ALC-Hospital, Medicaid, & Developmental Disabilities Study Subcommittee
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- October 2, 2026
Senator Jane English
Unverified
4:02
Good afternoon folks.lad to see you all here and for our hospital Medicaid and development disabilities steady subcommittee and as part of our social services and workforce reform task that we are charged with one of the things that is really important is to begin to look at some of these things that are like the benefit clips so we've invited John Rees from the who's the senior advisor from the Federal Reserve Bank in Atlanta.
this is kind of their area of expertise is to talk about some of these things and John is very well versed and so I will you turn on your mic and pull it up close to you so we can hear you you introduce yourself for the record and we're glad to have you here. John Reese with the Federal Reserve, can you all hear me all right?
Speaker 4
4:53
all right so my name again Johnes federal Reserve senior advisor with the bank I first want to
Speaker 6
5:05
thank you Senator English for the invitation to speak with you all today our plan is to basically present for 2025 minutes or so and then take questions does that sound sort of appropriate with that said if there's anything you don't understand or have a question about during the presentation please feel free to interject. I'll be happy to to take questions throughout the presentations so I'll start with sort of why I'm here and why I'm operating
in space I was very briefly speaking with senator Bryan beforehand who question I often get is why is the federal reserve looking at this issue of the benefits cliff and the reason for that is that we have a dual mandate at the bank I think most people are probably more familiar with that first part of the mandate which is to maintain stable prices and in support of that that revolves involves a lot of our activities around the federal open market committee and sort of interest rates but the other
part of that is to promote maximum employment and we see this issue of the benefits cliff as a potential impediment to fulfilling that maximum employment mandate and and the Federal Reserve Bank of atlanta we have a community and economic development division which is largely focused on three issues communities, capitals and careers and that careers component is what I work with initiative we call our advancing careers for low income families
initiative which largely focuses again on this issue of the benefits cliff for what is it we have developed a series of tools to show how it sort of manifests itself within workers' lives to do research on this issue and to connect organizations states what have you that are operating in the space this would be a probably a good time I probably should have said this to begin with that one what I'm speaking about today
are my own views and I don't necessarily reflect those of theederal reserve system and secondly in our rule right we do do research we do create tools but we don't do is sort of advocate or endorse specific policies right we are highlighting that this is a dynamic that does exist there are examples of again sort of states organizations individuals trying to address this but we don't take sort of a stance on that so another I think sort of helpful
bit of information is sort of exactly what we're talking about when we speak of benefits good but this happens to be an issue I think where some people this is really what they sort of eat and breathe every day for some people they may be familiar with the the concept or we've heard of that but aren't particularly familiar with it and other people have never heard of it and so for today's purposes we're gonna say the benefitfit cliff really is an obstacle that lowa and sometimes moderate income families face as they pursue economic mobility and that's because as they do so
they may encounter what we call the cliff effect in which they receive a modest increase and let's say income or hours worked and that puts them beyond the threshold for public assistance eligibility and so they're actually made worse off again we're sharing the story earlier my boss at the federal Reserve used to work for the agency in Florida that administers the child care subsidy program and several years ago sort of her first blush brush with this cliff effect was that she had
a distraught mother come in and say she had gotten a 10 cent wage increase that was going to put her just beyond the threshold for eligibility for childcare assistance so she was going to lose that and that was valued about I think at the time $1200 a month right so that's sort of a more acute version of that but as we'll see here there's a lot of other cliffs that can impact workers and so you know that's a great example I think of how it negatively impacts sort of individuals workers families
Speaker 11
9:14
but it also as we'll see has implications for employers and the government this actually this question comes from a published
Speaker 6
9:21
research article this summer where they did a scientifically ballot survey I think about 2000 individuals throughout the country asking had you taken behaviors taken action to avoid losing your assistance and about 1 in5 workers have done so right they either not taking a a raise or a promotion kept their savings below a threshold not take additional
hours because again of this fear of experiencing the cliff Similarly we were working in florida and thelorida chamber was about to send out a survey to its member organization we asked if they would add this question they were looking at sort of obstacles for maintaining workers asking if they had had workers unwilling to accept jobs or increase hours for fear of losing government assistance and here it was about one in three
so again both of these whether it's 1 in5 workers 1 in3 employees hopefully underscores that this is a remarkably widespread phenomenon Finally, why I think it impacts sort of governments it's because if we can encourage workers to pursue economic mobility they're not only going to command higher wages for themselves over the long run but that in turn is going to
generate greater tax revenue for the communities in which they reside this is actually a calculation that comes out of one of our tools and again we're going to show a little bit of how these work in a minute if you took an individual with two children if they can transition from a cashier to be licensed practical nurse and this is specific this happens to be actually an Eagle County Colorado where I was presenting but over their lifetime we anticipate
