[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



 
                  NATIONAL PROBLEMS, LOCAL SOLUTIONS:
                           FEDERALISM AT WORK
                                PART III
                  WELFARE REFORM IS WORKING: A REPORT
                     ON STATE AND LOCAL INITIATIVES

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 22, 1999

                               __________

                           Serial No. 106-18

                               __________

       Printed for the use of the Committee on Government Reform


     Available via the World Wide Web: http://www.house.gov/reform

                                 ______

                     U.S. GOVERNMENT PRINTING OFFICE
57-684 CC                    WASHINGTON : 1999






                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       ROBERT E. WISE, Jr., West Virginia
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
STEPHEN HORN, California             PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida                PATSY T. MINK, Hawaii
THOMAS M. DAVIS, Virginia            CAROLYN B. MALONEY, New York
DAVID M. McINTOSH, Indiana           ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             CHAKA FATTAH, Pennsylvania
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
MARSHALL ``MARK'' SANFORD, South     DENNIS J. KUCINICH, Ohio
    Carolina                         ROD R. BLAGOJEVICH, Illinois
BOB BARR, Georgia                    DANNY K. DAVIS, Illinois
DAN MILLER, Florida                  JOHN F. TIERNEY, Massachusetts
ASA HUTCHINSON, Arkansas             JIM TURNER, Texas
LEE TERRY, Nebraska                  THOMAS H. ALLEN, Maine
JUDY BIGGERT, Illinois               HAROLD E. FORD, Jr., Tennessee
GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
DOUG OSE, California                             ------
PAUL RYAN, Wisconsin                 BERNARD SANDERS, Vermont 
JOHN T. DOOLITTLE, California            (Independent)
HELEN CHENOWETH, Idaho


                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
           David A. Kass, Deputy Counsel and Parliamentarian
                      Carla J. Martin, Chief Clerk
                 Phil Schiliro, Minority Staff Director



                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 22, 1999...................................     1
Statement of:
    Allen, Claude A., secretary, Virginia Department of Health 
      and Human Resources; Michael Poole, chairman, Board of 
      Directors, Florida Work and Gain Economic Self Sufficiency 
      Program; Jason A. Turner, commissioner, New York City Human 
      Resources Administration; Julia Taylor, CEO, YW Works; 
      Cassandra Tucker, former welfare recipient; Genevieve 
      Kukla, president, Central Overhead Doors; Wendell Primus, 
      director of income security of the Center on Budget and 
      Policy Priorities..........................................    69
    Thompson, Tommy G., Governor of Wisconsin....................    17
Letters, statements, etc., submitted for the record by:
    Allen, Claude A., secretary, Virginia Department of Health 
      and Human Resources, prepared statement of.................    72
    Burton, Hon. Dan, a Representative in Congress from the State 
      of Indiana, prepared statement of..........................     5
    Hutchinson, Asa, a Representative in Congress from the State 
      of Arizona, letter dated April 2, 1999.....................    51
    Kucinich, Hon. Dennis J., a Representative in Congress from 
      the State of Ohio, prepared statement of...................    14
    Kukla, Genevieve, president, Central Overhead Doors, prepared 
      statement of...............................................   107
    Poole, Michael, chairman, Board of Directors, Florida Work 
      and Gain Economic Self Sufficiency Program, prepared 
      statement of...............................................    78
    Primus, Wendell, director of income security of the Center on 
      Budget and Policy Priorities, prepared statement of........   112
    Sanders, Hon. Bernard, a Representative in Congress from the 
      State of Vermont, prepared statement of....................    11
    Taylor, Julia, CEO, YW Works, prepared statement of..........    94
    Thompson, Tommy G., Governor of Wisconsin, prepared statement 
      of.........................................................    25
    Tucker, Cassandra, former welfare recipient, prepared 
      statement of...............................................   102
    Turner, Jason A., commissioner, New York City Human Resources 
      Administration, prepared statement of......................    85


