Cash for Californians

Introduction

To meaningfully advance economic justice, we must enhance existing government systems and create new supports targeted to residents most impacted by inequality. In 2019, more than one in three California residents was considered poor or near poor. Even after accounting for existing public benefit programs, 16.4 percent of Californians – or about 6.3 million people – did not have enough resources to meet basic needs.1 Furthermore, these figures hide fundamental disparities among Californians living in poverty: In California, more than one in five Latinos (21.4 percent), more than one in six Black people (17.4 percent), and more than one in seven Asian/Pacific Islanders (14.5 percent) live in poverty, compared to less than one in nine white people (12.1 percent).

“We define a guaranteed income as the provision of regular cash payments with no strings attached and no work requirements.”

While the COVID-19 pandemic both highlighted and exacerbated these disparities, it also initiated what could be a blueprint for creating a more just and equitable economy.2 From providing stimulus checks and expanding the Child Tax Credit to launching guaranteed income pilot projects, governments have used unrestricted cash programs to support residents’ and communities’ economic security.

In fact, while the COVID-19 pandemic necessitated the shutdown of large parts of our economy, poverty in the U.S. decreased during the first year of the pandemic due to large-scale government investment.

As communities throughout California build unrestricted cash programs, advocates and service providers have a unique opportunity to help shape California’s efforts by weighing in on the process and proposing innovative pilot programs. To give a sense of the landscape and opportunities in California, this paper highlights the benefits of cash policies, details the role states and local governments play in this policy arena in California, and discusses essential policy considerations for program designs. This paper also includes appendices that summarize the overall allocation of American Rescue Plan Act within California and provide an overview of launched or announced local guaranteed income programs within California.

The Benefits of Guaranteed Income

We define a guaranteed income as the provision of regular cash payments with no strings attached and no work requirements. Designed to provide an income floor through which no one can fall, guaranteed income is grounded in the values of trust and respect for recipients and prioritizes providing the flexibility recipients need to best meet their needs.

States and local governments should look to guaranteed income to address economic inequality for three reasons:

Guaranteed income improves recipients’ financial security and physical health. Guaranteed income programs have been shown to improve recipients’ economic security and health. Participants in Stockton, California’s Stockton Economic Empowerment Demonstration (SEED) experienced reduced income volatility, increased full-time employment, and decreased levels of depression and anxiety while participating in the guaranteed income program.3 During the pandemic, the Child Tax Credit (CTC) and federal stimulus checks reduced poverty and hardship. By essentially providing a guaranteed income for families with children, the first CTC payment alone was associated with a 26 percent reduction in food insufficiency on US households with children.4 Tens of millions of families who file income taxes or receive federal public benefits received relief within weeks because the government delivered these payments automatically.5
Guaranteed income has strong public support. Guaranteed income and cash transfer programs are popular. An Oxfam-commissioned poll in February 2021, found at least two out of three voters in surveyed states favored stimulus checks – Georgia 78 percent, Arizona 77 percent, Maine 69 percent, and New Hampshire 64 percent.6 Other polling data may be found at at the Economic Security Project.

In California, 69 percent of residents of the Inland Empire (Riverside and San Bernardino Counties) strongly or somewhat agree that the government is responsible for ensuring basic income, with 85 percent of Black or African American and 77 percent of Latinx residents agreeing.7 Similarly, in Orange County, 85 percent of Vietnamese residents, 80 percent of other Asian American and Pacific Islander residents, and 75 percent of Latinx residents strongly or somewhat agree that the government is responsible for ensuring basic income.8
Guaranteed income is an antiracist policy. Guaranteed income programs challenge and disrupt gendered and racist ideas of deservedness and worth that have undermined our social safety net for generations. In addition to providing reliable economic support, guaranteed income recognizes recipients' agency to make the best financial choices for their unique situations. As opposed to universal basic income, which aims to provide everyone with the same amount of benefit regardless of income or wealth, guaranteed income programs target benefits to people who experience the most economic vulnerability. Drawing from Janelle Jones’s Black Women Best framework9 and john a. powell’s targeted universalism,10 policies that center those who have been most marginalized create systems in which everyone can thrive.