Speaker 11
11:15
that they would generate an additional300,000 dollars
Speaker 6
11:21
in tax revenue for their government so again you can imagine if you can sort of scale efforts that promote economic ability it can produce a pretty significant fiscal impact so we've got this widespread dynamic right that is negatively impacting workers businesses governments I think a fair question is why does this actually exist I happen to be relatively new to
the federalreserve it's been about 15 or so years in economic development consulting and so that was at least one of my first questions as we start to advance this work and I think one of the first things you realize when you start looking at public assistance in this country is it's extraordinarily siloed program right we have a lot of different programs that have a lot of different rules and interact invariably complex ways and that I think creates two significant challenges one it's
very difficult for policy makers to understand how these all interact on an individual and secondly it can make it difficult for an individual to understand how again a change would say they take a promotion or they take on additional hours how that change is gonna impact their resistance because they don't have to consider necessarily one program but maybe a multitude and so at the federal reserve I can't take credit for this but some of my extraordinarily
talented colleagues had developed something called the policy rules database and what this does is you can enter in information about household characteristics right? how many individuals are residing in a household where they live put in whatever public assistance they might be participating in and their income and get a sense of where these cliffs exist so this shows an example of this policy rules database anybody can google this you can access this now again it's going to depend on household
characteristics so we're gonna say this individual lives in Craighead County, Arkansas picked that because in my consulting days I did a lot of work in Jonesboro actually we're gonna say
Speaker 11
13:32
it's individual as an adult and two kids and that they are receiving snap umIP which Medicaid for Children programme and they also are eligible for the child
Speaker 6
13:41
tax credit and the earned income tax credit it's gonna spit out a chart that looks like this and what we're looking at I'm not
Speaker 11
13:49
a particular big math person myself sort of on the
horizontal axis is the more money you're making you're making your job. sort of vertical axis is your net resources which we calculate is
Speaker 6
14:04
if you take the income thats workers earning add to that whatever public assistance they may be receiving subtract out expenses for expenses we use a framework called United for Alice that'll get into a little bit more in a second but really it's just a kind of a bare bones household budget for things like housing transportation, childcare and
whatnot and taxes and we want to know right are peopleing to basically pay their bills and if we didn't have cliffs this would be a straight line up right the more money you make the more resources you have but as you can tell this is not a straight line we have periods what we call sort of a benefits plateau right this is a dynamic in which maybe you're not worse off but you're certainly not any better off you're really just treading water right so you go from let's say making31,000 dollars a year
to32,000 dollars a year so you've made it wage increase of $1000 but you lost $900 in public assistance right so again you're just kind of barely getting ahead there's also on this journey two cliffs right where you can let's say you go from40,000 dollars to41,000 dollars again so we've enjoyed $1000 wage increase but you'll lose $2000 and assistance and so you're worse off just to show sort of the pathway to
Speaker 11
15:21
economic ability can be fairly bumpy for individuals and again I think
prior to our tool's been very difficult for either policy makers or individuals So we had this thing we call our policy rules and we have utilized this tool to develop a series of other
Speaker 6
15:43
tools that we use in coaching settings now I know that's not necessarily the purpose of today's conversations for how to coach but I think they can provide some interesting examples of one
sort of how this dynamic operates but also in the second tool I'm gonna show about ways to think about sort of breaking down some of those silos that exist not only among individual programs but also that separate considerations of social service provision and workforce development because again I think that is how workers sort of you know workers don't just sort of live in the workforce development silo or in the public assistance s style they see that as sort of a holistic environment in which again they're trying to pursue
Speaker 11
16:28
economic ability so again we have three tools our snapshot, our dashboard and our planner. our snapshots the first thing we're show really just shows a point in time if you have a change in income this is what we estimate the immediate impact would be on your household financial situation the dashboard is going to take a much longer view and say if you're interested in let's say changing careers pursuing hopefully sort of a more promising or higher paying position here's the anticipated wage trajectory
and how would that interact with your public assistance and again how can we bring these two worlds of social
Speaker 6
17:06
service provision and workforce development together the third tool which I'm not gonna go over today basically also embeds a
Speaker 11
17:12
financial planning component of it so for the snapshot again like our policy rules database it's going to be driven by sort of household characteristics your location your the assistance that you're receiving and
Speaker 6
17:24
your work situation we're gonna say we have Maria she lives in pulaski
County Arkansas. she's 27 and has two children ages7 and5. and she is receiving the following public assistance snap chip free and reduced school lunch medicaid and two tax credits again the earned income tax credits and the
Speaker 11
17:45
child tax credits she's making $16 an hour working for I saw sort of an example of this actually in
Speaker 6
17:53
assigned in a fast food restaurant let's say she's making $16 an hour working 24 hours a week
as a cashier in a a fast food company and she's doing
Speaker 11
18:06
