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Memorandum of Support

Empire Justice Memo of Support: Repeal The 185% Earned Income Cap

A.3425 (Wright)

When New York State passed its welfare reform initiative in 1997, working families on public assistance were promised that they could earn their way to the poverty level with the state’s enhanced earnings disregards.  Social Services Law § 131-a(8)(a)(iii).  However, because the Social Services Law  § 131-a(10) makes families with incomes over 185% of the standard of need ineligible for any assistance,  families are made ineligible for assistance before they  ever earn up to the poverty level.

In 1997, New York’s welfare reform law introduced a generous earnings disregard designed to allow families to earn up to the poverty level.  At that time, 185% of the standard of need was closer to the poverty level than it is today.  The poverty level is adjusted upward every year, and as a result, the poverty level is significantly higher than 185% of the standard of need in every county.  Recipients become ineligible for assistance at 185% of their district’s standard of need before they every reach the poverty level.

Earnings disregards are an important piece of the income package that recipients are expected to use to pay their rent, and recipients should be able to work their way up to the poverty level as promised by Social Services Law § 131-a(8)(a)(iii).  As the attached chart indicates, in no county of the state is a public assistance household of three with wages allowed to reach the poverty level. In fact, the 185% cap results in most families losing public assistance eligibility when they are $300 - 400 under the poverty level.

The public assistance grant increase which is scheduled to take place over the next three years, beginning July 1, 2009, will increase the size of the 185% cap, but not enough to change the problem of the 185% cap cutting people off before they reach the poverty level. Even in the unlikely event that the poverty level in 2011 is the same as the 2009 poverty level, families would lose their assistance in every county except Nassau, Suffolk and Putnam before they hit the poverty level.  If the 2011 poverty level exceeds the 2009 poverty level by even $20 per month, the families in Nassau, Suffolk and Putnam will not be able to earn their way to the poverty level before losing eligibility for public assistance.

This bill includes an earnings disregard of 67% but maintains the poverty level cap on eligibility.  Repealing Social Services Law 131-a(10) will help assure the success of families leaving welfare, allowing them to earn their way to poverty, before losing cash assistance.  Increasing the earned income disregard to 67% will assure that more families are able to earn up to the poverty level and help New York State meet its federal work participation rate.

This memo was prepared by:

Susan C. Antos

Empire Justice Center
119 Washington Avenue
Albany, NY  12210 

(518) 462-6831
(518) 935-2852