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Minding the Gap between Benefits and Prosperity

Explore the impact of the Cliff Effect on low-income families and strategies for self-sufficiency at the 2019 Prosperity Indiana Summit. Learn about federal work support benefits and how to plan effectively for transitions. Join us for insights and policy implications.

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Minding the Gap between Benefits and Prosperity

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  1. Minding theGap between Benefits and Prosperity 2019 Prosperity Indiana Summit January 30, 2019

  2. Office of Public Health & Safety ShellyeSuttles Food Policy & Program Coordinator Marie WieseCo-Founder, BRiCKs AllianceCircles Coordinator Jill Chappell Co-Founder, BRiCKs Alliance Circles Volunteer Madeline SteckNutrition Programs Coordinator

  3. Agenda • Overview of barriers faced by low-income families • Defining the Cliff Effect • What are the Benefits? • Planning for the Cliff Effect • Policy Implications

  4. POVERTY is an EconomicISSUE • 46 + million people in the U.S. living in poverty. • Yet, we don’t have enough labor available to fill needed positions.

  5. Poverty DefinedBy The Government ~$2500/month @ 125% vs ~$5000/month @ 250% family of 4 Federal Minimum Wage is $15,080 a year. U.S. Dept. of Labor. Wage and Hour Division. (since July 2009) = Indiana Minimum Wage ($7.25/hour)

  6. Getting to Self-Sufficiency http://www.incap.org/iiwf/self-sufficiency/2016-Self-sufficiency-report.pdf

  7. Gaps in Life Expectancy in Indianapolis

  8. Poverty Rates Sources:  US Census Talkpoverty.org STATS Indiana

  9. Current Bridge Out Of Poverty Not only is the bridge broken… It was never properly built to support travel up and out of poverty

  10. The Cliff Effect is: A Sudden, abrupt, disproportionateloss of assistance (such as SNAP/food stamps, medical coverage, WIC, childcare, etc. )when a person in poverty receives a slight increase in income.

  11. WHY IT MATTERS: • the greatest systemic barrier for hardworking families trying to move out of poverty: • FAMILIES are forced to turn down job promotions and pay raises to keep the assistance that is needed to provide adequatelyfor their families. The CLIFF EFFECT

  12. Sarahand the cliff effect https://www.youtube.com/watch?v=t9ZIaBweBds

  13. What are “the benefits”? Madeline SteckIndy Hunger Network Nutrition Programs Coordinator

  14. Federal Work Support Benefits 1 • TANF • “Temporary Assistance for Needy Families” • Cash benefits • SNAP (Supplemental Nutrition Assistance Program) • Formerly known as food stamps • Also referred to as EBT • Generally must be at or below 130% of the federal poverty line • WIC (Women, Infants, and Children) • Food benefits, formula, breast-feeding help, and referrals • Generally must be at or below 185% of the federal poverty line

  15. Federal Work Support Benefits 2 • EITC • Earned Income Tax Credit • Refundable tax credit for low- to moderate-income working individuals (usually parents) • CCDF (Child Care and Development Fund)  • Childcare vouchers for low-income parents • EAP (Energy Assistance Program) • One time assistance with heat and electric bills

  16. Federal Work Support Benefits 3 • NSLP & SBP (National School Lunch Program & School Breakfast Program) • Children from families at or below 130% of the federal poverty line receive free breakfast • Children from families between 130% and 185% of the federal poverty line receive reduced price breakfast • Section 8/Shelter Care Plus • Provides housing vouchers for low income individuals • Uses area median family/individual income instead of federal poverty line to determine eligibility • Lifeline • Monthly discount on telecommunications services ($5-9) • Must be at or below 135% of federal poverty line

  17. History of the Federal poverty Line

  18. FederalPoverty Line (FPL) vsLivingWage • The issue today: food is no longer 1/3 of a household budget. • Child care and transportation are now much more significant costs. • Housing has surpassed food as a percent of total. • Yet the poverty threshold since 1965 has been indexed to the Consumer Price Index, not to changes in the cost of food or the share of a family’s income spent on food or the cost of other items that have since become more essential to a family’s budget.

  19. Income Guidelines: SNAP Example Some of the types of income considered are wages, unemployment benefits, Social Security benefits and child support.

  20. Examples of deductions • SNAP has many allowable deductions for expenses, and this makes it difficult to predict how changes to an individual’s circumstances will affect their SNAP benefits. • Housing costs • Court ordered child support payments • Child care or dependent care payments • Certain self-employment expenses • Monthly medical expenses over $35 for elderly (at least 60 years of age) and people with disabilities.

  21. benefits vary by state…and even regionally

  22. Planningfor the cliff effect Jill Chappell President, BRiCKs Alliance Circles Volunteer

  23. Work supports help meet basic needs ? http://www.incap.org/iiwf/self-sufficiency/2016-Self-sufficiency-report.pdf

  24. Subsidies end as pay increases Subsidies decline as Pay increases

  25. Cliff effect planningtool DISCLAIMER: • The tool should only be used to make estimationson future benefits • It will notdetermine eligibility.

  26. Current BENEFITSinformation • Include the amount actually being received for each benefits program. • Because of the complexity of some programs, it may be impractical to estimate an outcome from every scenario.

  27. demographics • Demographicsare collected about geographic area, home, and family composition. • Some benefits are based on statewide data while others vary by county. • These are similar questions that a caseworker would ask a “client” to determine benefit eligibility and the amount of each.

  28. Current BUDGETinformation…leading to What IF? Monthly EXPENSES: INCOMEearned, unearned, and other ASSETS:

  29. Cliff effect analysis: an example Monthly Amount What IF? Hourly Wage

  30. Mitigating the Cliff effect: an example What IF? Monthly Amount Hourly Wage http://www.incap.org/cliffeffect.html#.XFA6v89KhsM

  31. What would you do?

  32. Better Understanding of the cliff

  33. Policyimplications ShellyeSuttles Office of Public Health & Safety Food Policy & Program Coordinator

  34. Poverty: Policy Implications According to the American Psychological Association (2018): • Effects on Households • Low birth weight • Reduced cognitive development • Food insecurity and inadequate nutrition • Homelessness • Chronic disease • Exposure to violence • Exposure to environmental contaminants (e.g. black mold, etc.)

  35. Poverty: Policy Implications • Effects on Society • Increased health expenditures • Increased poverty-related crime (e.g. burglary, etc.) • Homelessness • Reduced productivity • Lowered economic output

  36. Public Policy & the Cliff Effect Policy benefits of a Cliff Effect planning tool • A resource for families working toward self-sufficiency • Advocacy opportunity • Federal benefits as work support programs • Particularly in the case of Medicaid and childcare subsidy (CCDF) • Frame the current discussion of increased minimum wage • Without considerations of benefits eligibility, an increase in minimum wage that doesn’t get families to self-sufficiency could push them over the cliff • Cascading impacts on unemployment, inflation, etc.

  37. Minding theGap between Benefits and Prosperity Thank you!

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