For example, because more families of color live in poverty, the Child Tax Credit expansion both reduced poverty among all groups and reduced racial disparities among people living in poverty significantly. One study found that if the federal government permanently established the Child Tax Credit, poverty among Black (non-Hispanic) children would be cut in half, falling by 10.3 percentage points, and rates for white (non-Hispanic) children would fall by 3.3 percentage points. Poverty among Hispanic children and Asian American and Pacific Islander children would fall by 9.2 and 3.6 percentage points, respectively.11

Where the Action Is: States, Cities, and Counties for Guaranteed Income

Over the past five years, philanthropic funding has played a critical role in seeding the guaranteed income field. Now, federal policy shifts are creating exciting opportunities to use public funds to build out new programs. By intentionally leveraging this critical support, states and local governments can give people what they need to survive, advance racial equity, and restore faith in government as a tool for collective action and progress.

“Guaranteed income programs challenge and disrupt gendered and racist ideas of deservedness and worth that have undermined our social safety net for generations.”

The federal government moved with unprecedented speed during the coronavirus pandemic to develop cash transfer programs that kept American households and businesses afloat, allocating over $5 trillion in relief to states, local governments, businesses, and residents.12 This not only helped the U.S. economy avoid a long recession, but highlighted the power of unrestricted cash transfers targeted to no-, low-, and middle-income residents to reduce poverty and increase economic stability. In particular, the three rounds of stimulus payments and the expansion of the Child Tax Credit in the American Rescue Plan Act (ARPA) were provided to American citizens with no earned income requirements. While advocates continue to push for federal legislation, states and local governments have the opportunity to take action and lead.

Many states and local governments have already announced plans to use portions of the $350 billion in ARPA Fiscal Recovery Funds to set up guaranteed income programs that respond to the disproportionate impacts of the pandemic.13

When determining whether ARPA Fiscal Recovery Funds may be used for guaranteed income programs, local governments, constituents, and civic leaders should consider the following:

Eligibility: Guaranteed income programs that provide economic stability to economically disadvantaged communities may be more likely to fall within the guidelines of appropriate use of ARPA Fiscal Recovery Funds. Specifically, the final rule from the U.S. Department of the Treasury clearly acknowledges that the negative economic impacts of the coronavirus pandemic have not been felt equally and notes the disparate impact on workers of color, low-wage earners, and women of color, exacerbating pre-existing economic disparities.14 Programs that provide economic relief to these communities are more likely to be found to be an appropriate use of ARPA funds.
Timeline: Governments must use allocations from the Fiscal Recovery Funds to cover costs incurred by December 31, 2024. The interim final rule interprets ARPA “to require only that recipients have obligated the Fiscal Recovery Funds” by December 31, 2024 and uses the definition of “obligation” in the Uniform Guidance.15 In addition, the final rule permits Fiscal Recovery Funds to be used to cover costs incurred beginning on March 3, 2021.16

California is well positioned to lead the country in making innovative use of ARPA funds for guaranteed income, having been at the forefront of the guaranteed income movement.17 The State of California alone received over $27 billion in ARPA Fiscal Recovery Funds (see Appendix A: ARPA Allocations Within California for a detailed breakdown).18 Indeed, throughout California, the state, local governments, and advocacy and service organizations have already begun taking advantage of this unique opportunity (see Appendix B: Local Guaranteed Income Demonstrations in California for more details).

Importantly, the five-year California Guaranteed Income Pilot Program won bipartisan support and passed in the 2021-22 California State Budget, allocating $35 million of general funds. Administered by the California Department of Social Services (CDSS), the Program will provide matching funds to California counties, local municipalities, tribal governments, nonprofit and community-based organizations, and joint partnerships to develop or expand guaranteed income pilot programs around the state.