                  NATIONAL PROBLEMS, LOCAL SOLUTIONS:
                           FEDERALISM AT WORK
                                PART III
                  WELFARE REFORM IS WORKING: A REPORT
                     ON STATE AND LOCAL INITIATIVES

                              ----------                              


                        THURSDAY, APRIL 22, 1999

                          House of Representatives,
                            Committee on Government Reform,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:33 a.m., in 
room 2154, Rayburn House Office Building, Hon. Dan Burton 
(chairman of the committee) presiding.
    Present: Representatives Burton, Morella, Shays, McHugh, 
Mica, LaTourette, Miller, Hutchinson, Terry, Biggert, Ose, 
Ryan, Waxman, Maloney, Norton, Kucinich, Davis of Illinois, and 
Schakowsky.
    Staff present: Kevin Binger, staff director; Barbara 
Comstock, chief counsel; David A. Kass, deputy counsel and 
parliamentarian; Kristi Remington, senior counsel; Mark 
Corallo, director of communications; John Williams, deputy 
communications director; Carla J. Martin, chief clerk; Lisa 
Smith-Arafune, deputy chief clerk; Corinne Zaccagnini, systems 
administrator; Nicole Petrosino and Jacqueline Moran, 
legislative aides; Laurel Grover, staff assistant; Phil 
Barnett, minority chief counsel; Cherri Branson and Sarah 
Despres, minority counsels; Ellen Rayner, minority chief clerk; 
and Early Green, minority staff assistant.
    Mr. Burton. A quorum being present, the Committee on 
Government Reform will come to order. I ask unanimous consent 
that all Members' and witnesses' written opening statements be 
included in the record. Without objection, so ordered.
    I want to welcome Governor Thompson of Wisconsin, who is 
with us today. Governor, we have four markups that are going on 
right now, and as a result we are going to have Members coming 
in and out; and I appreciate your patience with the problems we 
are having here in Washington.
    Today, we will continue our series of hearings on the 
relationship between State and local governments and the 
Federal Government, and we will look at the progress of reforms 
of our Nation's welfare system.
    We are very honored to have Governor Thompson with us 
today, whose innovative reforms in Wisconsin set the tone for 
later Federal reforms. The remarkable turnaround in welfare 
policy at both the State and Federal levels has allowed 
millions to free themselves from the vicious cycle of welfare 
dependency and poverty, and I am glad to be able to say that 
the success of the 1996 reforms and the State initiatives they 
were based on has proved many of the reform critics wrong. 
Since 1993, welfare caseloads have fallen by 6.5 million 
people.
    Welfare reform started the same way many of our most 
innovative and successful policy reforms have started: in the 
States. One reason for this is that every State is different, 
and the government that is closest to the people is best able 
to respond to the people. We already have seen that in the past 
two hearings on crime and taxes. What may work in a large State 
like California may not be right for Delaware. The same holds 
true for welfare reform, and today we will hear from several 
different States and localities on how things are getting done.
    Welfare reform is one of the best examples of policy 
success at the State level. Before Federal welfare reform 
legislation was enacted in 1996, 43 States were already 
operating under waivers from the Federal laws, a practice begun 
under President Reagan. The waivers enabled States to initiate 
experimental reforms in welfare that were ultimately 
successful, and these reforms led to the Federal legislation 
enacted in 1996.
    In 1965, there were over 1 million people on welfare rolls 
nationwide. By 1994 that figure was over $5 million. Even after 
spending $6 trillion in the war on poverty, the poverty rates 
increased from 14 percent to 15.2 percent between 1965 and 1992 
and out-of-wedlock births rose from 5 percent in 1965 to 
approximately 32 percent today. If you look at the inner-
cities, the figures are even higher. It became apparent that 
the welfare system was not working and was actually hurting the 
very people it was designed to help.
    The 104th Congress made it a priority to change this system 
and replace it with a program that placed an emphasis on work, 
responsibility, and family. The old welfare system undermined 
these basic values. The premise of reforms was rather simple. 
If an individual on public assistance is able to work, there is 
