Convening #2 The Benefits Cliff
Guaranteed Income and the Benefits Cliff: Aligning on a strategy to protect benefits while piloting guaranteed income and thinking beyond the benefits cliff
- Provide tools and resources for members to navigate the benefits cliff, mitigate loss of benefits, and consider tax implications in their state or local context of a pilot program.
- Discuss moving from “one-off” waivers for pilot programs to state and federal waivers that help or solve the loss of benefits.
- Explore how the benefits cliff issue broadly, not just for pilot programs, reflects the fragility and punitive design of the social safety net
- MGI’s Guaranteed Income Pilot Design Considerations
- Mitigating Loss of Health Insurance and Means Tested Benefits
- State Income Exemption Bills: New York, California, and Illinois (passed)
- Rep. Bonnie Watson Coleman’s Income Exemption Bill Summary (116th Congress, not reintroduced)
Lessons Learned: Guaranteed Income Pilots and Mitigating the Loss of Benefits
Sukhi Samra, SEED & Mayors for Guaranteed Income
- Benefits preservation work is very difficult and requires buy-in from stakeholders who don’t necessarily have an incentive to work alongside you. Benefits work is very state-by-state and county-by-county specific.
- Stockton used four strategies to protect the benefits cliff:
- Ensured benefits are structured as a gift – The entity giving the disbursements was different than the entity conducting the research. The cash was therefore unconditional and the research was compensated beyond the $500/month. Classifying the disbursement as a gift allowed recipients not to have to report these gifts on income taxes and in turn allowed it to be excluded from programs like MediCal. This allowed up to protect some benefits.
- Pursued waivers when possible – SEED was only able to obtain waivers for CalWorks (TANF). SEED worked with a local human services agency who submitted a waiver request with the State of California. This excluded $500/month from being counted against any CalWorks services that recipients may have been receiving.
- Set up a hold harmless fund – Any unexpected loss of benefits could be compensated for benefits SEED could not protect. SEED used this mostly for housing. We were able to set up a unique relationship with the housing authority in Stockton. The board voted to allocate some of their fund towards their hold harmless fund to reimburse recipients for their share of cost for housing.
- Provided benefits counseling – Provided benefits counseling for two reasons. First, to comply with the informed consent standards of IRB. Second, in alignment of our values of agency SEED wanted to provide as much information as possible and then trust families to make the best decisions for their families. SEED partnered with a local nonprofit, Catholic Charities, to provide benefits counseling and explain exactly how the $500 could impact their benefits. Recipients could drop out, stay in, or transfer their spot in the program to someone else in their household.
- There were two benefits SEED was unable to protect: disability benefits and CalFresh.
- With disability, many participants who received these benefits dropped out.
- With CalFresh, the amount received in SNAP is not a dollar for dollar reduction and the cash is not flexible, people were okay with losing a little bit in their SNAP benefits to receive the $500/month.
Atlanta and Richmond Federal Reserve Banks’ Benefits Cliff Dashboard
Ellyn Terry, Federal Reserve Bank of Atlanta
- There are three main uses cases for the dashboard:
- information tool for policy makers,
- inform program design, and
- educate prospective program participants on possible benefits loss.
- The dashboard does not currently include all eligibility criteria for all states including asset limits.
- To create the database, the Fed used the Policy Roles Database (PRD). The database assumes the guaranteed income disbursement is structured as a gift. The dashboard codes programs by how and if they will be affected by the GI disbursement. Based on their research, they coded the programs based on the likelihood it would be affected be a GI disbursement. Based on the Feds’ research the programs in red would be affected by GI and programs in green will not be affected, this includes all taxes and tax credits. However, it is important to check with program administrators in your state.
Lessons Learned from Illinois: State Income Exemption Bill
Kim Drew, Heartland Alliance, Rachel Black, Aspen Institute
- Heartland Alliance led a legislative strategy to protect public benefits for participants enrolled in basic income pilots in Illinois. There were numerous reasons why they felt they needed to protect benefits. Heartland Alliance estimated that at least half of the people in the treatment group could have one or more benefits at risk. We were particularly concerned about benefits where the value of the benefit could not be easily replaced with cash so Medicaid and child care were high priorities.
- A legislative strategy was more directive than agency level advocacy. Each of the programs required a slightly different approach which would require different advocacy with the agencies. The bill passed right along party lines.
- One thing to note about the language of the bill was the phrase, “Maximum extent permitted by federal law” so the state wouldn’t be on the hook for the cost of benefits.
- Important to note this was a multi-year strategy, the bill was just a small piece. The research design excluded some folks who received housing vouchers, SSI and SSDI because of the risk of loss of benefits.
- Two takeaways from this process:
- We should not be doing this work piecemeal, we should be thinking about a federal strategy.
- The earned income tax credit is one of the most obvious mechanisms to bring direct cash policy to scale.
Beyond the Benefits Cliff
Rachel Black, Aspen Institute
- There are four key themes
- Clear need to connect practitioners to policy action.
- There are limited to reforming and one program in isolation. It is really hard to do good in a punitive system.
- Need for wholesale reorientation of policy systems around the values and principals cash represents: unconditional, automatic, unrestricted.
- Policies need to originate and be accountable to people who are impacted.