WHEREAS, the Federal Reserve Bank of Boston awarded the City of Springfield a Working Cities Grant whose goal is to increase the number of individuals participating and persisting in the workforce;

WHEREAS, Springfield Region’s Working Cities Group is led by the Economic Development Council of Western Mass in partnership with a significant number of private employers, not-for-profit organizations, training organizations, municipal departments, and Community Based Organizations;

WHEREAS, a study entitled, The Road to the Cliff Edge: Understanding Financial Gaps in Public Assistance Programs Available to Massachusetts Families, Center for Social Policy, August 2017, Marija Bingulac, Caitlin Carey, Susan Crandall. The study details the cliff effects that refer to the drop in public supports that occur when a benefit recipient’s earnings increase. The net effect is overall income and benefits decline or remain stagnant, resulting in little or no incentive to work as financially a person/family benefits more by staying on public assistance than working for low wages;

WHEREAS a Conference entitled Reframing Benefits Cliffs: Solutions for an Inclusive Recovery, Federal Reserve Bank of Atlanta, October 15, 2020, states that the issue of benefits cliffs has long been recognized as a barrier to economic mobility for lower-income families. However, solutions to the benefits cliff are no longer being viewed in isolation, but rather as part of an overall approach to support workers on the path to economic self-sufficiency.

WHEREAS research Reducing the Cliff Effect to Support Working Families,  Roxane White, Morgridge Family Foundation Innovator in Residence, Ascend at the Aspen Institute, Brittany Birken, Ph.D., Chief Executive Officer, Florida Children’s Council, Erin Moriarty-Siler, Director of Communications, the Bell Policy Center, April 23, 2018, states the rationale for reducing the cliff effect is simple: It helps families become more economically self-sufficient. Employees who are able to experience economic security for their children when accepting raises, working additional hours or advancing in their careers have a greater likelihood of work retention. By working together, businesses and government can create work-based pathways for economic stability, reduce government dependency, improve child and family outcomes, and support economic development.

WHEREAS, other States, including Maine, Minnesota, Colorado and Connecticut have developed pilot and or tiered benefit programs to bridge the cliff effects that occur as an individual/ family moves from public assistance to a livable wage; and

WHEREAS, it is the desire of the Commonwealth to create a Pilot Program to mitigate the cliff effect for low-income individuals/families who are receiving public assistance and to do so in partnership with the Boston Federal Reserve’s Working Cities Grant and to increase participation and persistence in the workforce;

SECTION 1. Chapter 18 of the general laws, as so appearing in the 2018 official edition, is hereby amended by inserting, after section 39, the following section:-

Section 40. (a) As used in this section the following words shall, unless the context clearly requires otherwise, have the following meanings:

“Base”, the dollar value of all benefits and after-tax earnings that a participant is receiving at the time that the participant enters the Pilot Program and becomes fully employed with a minimum of 37.5 hours per week.

“Cliff Effect”, the effect that occurs when a family or individual begins to earn above the income eligibility limits set by the state and becomes ineligible for subsidies on food, housing, child care, and other benefits.

“Economic Development Council”, the Economic Development Council of Western Massachusetts.

“Department”, the Department of Transitional Assistance.

“Participant”, a family or individual.

“Pilot Program”, a pilot program that modifies the Massachusetts earned income tax credit, established in section 6 of chapter 62 of the General Laws to mitigate the Cliff Effect for low-income families or individuals that are working and receiving any form of public assistance, including but not limited to cash assistance, Supplemental Nutrition Assistance Program benefits, child care benefits, transportation assistance, and housing assistance or voucher. 

“Working Cities Group”, private sector employers, not-for-profit organizations, training organizations, municipal departments, and community based organizations.

(b) There shall be established a Pilot Program to mitigate Cliff Effects for 100 Western Massachusetts participants who have been receiving public benefits for less than 12 consecutive months at the time of application into the pilot program. Participants in the pilot program must be eligible for the Work Opportunity Tax Credit.

(c) The Economic Development Council and Working Cities Group, in collaboration with the department, shall develop and oversee the pilot program. The Economic Development Council , in coordination with the department, shall assign department case managers to oversee and assist families or individuals who apply or are already receiving public assistance in order to maximize  their benefits and plan for the gradual lessening of benefits as their employment income increases. The Working Cities Group shall leverage existing resources to provide coaching and mentoring, financial wellness, Cliff Effect planning training, and other services as needed to achieve the goals of the program.

(d) The Economic Development Council in partnership with the department shall collaborate with all appropriate state agencies, departments, and secretariats of the commonwealth in developing the pilot program.

(e) The pilot program shall run for three years beginning in concurrence with the start of the first fiscal year after passage unless extended by an act of the legislature.

(f) The goal of the pilot program is to conduct a full test of this model that facilitates, encourages, and supports participants to enter, reenter, and remain in the workforce.

(g)(1) A family or individual may be eligible to participate in the pilot program once in a 5 year period for three 3 consecutive years. For the duration that a family or individual participates in the pilot program, the pilot program shall continue to pay an amount not less than the base for each participant.

(2) The department shall determine the base amount.

(3) In the first, second and third year that a participant is in the pilot program, he or she shall be allowed to keep all earned income and shall be awarded an adjustment to the earned income tax credit, whose dollar value allows the participant to continue to earn an amount that is not less than the base. If the participant successfully transitions off of public assistance during or at the end of  the pilot program, then the participant shall continue to receive counseling services, technical support services and be monitored for data collection purposes.

(4) If the department determines that a participant has successfully moved into the workforce during or at the end of the pilot program, the commonwealth shall award a match equal to 20 percent of the base, not to exceed an amount of $10,000.

(h)(1) For the duration of the pilot program, the department shall coordinate with the Economic Development Council to provide 2 intensive case managers that are assigned to the pilot program with the primary responsibility of overseeing the progress of the participants.

(2) The Economic Development Council, the department and the intensive case managers shall utilize shared resources of the Working Cities Group employer partners, staff members, mentors and volunteers in order to maximize the effectiveness of the pilot program. 

(i) In partnership with the Economic Development Council and the department, a third party evaluator will be retained to provide the legislature with an annual report on the program’s efficiency and impact on or before December 31, 2022. The report shall include but not be limited to the number of participants; the number of participants who entered the workforce; the amount of yearly income each participant earned;  the hourly wage rate of each participant including a record of all salary increases over each year; the dollar amount of all monies that incurred to the state in years one, two and three; and all records of participants entering or exiting the workforce including reasons for exiting. The department shall file the report with the clerks of the senate and house of representatives, the house and senate committees on ways and means and the joint committee on children, families and persons with disabilities.

SECTION 2. This act shall begin each fiscal year beginning on July 1, 2022, and shall take effect upon enactment.