Applicants can request between $2 and $5 million in total funding for up to a three-year grant period, including a planning period and a recommended 18-month disbursement period. Eligibility requires participation in statewide evaluation activities and providing at least a 50 percent match of funds from another source. CDSS provides guidelines for program design, requiring applicants to aim to service at least 150 recipients, recommending a minimum payment of $600 a month and requiring benefits counseling. In addition to requiring the programs to target low-income individuals, CDSS will prioritize funding programs that serve California residents who are pregnant or aging out of the extended foster care system.19

Guaranteed Income Program Design Considerations

Given the momentum behind guaranteed income in California and the current availability of public funds, organizations have the opportunity to develop programs that fit the needs of their communities, while working to move toward longer-term policy. Below we discuss essential considerations program implementers must account for when designing a guaranteed income program.

Public Benefits: Interactions with Existing Social Safety Net Programs

Receiving guaranteed income may affect participants’ eligibility to participate in existing social safety net programs. Given the potential negative impact of losing these benefits, guaranteed income program implementers must take proactive steps to protect existing benefits when possible, and ensure participants are informed about any potential loss of benefits.

Broadly, existing social safety net programs are federal, state, or local government programs designed to provide cash or near-cash support to help people meet certain basic needs. Examples of social safety net programs include Housing Choice Vouchers (Section 8), Medicaid, Supplemental Security Insurance (SSI), and Supplemental Nutrition Assistance Program (SNAP). Current social safety net benefits provide essential support to millions of people and increase access to food, housing, health insurance, and other basic necessities.20 For guaranteed income to meaningfully improve participants’ economic security and wellbeing and reduce economic inequality, it must supplement these existing social safety net programs rather than replacing or restricting them.

Many social safety net programs are “means-tested,” meaning the government determines if someone is eligible by assessing whether they have the means (income and assets) to meet the need without additional assistance.21 Strict income and asset restrictions imposed through means-testing create a system where someone can lose their entire benefit if they earn just a dollar more than the eligibility limit.22 Depending on how the relevant government agency defines income for a given program, payments received through a guaranteed income program could disqualify a participant from receiving a benefit. To understand the potential impacts across a range of public benefits, and the specific ways existing programs have tried to mitigate them, groups should consult the Learning Memo prepared by the Guaranteed Income Community of Practice Federal Benefits Protection Working Group.23

To mitigate the risk of jeopardizing participants’ benefits at a program level, program implementers can incorporate benefits counseling, where trained public benefits counselors help participants navigate these systems when enrolling in and transitioning out of guaranteed income programs. Program implementers can also establish “hold harmless” funds that provide resources to replace some or all of the value of any benefits participants lose based on their participation.

“For guaranteed income to meaningfully improve participants’ economic security and wellbeing and reduce economic inequality, it must supplement these existing social safety net programs rather than replacing or restricting them.”

Program implementers should also work to obtain income exemption waivers from state and federal government agencies to exempt guaranteed income payments from counting against participants’ income eligibility. In alignment with CA AB1338, the California Department of Social Services (CDSS) recently launched a process for guaranteed income programs to request income exemption waivers for CalWORKs and CalFresh.24 Income exemption requests must come directly from county Health and Human Service Agencies, so non-governmental entities requesting an income exemption must coordinate with their local Health and Human Service Agency. Notably, programs seeking an income exemption from CalFresh must be at least partially funded by private dollars regardless of the amount or the source of the private funds.

