Be it enacted by the General Assembly of Virginia:

1. That the Code of Virginia is amended by adding a section numbered 63.2-505.01 as follows:

§63.2-505.01. Establishment of a Dynamic Benefit Adjustment System.

A. This section establishes a Dynamic Benefit Adjustment System for the gradual reduction of public assistance benefits in response to increases in beneficiaries' earned income. The System shall apply to all public assistance programs under this subtitle.

B. Income thresholds for eligibility of public assistance programs shall automatically adjust based on a formula that considers the state's minimum wage, inflation rates, and cost of living indexes. The Department of Social Services shall determine the specific formula and make necessary adjustments annually or as economic conditions change.

C. Benefits shall be reduced gradually based on a predefined formula. For every X% increase in earned income above the eligibility threshold, public assistance benefits shall be reduced by Y%, ensuring a balanced and equitable reduction. The specific parameters of this formula (X and Y values) shall be determined by the Department, taking into account economic factors and the goal of promoting self-sufficiency.

D. The Department shall collect data and perform regular analyses to evaluate the effectiveness of the Dynamic Benefit Adjustment System. Adjustments to the formula shall be made based on empirical evidence and aimed at enhancing the System's effectiveness.

E. The Department shall be responsible for the implementation and oversight of the Dynamic Benefit Adjustment System. Regular reports on the System's performance shall be submitted to the General Assembly.

F. Safeguards shall be established to protect beneficiaries from sudden significant drops in assistance. The Department may make exceptions in cases of economic downturns or unusual circumstances.