Maine’s Whole Families Working Group engaged Stepwise Research in 2018 to assess the prevalence and impact of benefits cliffs. The study examined the interplay among 13 state and federal programs. Child care and health benefits had the most extreme cliffs. In other instances, the group found downward slopes across the benefit systems, negatively impacting the parent’s fiscal interest and capacity to work outside the home. The Earned Income Tax Credit (EITC) at the state and federal level was shown to be an effective policy lever to ease the cliff effect.
The Maine Department of Health and Human Services increased its monthly food supplement for working families from $15 per month to $50 per month by using $7 million annually in Temporary Assistance for Needy Families (TANF) funds to supplement SNAP benefits. Maine will also increase access to transitional Medicaid for families entering the workforce.
In 2019, Maine enacted a bipartisan package of bills, referred to as the Invest in Tomorrow package (LD 1772, LD 1774). The new laws are intended to address in significant ways the state’s benefits cliffs. Together, the package eliminates the gross income test for TANF, invests $2 million in whole-family pilot programs and increases the income disregard in TANF to support parents’ transition to work. It also authorizes an increase in TANF funds for transitional food assistance and establishes a working group to align programs and improve accountability for better outcomes for families.
Massachusetts is in the process of reforming its TANF program. The emphasis of reform efforts are on simplifying and aligning program rules and requirements for working families, better incentivizing and supporting employment and employment-related activities, and easing the cliff effect during transition to economic self-sufficiency. In 2019, the state is poised to pass a budget that will eliminate the asset test on a family’s first vehicle and provide child care assistance, for the first time, to kinship caregivers. Supporting kinship caregivers with child care subsidies can support economic mobility and family preservation.
These reforms build on significant changes in TANF policies implemented during the 2019 fiscal year. They include increasing the cash asset limit from $2,000 to $5,000 per household and offering to disregard 100% of participants’ income for six months when it falls below 200% of the federal poverty level. Taken together, these changes smooth transitions to work, sustain families when inevitable emergencies occur, and enable workers to begin accumulating financial assets.
“I hear from employers that folks can’t take on extra hours or a wage increase because they’re afraid of losing their housing, child care or other supports. We want to hand them a pole vault stick to get over the cliff.” —Jeff McCue, commissioner, Massachusetts Department of Transitional Assistance
Massachusetts’ Learn to Earn Initiative takes a comprehensive approach to providing unemployed and underemployed parents receiving public assistance the supports, skills and credentials they need to gain and retain employment. To help families identify how wage increases affect benefits, Massachusetts’ Department of Transitional Assistance, along with other agencies administering public benefits, developed CommonCalc, a benefits calculator for staff working with clients receiving TANF, SNAP and other public benefits. The tool helps case managers and community providers work more effectively with clients and to help them understand the impact of earnings and plan for their exit from public benefits. To promote self-determination, frontline staff coach clients to maximize opportunity rather than benefits.
Learn to Earn is also funding local pilot partnerships that are testing new models to encourage and support sustainable employment among public benefit recipients. The initiative is working two strategies: 1) through a cross-agency working group charged with identifying policy, regulatory and statutory changes to mitigate cliff effects, and 2) by supporting local flexibility and innovation at the pilot sites, it is testing policy changes and identifying solutions that can be scaled statewide.
Through the Federal Reserve Bank of Boston’s Working Cities Challenge, the city of Springfield has modified its financial literacy curriculum to highlight and plan for cliff-related barriers to employment. This whole-family curriculum is embedded in many local workforce development training programs and delivered to Head Start family service coordinators and coaches to help clients mitigate changes in net financial resources before they occur. Springfield is engaging employers to identify strategies to ease the impact of cliffs for their employees and in public policy.
New Hampshire’s proposed 2019-2020 budget contains a plan from Governor Chris Sununu (R) and the state Department of Health and Human Services (DHHS). It addresses benefits cliffs, develops a benefits calculator for public use, and explores solutions to closing the cliff effect.