a really good job and her boss would like her to take on an additional shift and sort of says alright if you can work32 hours a week that's right you'll work an additional shift a week I'll give you a dollar wage increase and Maria wants to know how is that going to impact my financial situation you know at first blush this seems like this would be a net gain for her right she could be working a third more hours, get a dollar an hour wage increase we run this through the tool and it is a net positive right
Speaker 6
18:32
that we would anticipate that her household finances would improve by about500 dollars a month and that would be because her take home pay would increase by almost575 dollars a month now she is going to lose some levels of public assistance right? you see a reduction in snap and earn income tax credit
Speaker 11
18:50
but on the whole she's going to be in a much better position than she would be previously but just to show sort of how complex and how slight changes can produce very different
scenarios we're going to keep everything else the same except we're gonna assume that she's already working32 hours a week right? and her boss says I'm gonna I'd love you to work full time if you could commit to40 hours a week give you a dollar an hour wage increase then so again everything else is the same and that scenario you actually see her household finances sort of contract by close to300 dollars a month and that's because while our takecompa by again working an extra 8 hours a week making that
extra dollar would increase by more than $850 a month she's going to lose snap and the earned and earned income tax credit and a little bit and free and reduced lunch but cumulatively that is more than the wage increase so she would
Speaker 6
19:48
again be worse off just to show again how this can operate in the real world So that's our snapshot tool I'm gonna conclude today with a
another example from our dashboard and again this takes it sort of a much longer term approach and really is our effort to combine I think kind of three principles one
Speaker 11
20:16
is this issue of the benefits cliff 2 this issue of sort of workforce development and pursuing career advancement and then three sort of embedding that and an attempt to understand our people position our family's positioned to meet sort of their household expenses and which we're incorporate United for Alice data.
so again looks very similar at first bbush it's gonna ask for sort of where you reside in your household characteristics for this example we're gonna stay in Pulaski County and the scenario we're gonna have an adult with one child or adult is gonna be age30. I apologize that's a little hard to read but
Speaker 6
20:55
in adult age30 with a5 year old kid and we're gonna say this individual's participating in Medicaid for adults and snap a free and reduced school lunch and tananna and is also eligible for the
Speaker 11
21:07
child tax credit and the earned income tax credit and we're going to say this individual is also working as a cashier but as their child is aging they feel like they've got a little
Speaker 6
21:18
bit more opportunity to pursue career development and they're interested in becoming a licensed practical nurse so when our tool you can basically select any occupation that's out there I think we've got a couple 100 but again for today's example we're gonna say she's interested in becoming a licensed practical nurse it's gonna ask you know how long it's gonna take to to to pursue that and you can select
basically on average it takes a year to get an LPnre and you can compare that scenario to any other work scenario the default is what we call a near minimum wage job and that
Speaker 11
21:50
is a cashier position that's what we'll use today and so we're going to compare two scenarios one is this individual becomes an LPN versus if they remain as a cashier our tool is gonna give a series of charts the first of which is going to show the immediate pay differential that mayor gold line is the cashier position
you're basically gonna be making we assume if you look at sort of data on employment in Pulaski County cashiers typically earn around $20,000 a year whereaslpns make about45,000 dollars a year and you'll see a huge leap that first year our model assumes that as you become an LPN you have to go to school for a year you continue to work part time as a cashier so you're making about $10,000 and I think again I think before sort of joining the fed I saw this is sort of the crux of the obstacle right
that it's really hard to navigate through that first year but you come out the other side of that you get that job as
Speaker 6
22:48
an LPn you're seeing a basically a doubling of your salary and at that point you're sort of onward but as we'll see the reality is a little bit
Speaker 11
22:55
more complex the second chart shows you're aftertax income between those two scenarios right so again that's sort of dark red is the LPN and the mario coer is the cashier can you see it on the screen? there's also a gray dotted line
that is the estimated household expense for a family of two in Pulaski County. and as you'll
Speaker 6
23:19
see in a second we are utilizing data from a separate organization called United for Al the important takeaway right now is if
Speaker 11
23:26
you are to remain as a cashier again as this individual with one child you're basically never gonna be able to meet your household expenses as
Speaker 6
23:34
long as your child's in the house. Our tool basically assumes that once that child that five year old hits 18 they are no longer in your
Speaker 11
23:44
household and you're no longer supporting them and and only then will you be able to pay your bills and I I know that's not necessarily true for everybody whereas if you are becoming LPN you're gonna struggle maybe in those first couple years but you look at the long term trajectory by year3 or4 you're consistently higher just for
Speaker 6
24:06
reference how we calculate that household budget again it's something calledite for Alice it's an organization affiliated and came out of some work the
United Way was doing in New Jersey and they've expanded it nationally it's now available for every county and state in the country including Arkansas and it's been very helpful and sort of immediately getting a sense of all right if we're trying to promote sort of economic mobility and to sort of see if people are positioned to pay their bills we needed a source of information to sort of say all right what is the estimated expenses for a variety of household types for a variety of expenses for again every county in the country so it includes child care