States have also taken legislative action to protect public benefits under their authority. Following the State of Illinois’s example, the State of California is considering AB1338, which excludes financial assistance received from applicable research and demonstration programs from certain public income eligibility determinations and creates a registration process for these programs to ensure coordination with public social service programs.25

Some social safety net programs are more difficult to protect. In California, all payments received from guaranteed income programs currently count as income for determining Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) eligibility, while California WIC awaits guidance from the U.S. Department of Agriculture. While programs in California have successfully pursued categorical eligibility for Supplemental Nutrition Assistance Program (SNAP) benefits through Temporary Assistance for Needy Families (TANF), this requires private, non-governmental funding.26 Additionally, protecting Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) benefits is extraordinarily difficult given the expansive definition of income used when determining eligibility. The large benefit amounts and strict eligibility processes associated with SSDI and SSI may make it too risky or costly for individuals receiving SSDI and SSI to participate in guaranteed income pilot programs. Advocates must push for federal policies that ensure people with disabilities and older adults are not excluded from or harmed by participating in guaranteed income programs. Additionally, federal housing benefits including Housing Choice Vouchers (Section 8) are not protected, though national advocates are in conversation with the U.S. Department of Housing and Urban Development requesting these protections.

Public Charge Concerns with Public Funding

It is vital that guaranteed income programs using public funds examine potential immigration consequences for recipients subject to the “public charge” test.

The “public charge” test is part of federal immigration law designed to identify people who may depend on public benefits as their main source of financial support. If the test determines that someone is likely to become a “public charge,” the government may deny admission to the U.S. or refuse an application for residency status. For more information on the public charge test and public benefits, see The ABC’s of Public Charge.27

The public charge test is an example of how racist rhetoric and policymaking exclude undocumented immigrants from public benefits programs, with only limited availability to immigrants with other documentation status. Even when immigrants qualify for social safety net programs, concerns about how participating could impact their visa or immigration status through the public charge rule can generate fear and discourage participation. This structural inequity, coupled with decades of cruel immigration policies, has made it harder for immigrants to obtain economic stability.

Importantly, disaster assistance is not considered in public charge determination. As such, American Rescue Plan Act Fiscal Recovery Funds used for guaranteed income programs are likely excluded from public charge determinations.

“Strict Scrutiny” Concerns with Public Funding

The type of funding source used for guaranteed income programs has significant impacts on the ability to target specific populations, and on how programs interact with participants’ existing benefits.

Private funds: Over the past half decade, philanthropic and private donors have funded individual guaranteed income pilot programs to build the case for guaranteed income as a broader policy tool. Philanthropic funds can allow for quick, flexible start-up, and cash received from philanthropically-funded programs generally meets the IRS definition of a “gift,” and may therefore avoid being reported as income.28 Non-income cash disbursements may be excluded from consideration when determining some public benefits. However, organizations should check with local and state regulators and see the Guaranteed Income Community of Practice Fact Sheet for more information.29 While more flexible and potentially easier for navigating benefits eligibility, philanthropic and private funds are often time-limited and generally do not fund a program of more than a few hundred people.

Public funds: Publicly-funded guaranteed income programs can achieve scale and help build the case for longer-term federal public investment. However, as discussed above, using public funding poses a greater risk of impacting recipients' eligibility for other public benefits. Additionally, public funds may be less flexible than philanthropic dollars for targeting programs to build equity, because publicly-funded programs are subject to “strict scrutiny” where race targeting is used.30 To avoid concerns about strict scrutiny, publicly-funded programs may target eligibility by other indicators of need, such as zip code or income, rather than race.

Prior to the influx of federal resources in response to the pandemic, government was not at the forefront of funding guaranteed income programs. Even mayor-led demonstrations, like those supported by Mayors for a Guaranteed Income, tended to be philanthropically funded. However, many states and local governments have now committed to using public funding from the American Rescue Plan Act and other sources to launch guaranteed income programs. As prospects for further federal COVID-19 funding diminish, state and local governments must develop a strategy for securing alternate sources of funds while advocating for continued federal support for guaranteed income.

Eligibility Considerations

Deciding who to include in a guaranteed income program has many cascading impacts, including funding requirements and political feasibility.

Some programs serve a broad set of participants. Alaska’s Permanent Fund Dividend, for example, makes payments to almost all U.S. citizens who have lived in Alaska for the previous calendar year and intend to stay.

