- Associated Press - Tuesday, May 13, 2014

MONTPELIER, Vt. (AP) - Participants in Vermont’s Reach Up welfare-to-work program will see longer-term child care subsidies and an increase in the amount of income the program will disregard when calculating benefits, under a bill passed in the final hours of the legislative session.

Supporters say the legislation will help address a so-called “benefit cliff,” in which people sometimes go to work and see their state benefits drop so steeply that joining the workforce looks like a bad deal.

“Not having child care to be able to go to work, or worrying about losing more in benefits than you earn is a poverty trap,” said Heather Newcomb, a former Reach Up participant.

The bill approved Saturday addresses both concerns. The governor is expected to sign the legislation.

Depending on income eligibility guidelines, it would increase the amount of time a Reach Up recipient exiting the program can get state child care subsidies from one year to two. It also increases the amount of monthly income the state will disregard in calculating benefits.

“This legislation tells families that if you work you keep more of what you earn,” said Christopher Curtis, a Vermont Legal Aid lawyer and co-chairman of the governor’s Pathways From Poverty Council. “It may sound modest to some, but this pays for diapers and dairy for a lot of families.”

Dave Yacovone, commissioner of the Vermont Department For Children and Families, said the bill increases the amount of earnings a family can get and remain eligible for benefits. He offered the example of a household with earnings of $1,000 per month, saying the “income disregard” would amount to $250 plus 25 percent of earnings. That means the family in this case would have benefits calculated on $500 in monthly income. Currently, the formula is $200 plus 25 percent of earnings.

He said that will help many of the roughly 6,360 households, or more than 16,000 individuals, in the Reach Up program.

Newcomb now works at FRESH Food, a Winooski kitchen operated by Vermont Works for Women, where she trains current program participants and others in the culinary arts and prepares them to work in commercial kitchens and restaurants.

She said the increase in disregarded income might have helped her when she moved from Reach Up to a $9 per hour job in 2005. She was offered a raise of 25 cents per hour, asked her Reach Up caseworker how that would affect her benefits, and was told she couldn’t find out until she filed a “change report” and the benefits were recalculated.

It ended up that “a 40 dollar per month increase in pay cost me $100 in benefits. It put me in the hole by $60 per month,” Newcomb said.

One thing unchanged in the bill is the amount of assets the state will disregard when calculating Reach Up benefits. That figure remains at $2,000, although advocates for low-income residents had pushed for an increase to $5,000.

Newcomb, 43, said she lost her job last year, applied to begin receiving Reach Up benefits and was told she would have to cash out an individual retirement account in which she had saved about $5,000. She did so, paid taxes and a penalty for early withdrawal, and was required to prove she had spent the money, which she did by paying off a credit card account.

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