The Schwarzenegger Administration has informed the Legislature that the social service trailer bill being sent to the Legislature will repeal the statutory Cost of Living Adjustments (COLAs) for both CalWORKs grant and for the state SSP portion of the SSI grant. Even if adopted, this would have no immediate impact on program participants because the COLAs for both programs have already been suspended for the 2009-10 state budget. It also has no impact on the 2009-10 budget.

Repealing the COLAs, however, virtually guarantees that the grants will lose purchasing power at an accelarated pace and be even more inadequate in meeting the cost of housing, food and utilities. To see how much purchasing power the CalWORKs and SSI grants have lost in recent decades see the link to the California Budget Project and go to page 49 for CalWORKs and page 52 for SSI.

http://www.cbp.org/pdfs/2009/090505_uncharted_waters_May_update.pdf

CalWORKs grants are a particular concern because of the rising number of homeless CalWORKs families. The COLA has been been suspended or the grant reduced in 13 of the past 21 years. The maximum CalWORKs grant for a three person family as of July 1 will be $694 a month, exactly what was paid by Governor Deumejian in 1989. With unemployment at 11%, fewer families are able to make up the lost income.

SSI grants may suffer less because the federal portion of the grant includes a federal statutory COLA that the state can not repeal. Twice in recent years the state has diverted the federal COLA away from recipients and into the state budget. The state could do this because our SSP payments were above the $156 minimum the state must contribute (we are just $20 above it now and the Governor is proposing to cut the $20). Once grants hit the minimum, the state can no longer divert SSI COLAs because it can not reduce SSP further.

The Legislature would be wise to consider carefully before agreeing to repeal the two COLAs. Though the COLAs have often been suspended, they provide a powerful point of leverage in the human services budget. Many program cuts desired by both Democrat and Republican Governors (and strongly opposed by advocates) have been prevented by suspending COLAs. Without the COLAs, the Legislature will have far less to bargain with in future years.