DHHS is also restructuring its divisions and bureaus to prioritize prevention and economic stability as well as improve frontline interactions with clients. In addition, the Division of Economic and Housing Stability was created in 2018 to “promote a more holistic, multi-generational and integrated approach for individuals, children, and families that may be in need of an array of supports and services.” The new organization brings together many human services functions, including workforce, child care, child support and housing—all aimed at creating pathways to self-sufficiency.
New Hampshire’s cliff effect initiative complements the Community Collaborations to Strengthen and Preserve Families grant program from the federal Children’s Bureau at the Administration for Children and Families. The grant program focuses on strengthening families, building parents’ capacity for self-sufficiency, and ensuring children are in safe and nurturing environments. The initiative also aligns with statewide initiatives addressing affordable housing vouchers and planning for high-quality preschool, the federal State Opioid Response grant, increasing quality initiatives at Family Resource Centers, and the state’s new 10-Year Mental Health Plan.
Focus groups conducted by the Connecticut Association of Human Services offer compelling examples of how benefits cliffs limit Connecticut parents’ ability to move ahead economically. As one parent who participated in the focus group described:
“It’s like being pushed over the cliff, not falling. You have to work to qualify, but then working too much can cost you your Care4Kids? The same goes for food stamps and HUSKY, and with those we’re barely getting by [...] And because you’re not allowed to save anything up, to have money in your bank account, you have nowhere to land.”
In addition, the state’s Two-Generational Advisory Board held a public forum to inform legislators, state agencies, parents and others about opportunities to address the cliff effect. The board created a work group charged with swiftly developing a study of the cliff effect, and potentially a cliffs calculator. It also devised policy changes to mitigate the potential cliff effect of the 2019 minimum wage increase passed by the legislature in HB 5004. The work group includes agency commissioners, legislators and advocates.
In 2019, Connecticut’s Office of Early Childhood modified its child care subsidies to smooth the impact of benefits cliffs. Other efforts by the office to boost employment for parents through a whole-family approach include a child care voucher program to help qualifying low-income parents attend community college.
In 2019, Connecticut passed SB 1080, which bolsters existing two-generational legislation by charging the administration with bringing together agencies to develop a plan to help families overcome barriers to economic success. The legislation requires the plan to include indicators of quantifiable and verifiable systems change to disrupt cycles of intergenerational poverty and advance family economic self-sufficiency and equity. To achieve those goals, the plan likely will include multi-agency efforts to address cliffs across numerous state benefits programs.
Through the Federal Reserve Bank of Boston’s Working Cities Initiative, the city of Newport is working with stakeholders to identify solutions to benefit cliffs in housing assistance. The complexity of housing assistance policies and the cliff effect were highlighted at a meeting of the Rhode Island team. Families discussed how housing assistance programs each have their own rules and structures, creating a complex interplay that is difficult for residents and case managers alike to understand.
Vermont has been working for years to address TANF benefit cliffs. In 2013, the earned income disregard was increased from $200 and 25% of remaining earnings to $250 and 25% of remaining earnings, allowing families to keep more of their TANF benefits when they go to work. The Reach Ahead program at Vermont’s Human Services agency provides a transitional food benefit and other support services to help working clients put food on the table after they exit TANF and the state’s postsecondary education program.
In 2017, the Vermont General Assembly established a study committee to examine proposals to increase the state’s minimum wage and the impact that would have on public benefits for low-income families. The committee ultimately recommended increasing the state’s minimum wage, while also including a provision in the legislation to shift the eligibility for the state’s child care subsidy at the same rate to reduce the likelihood that low-income families would lose their child care support.
In 2018, Vermont passed HB 236, which increased asset limits for TANF from $2,000 to $9,000 and excludes deposits in child savings accounts and retirement accounts. Both measures were taken to mitigate against loss of benefits when families try to build asset cushions for their families. Assets accumulated from earnings by participating families, as well as any earned income tax credit, are now excluded when determining continuing eligibility for TANF. The statute also removes children’s higher education savings accounts from asset limits when determining eligibility for a child care subsidy.