healthcare, food rent utilities transportation that miscellaneous is mostly a savings element and technology which basically assumes that to sort of live in the modern world you need a cellphone and as you can see it falls over time that's we have a child right and assumes things like childcare expenses decline over time so again this is sort of embedded in our tool and just to get a sense
Speaker 11
25:06
of sort of how widespread I think you know it's not always appreciated that a lot of people on public assistance
Speaker 6
25:15
particularly with some of the the current work requirements are employed but we have sort of
Speaker 11
25:21
poverty statistics that miss a lot of that so that that all stands for asset limitedcome constraint and employed. basically shorthand for working poor that's about 28% of the Arkansas population you add that to the population poverty you get about4544% of the population of Arkansas falls below that Alice threshold
this next shot in our tool will actually show the level of public assistance that you would receive in those two scenarios right that LPN and a cashier you can sort of see on that
Speaker 6
26:00
web chart that's the LPn scenario again remember we assume you're working part time as a cashier that first year you're making around $10,000 a year you're eligible for a non event level of public assistance but that ramps down very quickly right you come out of school
Speaker 11
26:13
you're making about45,000 dollars a year by year three really the only assistance that you're receiving at that point is
the child tax credit we're on the right if you remain in a near minimum wage job you're going to continue to receive you know and fair number of public assistance programs basically for as long as you have a child in the house this final shortener tool kind of brings it all together it adds that income that social assistance together and says all right are you positioned enough to meet those Alice expenses right if you're above zero you're gonna struggle if you're below the or above that you're gonna be able to meet you you
can be able to pay your bills if you're below that you're really gonna struggle and again on that LPN I think there's two things to take away one is after that first year you're always above zero right whereas if you remain as a cashier in that near minimum wage job you're never really gonna hit that until your child again sort of we assume leaves the home Secondly, even though you are going to be able to pay your bills as thelPm scenario it's not a straight line up right we
Speaker 6
27:16
see several cliffs along the journey and I think it'd be helpful
to prepare workers for this so that they don't get
Speaker 11
27:24
discouraged right you see one pretty immediately in that first year that second year they come out right where they're actually gonna have fewer resources because while they're going to see an increase in their earnings they're going to lose some public assistance but much like the tax chart that I started off with over time the cumulative benefits for being able to pursue economic ability are pretty substantial this is just one person and the payoff is not huge in the
immediate years right that we looked at sort of the anticipated income of those two scenarios for the first couple of years that's less than $1500 payoff and that does not include any costs associated with pursuing your education but over time again it compounds and we would estimate in this scenario right that if you do trans transition from a cashier to an LPN that you would command more than500000 dollars over your lifetime in additional income thanks to that transition and again much like that first chart
that also then generates significantly higher tax revenues for the community of this worker so again hopefully I haven't talked too long I really appreciate this opportunity to
Speaker 6
28:34
share one this information with you but also take any questions that you might have but with that that's the sort of end of my formal presentation I encourage anybody who wants to learn more to either email me directly or to reach out to our website thank you very
Senator Jane English
Unverified
28:50
much we will take senator Sullivan sir thank you for the
Senator Dan Sullivan
Unverified
28:57
presentation you know my this is not new information the people that are living this understand all of this so what has prov and the opportunities that the chart suggests people also know because that's their lived experiences in many cases for generations so it seems like motivation would play a big part in people doing this if it it would is that assumption accurate
Speaker 31
29:27
' ll say a couple of things to that I think one is people aren't always
Speaker 6
29:34
some people are very aware of this right and they know exactly how much they could work other people aren't because you can run scenarios like that first one I showed I wish someone sort of just thinks I can't take on an extra shift but they actually are wrong and they could right like this is hopefully to
Speaker 11
29:47
give some line of sight into that like no there are scenarios in which you can't take on that extra shift and
Senator Dan Sullivan
Unverified
29:52
you would your position be then that once we educate this segment of the population that this impacts
there'll be a significant portion that would now take advantage because of their additional knowledge potentially I think I will I'll be perfectly frank I do think so the
Speaker 40
30:06
federal reserve's great at math right? hopefully as you saw today I think we have a lot of work
Speaker 6
30:12
to do on coaching and that's just not an area of expertise but I would I would hope this information would help that secondcondly our I think there are going to be positions maybe in that like that year two scenario showed and which maybe there's not an immediate
payoff but hopefully giving people the information that sort of over the long term it is better but there are certainly obstacles to consider right that even in that first example right because I've certainly heard this this as sort of to your standpoint the perception of yeah I'm gonna be better off it says on paper but I'm still gonna lose some benefits so how do we coach people to sort of say you know that is going to be part of it but on the whole you're gonna be better but again it gets into some of that gets into coaching in which I I just
Senator Dan Sullivan
Unverified
30:59
your example is from Craighead County.