Other programs target particular populations, such as pregnant people, youth exiting foster care, undocumented immigrants, and people with conviction histories. These designs reflect some of the earliest and most powerful thinking about guaranteed income as an income floor through which no one should be allowed to fall regardless of their circumstances – a concept shared by thinkers such as Johnnie Tillmon of the National Welfare Rights Organization, Dr. Martin Luther King, Jr., and the Black Panthers.

As mentioned above, creating a targeted program requires thoughtfully considering funding sources. To avoid concerns about strict scrutiny, publicly-funded programs may target by indicators of need, such as zip code or income, rather than race. Privately-funded programs have more flexibility. For example, Springboard To Opportunities’ Magnolia Mother’s Trust provides 12 months of support to low-income Black mothers in Jackson, Mississippi, directly challenging long-held beliefs around gender and race and highlighting the intersections of gender, racial, and economic justice. Because Magnolia Mother’s Trust is funded with private dollars, the program avoids the “strict scrutiny” concerns detailed above.

“These designs reflect some of the earliest and most powerful thinking about guaranteed income as an income floor through which no one should be allowed to fall regardless of their circumstances – a concept shared by thinkers such as Johnnie Tillmon of the National Welfare Rights Organization, Dr. Martin Luther King, Jr., and the Black Panthers.”

Payment Frequency: Lump Sum vs. Series of Recurring Payments

Guaranteed income program implementers must determine how frequently the program will distribute payments. The most common options are lump sum payments, typically annually, or as a series of recurring payments, typically monthly. Importantly, program administrators should explore if and how payment frequency impacts eligibility for other social safety net programs, since some government agencies may be more likely to exempt lump sum payments rather than regular, periodic payments.

This paper sees advantages in distributing guaranteed income as a series of recurring payments. As noted in the introduction, guaranteed income is the provision of regular cash payments with no strings attached and no work requirements. By providing regular, recurring payments, guaranteed income helps smooth out fluctuations in income and ensures participants have a steady, reliable stream of resources during their time in the program.

A recent study from the Center on Poverty and Social Policy at Columbia University found that monthly distributions of tax credits are more effective at keeping families out of poverty than annual lump sum payments. Using data from the monthly Child Tax Credit payments authorized by the American Rescue Plan, researchers found the child poverty rates were consistently 6.8 percentage points lower with monthly payments, on average, than with lump sum payments. Monthly payments reduce income volatility and reduce poverty for the same cost as annual payments.31

“Monthly payments reduce income volatility and reduce poverty for the same cost as annual payments.”

Additionally, providing regular, periodic payments can create a basis for an ongoing relationship with participants. On a recent Economic Security Project panel convened to discuss guaranteed income as a public health intervention, Dr. Zea Malawa, Physician Director of Expecting Justice in San Francisco, described how debit card distribution days for the Abundant Birth Project provide a joyful opportunity for participants and program staff to casually convene and experience community. On the same panel, Michelle Lockhart, a former member of the Old Fourth Ward Economic Security Task Force in Atlanta, Georgia, described how her neighborhood was more social, happier, and spent more time in community on days when stimulus checks came through. These experiences signal that periodic payments can support the goal of using guaranteed income to build both economic security and overall well-being for individuals and communities.

Program Eligibility Verification

Within social safety net programs, processes for determining eligibility can be intrusive, burdensome, unresponsive, and stigmatizing. For example, means-tested programs require applicants to prove they fall below a given income level by sharing detailed information about their conditions of employment and other sources of income. Reviewing this type of proof requires a structure for program administrators to process the documentation and judge eligibility, which can create slow and unresponsive bureaucracies. Generally, this means-testing does not account for the complex everyday lives of participants and stigmatizes participants by reinforcing notions of “deserving” and “undeserving” recipients. When designing targeted programs, it is important to think through these processes carefully, in partnership with members of the targeted group.

