I would feel hopeless and petrified if I was just now going on welfare,” said Irene Stoppelbein, a Los Angeles mother of two who soon expects to finish school and get off the welfare rolls.

Welfare recipients facing homelessness because of skyrocketing rental costs also will find less government aid available to them because of cuts to an emergency homeless assistance program.

Starting Aug. 1, the number of days that a homeless family on welfare can receive assistance drops from 28 to 16 days. While the assistance now can be renewed every 12 months, as of Aug. 1 recipients will have to wait 24 months.

The program provides basic assistance of up to $60 a day depending on the size of the family. To help recipients find permanent housing, it now provides money for a security deposit of up to two months rent. After the budget cuts, assistance for security deposits declines to only one month’s rent.

As a concession to Gov. Pete Wilson, however, the Legislature provided several incentives for welfare recipients to go to work. Although lawmakers reduced benefits, they approved legislation that permits welfare mothers to earn an additional $31 a month without it affecting their basic aid grant.

Under welfare rules, if recipients earn more than a certain amount of income their monthly payments are reduced accordingly. The legislative action raises the amount they can earn without penalty by $31. As additional incentive to work, the Legislature made provisions for raising the amount that can be earned without penalty in future years. It will be calculated at about 70% of the inflation rate.

The change in the work formula reverses some of the changes in welfare rules and regulations that were enacted during the Reagan presidency in the early 1980s. At that time, the amount recipients were allowed to earn was dramatically reduced as a cost-saving measure. Since then, many critics of the system have complained that those reductions only served to remove incentives to work and eventually get off welfare.

Although welfare recipients were affected more severely this year by legislative budget cuts than any other group of poor people, those receiving aid for the aged, blind and disabled were also hit with suspension of their cost-of-living allowances. In California, the state supplements the federal aid program for the aged, blind and disabled, and each January has joined the Social Security Administration in raising cost-of-living allowances.

Starting in January, however, the 869,271 Californians who receive this aid will only get a cost-of-living increase for the federal portion of their payment. Although aid payments vary according to a person’s living circumstances, a typical aged or disabled person living independently, receives $633 a month with about two-thirds being provided by the federal government and the rest by the state. A blind person living independently gets $704 a month, with the federal government paying $407 of the check and the state $297.