I'm from Crahead County and also in Arkansas and my experience is that these are lived experiences for generations and the fact that it's in a wonderful slideshow they they know this and then for generations we're struggling getting the people who are in that group to provide them the incentive to to make the move up at just his heart attended this weekend
this week Arkansas State got some great programs very aligned to what you're talking about the hard part is getting people to buy into it and actually take that leap of faith and and go but I appreciate your presentation the last thing I'll add
Speaker 14
31:45
to that I do think that sometimes that does speak to the
Speaker 11
31:49
silo though is that there is a conversation about income there is a conversation about sort of public assistance. I don't know that we have always made the connection between that
Speaker 6
32:01
and what's going on in Arkansas state clear enough to sort of say like here's a specific program so that's hopefully kind of the the use of our tool and I would be more than happy to talk to anybody at Arkansas State University so say is there a way to connect those two right is that we have a population that is receiving case management as part of you know snap or whatever it might be we have you know Jonesboro metro has been consistently growing now for 20 years I remember when I was doing work there 10 years ago they were having a hard time
getting enough nursing nurses to serve that population is there a way to connect those two so to create that sort of win win I don't know but I I Yeah thank you actually they are doing
Senator Dan Sullivan
Unverified
32:51
that nursing and they have those nursing programs that why you're going to the the lower level you have a job they give you a job to help pay for your school and then you matriculate
up at different licensing and credentialing levels while you're working to do that so they're doing that they're just starting the way to educate and the practical sense of it side of it is that they're educating new people to the to the system so they're starting when you're in the 10th and 11th grade educating you why you have a job at that entry level and then you get more expertise get more credentials as you move through so I appreciate what
you're doing I think that's it's certainly the way out of some of this generational poverty is to start young educate the people and provide those opportunities. Thank you. Representative meeks thank you right here in front of
Representative Stephen Meeks
Unverified
33:53
you thank you for being here for your presentation. I I share kind of the motivational concern what's sometimes folks could
just get comfortable in that lifestyle and trying to motivate them to seek better for themselves can sometimes be
challenging. my my question is and and I came in late so you may have already addressed this is this tool available to the public is this available to our state employees who who's going to be best to utilize this tool to make this information available to the people who could use it the most is that something that we as a state would have to train our employees to say hey there's a website available or how does this work in in practicality to use this tool I am thank you very much for that opportunity
Speaker 35
34:43
freely available to anyone who wants to use it but there are now there's
Speaker 11
34:48
actually four states I believe in which A2 is mandated among their workforce agencies hree of
Speaker 6
34:53
those states are actually using our tool Forda uses it and there's sort of workforce development arm the department of childrenldren
Speaker 11
34:59
and Family are using it in Louisiana and they're about to launch it in South Carolina Kentucky also uses a calculator but they use they create their own for their
Speaker 6
35:10
state there's sort of like two there's a couple of ways to approach it one is you know if you have sort of formal plans to sort of try to launch this at scale we are happy to sort of like hold your hand and provide training to your staff we've also seen some states just do it sort of on a pilot. we've actually if you actually go and you reach out to me I can give you sort of the link to use our tools we actually have a lot of training videos that you can also use and so there's a lot of ways that can be deployed
Speaker 58
35:36
we're pretty flexible and again none of these involve any sort of cost to the
participant sounds good and then my my follow up is I I
Representative Stephen Meeks
Unverified
35:44
don't know how long the tools been around but since other states are using it do you have any outcomes yet from the use of the tool that you could point to or is it still too early in the project so think we're still early I means to to the
Speaker 5
35:59
point earlier like to me I think our next emphasis is gonna be largely on coaching. I will say in
Speaker 6
36:04
general there was some initial the initial pilots and necessarily predates my time with the fed workers did say
it was very helpful and and giving them some line of sight both on sort of that they weren't surprised because they didn't know or a sense of we've actually had a couple of employers use it healthcare
Speaker 11
36:23
seems to be the best case because there's pretty standard sort of career paths right where you can get one credential you go to
Speaker 6
36:31
LPN then you become an Rn and sort of help them plan and say all right you might be experiencing a cliff in the shorthand but again sort of long term you're going to be better
off and then we've actually did have states have looked at specific policy changes and reached out to us to get a sense of what would this do to some of these cliffs that we see. Floda for example recently increased the threshold for eligibility for their childcare and once we're to get a sense of alright how is this going to impact people and so we kind of can take it both sides. One is deploying the tool as you say and sort of counseling sessions but the other one is as a broadbas sort
Speaker 11
37:13
of policy forecasting yeah policy analyst component we're also I think in January gonna make this the code underlying all this freely available
Speaker 6
37:22