Once again, the source of funds plays an important role when deciding how to structure guaranteed income program eligibility verification. Programs using private funds have the flexibility to make their processes less onerous and stigmatizing, though this may equate to less strict adherence to eligibility criteria. Programs using public funds may be able to rely on broader infrastructure to verify eligibility, including existing government administrative datasets like income tax data or enrollment in other government programs, but will have limited ability to change the nature or character of those processes. Programs that use government administrative data for eligibility verification must consider data privacy concerns to ensure residents’ data is not misused.

“When designing targeted programs, it is important to think through these processes carefully, in partnership with members of the targeted group.”

To increase the ease of connecting to residents within target populations, government agencies can support privately-funded guaranteed income programs by facilitating warm handoffs between government programs and services and guaranteed income program administrators. For example, if a guaranteed income program targets residents returning to their communities after detention or incarceration, the local government could allow the administering organization to have dedicated space in the area where people exit so organizers can be physically present to provide immediate support upon release and connect people to applicable resources, including enrollment in the guaranteed income program. Similarly, if a guaranteed income program focuses on new moms, the local public hospital could ensure each patient receives information about their eligibility during their visit to the doctor. Program implementers should make these decisions in consultation with impacted people and members of the prospective target population to ensure they will most benefit potential program participants and will not be negatively associated with other programs or viewed as an overreach.

Conclusion

Innovative and expansive programs in California and across the country demonstrate the potential of guaranteed income to improve people’s immediate well-being and long-term economic security. Despite the impasse in Washington, governments and community-based organizations across California are moving forward in establishing guaranteed income programs that provide significant benefits while setting important precedents for national policy. Organizations throughout California have the opportunity to use private and public dollars to demonstrate the power of these approaches, and lay the groundwork for broader policies that address profound inequity and ensure that everyone has what they need to live and thrive.

Editor's note: This paper was commissioned by the Blueprint for Belonging project, a collaborative initiative led by the Othering & Belonging Institute, in partnership with more than 50 civic and community-based organizations across California. Any recommendations expressed in the paper are the authors’ alone, and do not necessarily reflect those of the Othering & Belonging Institute or UC Berkeley.

