HB 5540 — AN ACT CONCERNING THE MITIGATION OF BENEFITS CLIFFS.

2 July 1, 2026 17b-105a(e) July 1, 2026 Sec.

3 July 1, 2026 New section StatementsHB5540 of/ LegislativeFile Commissioners:No.

In444 Section 1(d)(1), brackets around existing statutory language were deleted and "On and after July 1, 2027, the commissioner shall not deny a family assistance under said program on the basis of such family's LCO 9 ofsHB5540 10File Substitute Bill No.

5540444 assets."Statement wasof inserted,Legislative forCommissioners: accuracy;

In Section 1(d)(1), brackets around existing statutory language were deleted and "On and after July 1, 2027, the commissioner shall not deny a family assistance under said program on the basis of such family's assets." was inserted, for accuracy;

-LCO LCOsHB5540 10/ ofFile 10No.

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444 The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose.

In general, fiscal impacts are based upon a variety of informational sources, including the analyst’s professional knowledge.

Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note State Impact:

Agency Affected Fund-Effect FY 27 $ FY 28 $ Social Services, Dept.

GF - Cost at least at least $2.6 $750,000 million Labor Dept.

GF - Cost None Significant Social Services, Dept.;

Office of GF - Cost $1.4 million $1.7 million Early Childhood Department of Housing GF - Cost $2.9 million $2.9 million Note:

GF=General Fund Municipal Impact:

None Explanation The bill results in increased costs to the state associated with expanding eligibility under the Temporary Family Assistance (TFA) program and establishing a two-year pilot program to mitigate benefits cliffs for two hundred households receiving public assistance.

Section 1 results in a one-time cost to the Department of Social Services (DSS) of at least $750,000 in FY 27 to support system modifications due to changing eligibility and benefit levels under TFA.

Section1eliminatestheTFA asset limit,effective 7/1/27.Onaverage, applications are denied each month due to exceeding the asset limit.

Assuming those denied will now be eligible under the bill’s provisions, DSS will incur costs of at least $1.8 million in FY 28 and $2.3 in FY 29.

DSS will experience additional costs associated with newly applying households, at an estimated average cost per household of approximately $765 in FY 28.

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444 Section 1 also creates a transitional benefit for households with income exceeding the federal poverty level (FPL) and requires DSS to gradually reduce benefits over the course of six months.

This is anticipated to result in a cost of at least $850,000 in FY 28 and $1 million in FY 29.

Actual costs will depend on the reduced benefit levels determined by DSS and eligible clients.

DSS will incur additional costs beginning in FY 29 associated with a $5,000 labor force retention bonus provided to any family that transitions out of the program due to income that exceeds the eligibility standard after twelve months of such transitional benefit.

Assuming the same rate of participation as those under the transitional benefit, DSS will incur additional costs of at least $2 million in FY 29.

Section 1 also requires that families receiving the transitional benefit established by the bill be referred to a case manager from the Jobs First Employment Services (JFES) program , which is administered by the Department of Labor (DOL).

This results in a significant cost starting in FY 28 associated with increases in workload and subsequent need for additional staff.

For reference, the cost of hiring an additional case manager would be at least $60,000 .

2 Section 2 requires DSS to exclude the new transitional TFA benefit when determining a family’s eligibility for SNAP benefits.

SNAP benefits are federally funded.

Section 3 results in a cost to DSS and the Office of Early Childhood (OEC) related to establishing a two- year benefits cliff pilot program for households receiving public assistance.

The program must be designed to align with the recommendations of the benefits cliff study report required by Special Act 24-8.

The benefits of cliff pilot cost analysis provides a framework through 1There are currently 42 Jobs First Employment Services case managers across the state, averaging 53 clients each.

TheDOLcurrentlycontractswiththefiveWorkforceRegionalBoardsforthedelivery of the program.

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444 which different design parameters can be analyzed.

The study presents three pilot models to assist 200 families, resulting in costs from between $3 million and $7 million over a three or four-year period.

The study suggests the stable benefit pilot design as the best fit to maximize family supports.

This is anticipated to result in annual costs of approximately $1.4 million in FY 27, $1.7 million in FY 28, $1.9 million in FY 29, and $1.7 million if continued in year four.

Approximately 62% of annual costs reflect benefit payments with the remaining funds used to support operation costs.

Actual costs depend on the final pilot design, related federal funding and timeframe in which it is operational.

Additionally, the bill results in a cost to the Department of Housing (DOH) of approximately $2.9 million in FY 27 and FY 28 due to including housing assistance as part of the public assistance required underthepilot(housingassistance wasnotincludedinthe benefitscliffs pilot cost analysis).

The average rental assistance program (RAP) certificate costs the state approximately $14,400/annually.

If the program resulted in continuing a certificate at the same level for two yearsfor200 households,thiswouldresult inacost ofabout $2.9million in each year.

DOH does not remove households from the RAP program unless the household is no longer eligible.

However, changes in eligibility and associated changes to the average RAP certificate cost may impact how many certificates can be issued in the future.