we've had one state reach out about doing their own either calculator or financial forecasting using that based on and we were we actually will work with you if you want to do that now but if they just want
Speaker 58
37:35
to do it on their own all right thank you thank you ma'am
Senator Joshua Bryant
Unverified
37:45
thank you madam chairir. I think that's that's kind of my question is what discretion does the state have to smooth some of these cliffs like if we can model if we can model the situation and instead of losing500 dollars by taking an hour bump? does the state have the authority or to to roll back portions of that over a six month period to let them stabilize rather than make that initial decision so it depends on the program in
Speaker 36
38:15
general if it's a block grant you've got a lot more discretion right like so tanniff
Speaker 11
38:21
is a lot easier to do childcare subsidy is a lot easier to do whereas I'm sorry I have a very low voice and
Speaker 4
38:30
it tends to go to the bottom sometimes so it depends on the program we
Speaker 6
38:35
could certainly work with you though to understand that but child care taiff andIp are the three that generally have the greatest flexibility andssnap was the one that was the biggest
that is largely determined by sort of statue about the thrifty plan and the thresholds we have seen a couple sort of philanthropic efforts to sort of say and you can do things on a pilot where you're sort of saying all right well we're not gonna do this statewide but we actually had a couple philanthropic organizations use our tool to source say right what is the cliff and if a family experiences cliff as they let's say become pursue career advancement we're going to make them whole for two years or we'll make them whole by500% over two years to sort of
Speaker 35
39:20
mitigate that so we have seen tennecies actually doing that as a pilot right now with some of their tta of dollars so that's done through enabling legislation
Senator Joshua Bryant
Unverified
39:27
or just the executive branch can say this is what we're doing so I think that's actually done at the agency level
Speaker 6
39:34
I don'tt they had and not have to double check that but becausetanup dollars if they're not spent stay with the state and they had accumulated a pretty significant I think they had at one point like700 million dollars in tanna funding they've decided to cede I think it's 18 different pilots two of which are going to touch on this issue
of the benefits cliff but I could put you in touch with
Speaker 11
39:54
whoever sort of help implement that thank you Oh do I see
Senator Jane English
Unverified
40:05
more questions here. Ohjony Meer. Representativer yes Miss Chairman sorry question for you sir.
Representative Johnny Rye
Unverified
40:16
let's just say that you had a lady and
two children and with that you're talking about assistance maybe totaling 2022 or $3000 a year if this lady our man received a job and let's just say that they could make $25,000 a year would they be penalized for the the assistance that they were getting already can you explain what would happen in a situation like that so
Speaker 6
40:57
it would depend on the exact programs right there are there are ones that sort of like smooth out right but there's ones that if they're just above the threshold it's gone right and so you have a scenario in which right that on paper you're seeing a $25,000 gain in income but from a resource standpoint you're not really much better off the issue with that though in general and it depends on the program right is most of those programs sort of depend on having sort of
children in the house. and you're not going to be eligible for them once you have children so you'll go over the lifetime I mean that is one of the challenges right if you look over sort of the lifetime of a career you're almost always better off taking that $25,000 job even though you're going to struggle then you would be on assistance but also for you need the scaffolding often of sort of assistant on top of that right like you're still going to be eligible for some programs at $25,000 and again I think our tool is an attempt to sort of help individuals understand what
that pathway is and sort of what is the path
Speaker 35
42:03
to sort of economic stability. thank you sir and thank you Mr Chairman. Representative beck thank you madam chair so
Representative Rick Beck
Unverified
42:17
looking at your chart great data by the way and looking at your chart you know we you can see the cliffs in the chart but but you obviously see that the chart is general if you were averaging out the line is is is an upward line so that's exactly what
would be a constant motivation for people to take the next step so my question is is is this why don't we have the the clips I mean I understand what are the cliffs I mean I understand you get to this point and you could drop off losing this. I understand that but why can't the the benefits be'm also a mathematical equation that would say at this level you would see this much and if you went up a little bit you would back off just a little bit so that there would never be a
need to you would basically be averaging out that that line going up and and so there'll be constant motivation for the individual to to head up to take the next step because they would always turn out a
plus I agree unfortunately I don't think I can answer the question onlying
Speaker 5
43:22
this it's right like there there are way you could do this, I mean a lot of that would require I
Speaker 6
43:28
think sort of like changes in federal law but sort of you like right like
there's only so much flexibility in individual states have on some of these but it would be possible umminnesota actually interestingly they did it with Snap but they did it so long ago I don't I'm not even sure it's possible anymore because the laws have changed so there have been efforts sort of in the past but as far as as to why they exist mean I do think one of the reasons in addition to that right is a lot of cliffs are actually created by the