1Bohn, S., Danielson, C., & Malagon, P. (2021). “Poverty in California.” Public Policy Institute of California. https://www.ppic.org/publication/poverty-in-california/.
2 Hamilton, D., Biu, O., Famighetti, C., Green, A., Strickland, K., & Wilcox, D. (2021). Building An Equitable Recovery: The Role Of Race, Labor Markets, and Education. Institute on Race and Political Economy, The New School. https://www.newschool.edu/institute-race-political-economy/Building_An_Equitable_Recovery_Hamilton_et_al_2021.pdf.
3West, S., Castro Baker, A., Samra, S., & Coltrera, E. (n.d.) Preliminary Analysis: SEED’s first year. https://static1.squarespace.com/static/6039d612b17d055cac14070f/t/
6050294a1212aa40fdaf773a/1615866187890/SEED_Preliminary+Analysis-SEEDs+First+Year_Final+Report_Individual+Pages+.pdf.
4 Shafer, P., Gutiérrez, K. M., Ettinger de Cuba, S., Bovell-Ammon, A., & Raifman, J. (2022). Association of Child Tax Credit Advance Payments with Food Insufficiency in US Households. Journal of the American Medical Association. https://childrenshealthwatch.org/wp-content/uploads/shafer_2022_oi_211202_1641586727.69679.pdf.
5 Notably, while automatic disbursements are an important aspect of these policies, relying on tax filing status excludes many of the most marginalized residents, including those whose earned income is too low to necessitate tax filings. Moving forward, governments must expand on this disbursement mechanism to intentionally incorporate all eligible recipients.
6 Oxfam. (2021, February). Poll of Voters on COVID-19 Relief Package. https://www.oxfamamerica.org/explore/research-publications/poll-voters-covid-19-relief-package-february-2021.
7 Clark, J. & Araiza, O. (November 2021). Margins in Movement: Toward Belonging in the Inland Empire of Southern California. Othering & Belonging Institute at UC Berkeley, https://belonging.berkeley.edu/sites/default/files/2021-11/Margins_in_Movement.pdf.
8 Clark, J. & Magaña López, M. (February 2022). Vietnamese Voices from Orange County, CA: Narratives of Community, Government, and Change. Othering & Belonging Institute at UC Berkeley, https://belonging.berkeley.edu/sites/default/files/2022-02/Vietnamese%20Voices.pdf.
9 Bozarth, K., Western, G., & Jones, J. (September 2020). Black Women Best: The Framework We Need for An Equitable Recovery. The Roosevelt Institute, https://rooseveltinstitute.org/wp-content/uploads/2020/09/RI_Black-Women-Best_IssueBrief-202009.pdf.
10 powell, j. A., Menendian, S., & Ake, W. (2019). Targeted Universalism: policy & practice. Haas Institute for a Fair and Inclusive Society. https://belonging.berkeley.edu/targeted-universalism.
11 Acs, G. & Werner, K. (2021). How a Permanent Expansion of the Child Tax Credit Could Affect Poverty. Urban Institute. https://www.urban.org/sites/default/files/publication/104626/how-a-permanent-expansion-of-the-child-tax-credit-could-affect-poverty_1.pdf.
12 Parlapiano, A., Solomon, D. B., Ngo, M., & Cowley, S. (2022, March 11). Where $5 Trillion in Pandemic Stimulus Money Went. The New York Times. https://www.nytimes.com/interactive/2022/03/11/us/how-covid-stimulus-money-was-spent.html.
13 The U.S. Department of the Treasury guidance describes the purpose of the funding, known as the Coronavirus State and Local Fiscal Recovery Fund (“Fiscal Recovery Funds”), as intended to “build a strong, resilient, and equitable recovery,” including by helping maintain public services and “support families and businesses struggling with [the pandemic’s] public health and economic impacts.” States receiving Fiscal Recovery Funds have broad flexibility on how best to use the funds provided under ARPA. See Coronavirus State and Local Fiscal Recovery Funds for more information.
14 In the final rule regarding ARPA, the U.S. Department of the Treasury provides the following guidance on cash transfer programs: “Cash transfers, like all eligible uses in this category, must respond to the negative economic impacts of the pandemic on a household or class of households… (R}ecipients may presume that low- and moderate-income households (as defined in the final rule), as well as households that experienced unemployment, food insecurity, or housing insecurity, experienced a negative economic impact due to the pandemic. Recipients may also identify other households or classes of households that experienced a negative economic impact of the pandemic and provide cash assistance that is reasonably proportional to, and not grossly in excess of, the amount needed to address the negative economic impact… Finally, Treasury has reiterated in the final rule that responses to negative economic impacts should be reasonably proportional to the impact that they are intended to address. Uses that bear no relation or are grossly disproportionate to the type or extent of harm experienced would not be eligible uses. Reasonably proportional refers to the scale of the response compared to the scale of the harm. It also refers to the targeting of the response to beneficiaries compared to the amount of harm they experienced; for example, it may not be reasonably proportional for a cash assistance program to provide assistance in a very small amount to a group that experienced severe harm and in a much larger amount to a group that experienced relatively little harm.”