The Out Years The annualized ongoing fiscal impact identified above would continue into the future subject to the structure of and benefits provided under TFA and workload increases to the JFES program.

The bill limits the pilot program to two years.

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444 OLR Bill Analysis sHB 5540 AN ACT CONCERNING THE MITIGATION OF BENEFITS CLIFFS.

SUMMARY This bill eliminates the asset limit for Temporary Family Assistance (TFA), increases TFA benefits for certain households, and creates a transitional benefit and a labor force retention bonus under the program.

The Department of Social Services (DSS) must refer families that receive this transitional benefit to Jobs First Employment Services to assess whether they would benefit from any workforce developmentalservices.Thedepartmentmustalso referfamiliestoCare Kids when they report new or increased employment or leave the program because they reached the time limit.

The bill also requires DSS to disregard a TFA transitional benefit when determining eligibility for the Supplemental Nutrition Assistance Program (SNAP) (§ 2).

Lastly, the bill requires DSS and the Office of Early Childhood (OEC) to enter into a public-private partnership to establish a two-year pilot program to mitigate benefits cliffs for 200 households receiving public assistance.

EFFECTIVE DATE:

July 1, 2026 TFA ELIGIBILITY AND BENEFITS TFA is the state’s cash assistance program for low-income families administered by DSS.

The federal Temporary Assistance for Needy Families (TANF) block grant partially funds TFA.

Eliminated Asset Limit Under current law, households with assets over $6,000 are ineligible sHB5540 / File No.

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444 for TFA.

Starting July 1, 2027, the bill eliminates this asset limit, prohibiting DSS from denying a family TFA benefits based on the family’s assets.

Transitional TFA Benefit By law, households with gross earnings (including earned and unearned income) over the federal poverty level (FPL) are generally ineligible for TFA.

For a period starting when the family’s total earnings exceed FPL and continuing for up to six months, the law requires DSS to (1) disregard earned income up to 230% of FPL, which generally allows more families to stay eligible for TFA during this period and (2) give a reduced benefit to families with total gross earnings between 171% and 230% of FPL.

Beginning July 1, 2027, the billrequires DSS to give atransitionalTFA benefit, starting the first month that a family’s total gross earnings exceed FPL.

The transitional benefit must be 100% of the family’s previous TFA benefit for the first six months.

For the six months following that period, DSS must gradually reduce the transitional benefit to $0 on a schedule it sets.

Referrals for Other Programs and Services The bill requires the DSS commissioner to refer a family to Care 4 Kids if the family reports to DSS that a family member has new employment or increased employment hours.

The Care 4 Kids program offers child care subsidies to income-eligible families when the parents are working or participating in certain education or job training programs.

Federal law generally puts a 60-month, lifetime limit on receiving TANF-funded cash assistance.

State law sets a 36-month limit but exempts families from it in certain circumstances (for example, a recipient caring for a child under age one or a household member with a disability).

By law, DSS must inform a family leaving TFA at the end of these time periods about other available services, including employment services, the earned income tax credit, and emergency sHB5540 / File No.

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444 housing.

The bill adds Care 4 Kids subsidies to this list.

Under the bill, DSS must refer any family that gets the transitional benefit to a Jobs First Employment Services case manager to determine whether there are any workforce developmental services that may benefit the family.

Jobs First Employment Services is a Labor Department program that gives training and job search help to TFA recipients.

Labor Force Retention Bonus The bill requires DSS, within available appropriations, to give a $5,000 labor force retention bonus to families that transition out of TFA due to exceeding the eligibility standard after getting the 12-month transitional benefit described above.

SNAP ELIGIBILITY DETERMINATIONS The bill also requires DSS to exclude the transitional TFA benefit described above when determining a family’s eligibility for SNAP benefits.

PILOT PROGRAM ON BENEFITS CLIFFS The bill requires DSS and OEC to enter into a public private partnership and establish the two-year pilot program within available appropriations and in consultation with the Labor Department, the Department of Housing, the Office of Workforce Strategy, and the two- generational initiative.

The pilot program is to mitigate benefits cliffs for families receiving public assistance, including TFA, SNAP, or housing assistance.

The bill requires DSS and OEC, in consultation with the entities above, to design and evaluate the pilot program following recommendations from the two-generational initiative’s study required under SA 24-8.

Among other things, the study recommends a pilot program that ensures participants get a stable, unchanging benefit for the program’s duration, even if their income changes.

DSS and OEC must annually report on the pilot program, starting by sHB5540 / File No.

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444 January 1, 2027, to the Education, Housing, Human Services, and Labor committees.

The report must include:

1.

the number of households enrolled in the pilot program, 2.

transitional assistance these households received or will receive to avert benefits cliffs, 3.

impacts on the state economy of program enrollees remaining employed during the pilot program, and 4.

resources needed to sustain the program.

COMMITTEE ACTION Human Services Committee Joint Favorable Yea 16 Nay 7 (03/19/2026) sHB5540 / File No.

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