interaction of multiple programs and it's not always clear how those occur and what you're doing a lot of modeling and to my knowledge there had not been sort of a nationwide understanding of that and a real thorough sense until our calculator right is that that cliffno may not exist ingra A and it may not exist ingrame B necessarily in the same ways it's when you add them together in a specific situation that they're created so there's also sort of one part of that
Speaker 35
44:32
does that make sense the follow up so if there's
Representative Rick Beck
Unverified
44:39
is there any data around showing that like as you mentioned the block grant programs and things the states have more in play with
those nurses is there any indication that the states are actually doing that so in other words I guess what I'm looking at is are some of the cliffs are are they are they they what we'll we'll call it a federal cliff right there's nothing that the state can do about that it drops off at that point versus these block grants that would the de could if they wanted to to kind of
smooth that out is there any indication that the states are trying to do
Speaker 5
45:14
that so a state umlorida's done it for ipp and the childcare substitute they they just the cliff still exists but they just pushed
Speaker 6
45:20
it out right so instead of it hitting it3 or 200% of the federal poverty rate it's now300% of the federal poverty rate and so they've they've been able to push that they did put in state dollars to do that right but when they did the analysis they didn't think it if you pushed it out for you know if you push the cliff out to $200,000 let's say
theoretically exists but it's gonna it's gonna impact far fewer people and that that that's kind of just a made up number but they have done that with boatship and the childcare subsidy Tennessee is looking at that on a pilot basis there's also been efforts by I think Ohio's one and Kentucky is one to do pilots to do some of this stuff to come up with programs that would mitigate that they've generally been fairly modest in scope partially to sort of see does it work does it
encourage people to pursue career advancement and so that is one option that generally doesn't require you know a lot of sort of change the federal law you generally get a decent amount of latitude to do pilots the ones in Tennessee are ongoing and so we'll see. for juries out right now about
Speaker 11
46:26
how effective they've been so one follow
Speaker 91
46:29
basically to your answer I I I like I like that
Representative Rick Beck
Unverified
46:34
but moving the cliff out right a s a state that's saying interjecting and saying that we're gonna move the clip the
cliff out just a little bit you still have the cliffs it's still there so is it when they move it out is it just for a period of time or is it income level or something like that it's the income of it so like
Speaker 74
46:55
in florida for example I thinkipp went from like 85% of the state median income being the threshold to 100% so it did just move it
Speaker 6
47:02
out but that still gives a lot of people breathing room right? like if you can make an extra you know510 $1000 dont I don't know what that would be without hitting a cliff that may be particularly with with
the childcare aspect where it's a pretty discreet period of time which you're eligible that might be enough to reduce it for a lot of individuals right because you're generally only going to get that subsidy for3 to5 years
Speaker 35
47:24
anyway that helped me to understand that you still
Representative Rick Beck
Unverified
47:27
then using your the three years later you would still get to a point where now if I take the you know
now I'm gonna hit another cliff and so instead of hitting it at45,000 you might hit it let's say
Speaker 74
47:38
or35,000 you hit it at40,000 dollars but for a lot of workers they're never gonna actually hit
Speaker 6
47:45
that40,000 point right? they're gonna hit sort of a an income plateau and so they're not like you only hit the cliff when you make more money and if we if states increase that level it ' s likely to impact fewer workers. does that make sense because it's not sort of a time frame it's also just how much you're earning. I understand thank you Senator Petty thank you madam chair . I'm not real sure how I want
Senator Jim Petty
Unverified
48:16
to phrase this question but talking about the cliffs there's been a lot of good conversation around the cliffs and and I know that that the majority of these programs that we're talking about they're not gonna change whether or not we've got less people facing a cliff or more people facing a cliff the the the block grant or the funding level is not gonna change but have you have you guys done any research around the public burden for
example if we you know leveled out the cliff and those that that were otherwise facing the cliff but now they they they get to step down and so there's gonna be less use of of emergency rooms and the burden that they leave with emergency rooms and and other federal programs and so the cost benefit analysis we just automatically think all right we're going to cut you off and and that's going to save the you know, taxpayer money but in
reality there may be overall less burden on the public if if there was this level more of the leveling out and less of the cliff effect that's an interesting point I think
Speaker 15
49:27
we we're a small team we've really only looked at if you look at sort of income tax gains from from
Speaker 6
49:34
that career advancement both at the federal and the statewide level you could certainly do I think a more robust analysis both on right of just a fiscal impact looking at you know if you're making more money you're going to spend more money right you're going to generate greater sales
Speaker 35
49:49
tax you're also not going to be on on benefits and you are likely to consume fewer public resources we just haven't had the bandwidth to do that sort of conference partially just because it's gonna look different pretty much for every place in the country because of different tax regimes and it's going to be different based on sort of household characteristics I will say none of what I'm presenting I
Speaker 6
50:11
I would say is like sort of the endgame for us I mean we just constantly either add programs or do additional sort of analysis to sort of