15 Ibid., 4433.
16 Ibid., 4446.
17 Over the past two years, we have seen an exciting expansion of cities and states setting up guaranteed income and other cash transfer programs across the country. California, specifically, has been on the forefront. Home to the first mayor-led guaranteed income demonstration, the Stockton Economic Empowerment Demonstration (SEED) and the first publicly-funded program since the 1970s, the County of Santa Clara’s Basic Income Pilot for transition age foster youth, California has led the way in demonstrating the power of direct cash. Building on these successes, California allocated $35 million in state funds to support guaranteed income programs around the state, and the SOAR Act, legislation to provide homeless youth transitioning from high school with a guaranteed income, is moving through the state house.
18 A breakdown of all Coronavirus State and Local Fiscal Recovery Fund allocations to states can be under the Allocation Information section of the U.S. Department of the Treasury’s webpage on CSLFRF. See U.S. Department of the Treasury, (2021). Coronavirus State and Local Fiscal Recovery Funds. https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/state-and-local-fiscal-recovery-funds.
19 For more information, see California Department of Social Services. (n.d.). California Guaranteed Income Pilot Program: Preliminary Information for Prospective Applicants. Retrieved on May 4, 2022 from https://www.cdss.ca.gov/inforesources/guaranteed-basic-income-projects/.
20 Trisi, D. & Saenz, M. (2021). Economic Security Programs Reduce Overall Poverty, Racial and Ethnic Inequities: Stronger policies needed to make further progress. Center for Budget and Policy Priorities. https://www.cbpp.org/research/poverty-and-inequality/economic-security-programs-reduce-overall-poverty-racial-and-ethnic.
21 These eligibility determinations frequently rely on formulas that are outdated or do not accurately reflect need. For example, SNAP income eligibility is based on food costs reflected in its Thrifty Food Plan. The Thrifty Food Plan was created in the 1970’s and had not been updated until 2021 to account for inflation or changes in food prices since its creation. See Joseph Llobrera et al., USDA Announces Important SNAP Benefit Modernization, Center on Budget and Policy Priorities, (Aug. 26, 2021), https://www.cbpp.org/research/food-assistance/usda-announces-important-snap-benefit-modernization#_ftn1.
22 This structure, known as the “benefits cliff,” leaves people unable to pursue economic mobility because they will earn too much to qualify for social safety net programs but may not earn enough to independently afford basic necessities like housing, food, and healthcare.
23 Guaranteed Income Community of Practice. (March 2022). Learning Memo: Guaranteed Income Community of Practice Federal Benefits Protection Working Group. https://gicp.info/wp-content/uploads/sites/164/220608-Federal-Benefits-Memo.pdf.
24 California Department of Social Services. (2022). CalWORKs and CalFresh Income Exemption Requests for Guaranteed Income Demonstration Projects. https://www.cdss.ca.gov/inforesources/guaranteed-income-exemption-requests.
25California Legislature, Public social services programs: financial assistance demonstration and research programs, AB-1388, introduced in Assembly February 19, 2021, https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB1338.
26 This means the state agency used its option to extend the same income exclusions it uses to determine TANF eligibility to also determine SNAP eligibility.
27 Protecting Immigrant Families. (March 2021). The ABCs of Public Charge. Retrieved on May 4, 2022 from https://protectingimmigrantfamilies.org/wp-content/uploads/2021/03/THE-ABCS-OF-PUBLIC-CHARGE.pdf.
28 Frequently Asked Questions on Gift Taxes, IRS website at https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes.
29 Guaranteed Income Community of Practice. (June 2021). Fact Sheet: The Benefits Cliff and Guaranteed Income. https://gicp.info/wp-content/uploads/sites/164/Benefits-Fact-Sheet-V2.pdf.
30 Courts use “strict scrutiny” to determine the constitutionality of laws or government policies that differentiate based on race or national origin, among other things. To pass strict scrutiny, the policy must be narrowly tailored to achieve a compelling government interest.
31 Hamilton, C., Wimer, C., Collyer, S., & Saricsany, L. (2022). Monthly Cash Payments Reduce Spells of Poverty Across the Year. Center on Poverty & Social Policy, Columbia University. https://static1.squarespace.com/static/610831a16c95260dbd68934a/t/
627ad342bc1db246690cdcf0/1652216643360/Monthly-Cash-Payments-Reduce-Spells-of-Poverty-CPSP-2022.pdf.