answer these questions right now we're working on seeing if we can develop a tool to sort of show how prevalent this is just looking at something
Speaker 35
50:26
like census data in individual states and so that's something that we also might consider just to make that fiscal impact component a little bit more compre Thank you Representative Bentley thank you thank you Mr. Reesa here thank you so much for being
Representative Mary Bentley
Unverified
50:46
people to be listening in to this committee meeting today
can you go over again exactly how people will get a hold of this tool and how they can use it was the website we could go to go to this link that's listed
Speaker 11
51:01
here or you take a picture of this link it will take you to a website that is complete this
Speaker 6
51:06
form all that does is ping me with an email I will reach out to you and I will show you the tool, the address and all that information again there's no sort of costs or any other burden but we do want you to reach out to us first just so we have some sense of how this is
being deployed right and where you're going to use it just for our internal for tracking
Speaker 35
51:25
purposes but there's not really any sort of constraints on how you can deploy it or when you can deploy it if you do want additional resources like I said if you want some of us to do some like either customized training
Speaker 6
51:36
or to work with you to think about how to point we're happy to have that discussion as well. great thank you Representative Brown madam chairir. thank you Mr. Deeses for being here did I say
Representative Matt Brown
Unverified
51:53
that Reids not des this isn't really a question but I know we've insitated instituted financial literacy for our schools and I would think that this would be an interesting component of financial literacy to show children children themselves how they can break that cycle and how they could be better off if it think it would give them
hope or or we children could see the possibility they don't have to live like mom and dadd
they don't have to continue to do what they're doing and they could live a better life so my understanding
Speaker 6
52:40
in this predates my time at the fed but that that wasn't initially conceived as a use and then we got
Speaker 35
52:46
contacted by organizations to do just that so there are places where this has been used in a a setting not sort of administrating benefits and
Speaker 6
52:57
think one thing that may not be apparent from some of the screenshots is that you do have to put in your sort of your household characteristics in your location when it asks for benefits one of the criteria you can actually select no benefits and we've seen organizations use that just to give individuals or children a sense of all right if you select this career what is the anticipated wage what are what's the difference between tax and after tax income and so again that's what sort of the think originally envisioned purpose of the tool we
Speaker 35
53:28
certainly have seen it deployed like that. Well I'm just thinking that
Representative Matt Brown
Unverified
53:32
you know when you talk about financial literacy of course you want to talk about budgets and how to manage a checkbook and things like that and all this new, these new money opportunities that are becoming available but you also talk about insurance and investing and you know benefits are another source of possible income or you know resources to help take care of yourself and your family so I think that that those kind of the benefits
need to be included in that consideration so people can see that they have better opportunities so I didn't also show we have a third tool it's
Speaker 6
54:12
that sort of united for hours framework right to estimate cost but as you saw right there was I think7 categories the planner tools allows you to do everything you're talking about because you might let's say you get in someone saying like I have all these expenses but also have $800 in credit
card debt I need to budget for that every month you can input all that you could put in I've got two jobs it it's pretty powerful I don't generally show it just because it takes a lot more time to do but it allows you it basically is our attempt if that second tool I showed you is our attempt to show career trajectories and benefits and household budgets that third to is all right how do you take it a step further how to get a better sense
Speaker 35
54:53
of how to build actually the household budget that makes thank you for being here
Senator Jane English
Unverified
55:06
Anybody have any more questions? I don't see any. thank you so very much
for being here and talking to us as we're thinking about our workforce reform all of these are topics that we need to be thinking about and planning for it and I really appreciate your effort in the coming to visit us thank you thanks again and again please do not hesitate if you have any additional questions or want
Speaker 6
55:30
me to connect with anybody in your communities you all have a great rest of your day thank you
Unknown speaker
55:43
seeing no further business, I adjourned the meeting.
Agenda
A. Call to Order
B. Discussion of Benefit Cliffs and Asset Limited, Income Constrained, Employed (ALICE) [Exhibit B] ̶ John Rees, Senior Advisor, Federal Reserve Bank of Atlanta
C. Discussion of Recommendations by Committee
D. Other Business
E. Adjournment
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — ALC - HOSPITAL, MEDICAID, & DEVELOPMENTAL DISABILITIES STUDY SUBCOMMITTEE, Oct 16, 2025 | Agenda | 1 | Official source ↗ |
| Exhibit B- Federal Reserve Bank of Atlanta | Exhibit | 36 | Official source ↗ |
Speakers
Senator Jane English
Unverified
Speaker 4
Speaker 6
Speaker 11
Senator Dan Sullivan
Unverified
Speaker 31
Speaker 40
Speaker 14
Representative Stephen Meeks
Unverified
Speaker 5
Speaker 35
Speaker 58
Senator Joshua Bryant
Unverified
Speaker 36
Representative Johnny Rye
Unverified
Representative Rick Beck
Unverified
Speaker 91
Speaker 74
Senator Jim Petty
Unverified
Speaker 15
Speaker 103
Representative Mary Bentley
Unverified
Representative Matt Brown
Unverified
Speaker 93