no reason he or she should not work. One of our most respected 
Presidents once said you cannot help men permanently by doing 
for them what they should and could do for themselves.
    Yet welfare reform is very controversial. The President 
vetoed two of these bills before he signed the third welfare 
reform bill in August 1996, and many liberals said that the 
bill would cause chaos and throw millions of people into the 
streets. Well, that has not happened. In fact, the welfare 
reform bill provided a $14 billion block grant for child care.
    Other critics claimed that the States could not be trusted. 
Both President Clinton and his Secretary of Health and Human 
Services warned of the serious danger of providing welfare 
funds to the States in block grants. When President Clinton 
spoke of the pending danger of the States' race to the bottom, 
he said ``It is always cheaper to cut people off of welfare 
than to move them to work. It will always be cheaper to lower 
benefits than to figure out how to reduce the caseload by 
moving them to work.'' Well, the States did not do that. They 
actually put more funds and more effort into providing their 
citizens new jobs, new hope, and new opportunity.
    Take, for example, Governor Thompson. Who did he talk to 
when he was planning welfare reform for Wisconsin? He went 
directly to the people who are most affected by the reforms in 
welfare, the recipients. He found out directly from the source 
why they were on welfare and how he could help them become 
independent. Even with the success of the waiver reforms in 
Wisconsin, it was an uphill climb to convince the 
administration that the reforms would work and that we could 
trust the States to provide adequate benefits to their 
citizens.
    Fortunately, we in Congress trusted the States and believed 
that they were best equipped to assist their own citizens. One 
of the truly great aspects of State control over policy is the 
speed with which they can address issues or problems that 
arise. If a program is not working for a State like Virginia, 
Virginia can change it. Virginia does not need to come to 
Congress and convince Senators and Representatives from 49 
other States that a particular welfare policy should be changed 
because it does not suit one State.
    Representatives from several States will be here today to 
tell us about their welfare reform programs and the progress 
they have made. Today, we want to look forward to the future of 
welfare and determine what roles the Federal, State, and local 
governments should play.
    Our witnesses today also will share with us their views of 
the impact of present Federal laws and regulations on State 
programs and whether they are helping or hindering State 
efforts.
    We are very happy Governor Thompson is on our first panel. 
He was first elected in 1986, and has won reelection ever since 
then. My gosh you have been Governor for----
    Governor Thompson. Thirteen years.
    Mr. Burton. And you look so young.
    Governor Thompson. I am the dean.
    Mr. Burton. Only 1 year after he took office, he received 
his first Federal welfare waivers from President Reagan and 
later received waivers from Presidents Bush and Clinton. Since 
that first waiver, he has worked with true diligence to 
overhaul Wisconsin's welfare system, and under his leadership 
Wisconsin's welfare rolls have dropped 81 percent since 1994.
    As part of his efforts, Wisconsin became the first State to 
require work in return for welfare benefits. Wisconsin Works or 
W-2--you know that is the same thing as the W-2 form for the 
IRS. Maybe you should have thought about that.
    Governor Thompson. That is why we did it. We went on to 
make W-2 synonymous with work.
    Mr. Burton. I understand. Wisconsin Works or W-2, the 
State's welfare program is a model for the rest of the country. 
In fact, W-2 has become an international model for many 
European nations looking to reform their welfare systems.
    The successful reforms in many States and local governments 
have been widely reported. What Congress needs to know is when 
to help, how to help, and when to get out of the way. And we 
hope today to learn from you, Governor Thompson, and others 
what it is you think we need to do to assist you further in 
what you are doing in the States.
    We will have other panelists who we will introduce at that 
time and each participant on that panel will provide us a 
different view on welfare reform. And with that I recognize Mr. 
Waxman for his opening comments.
    [The prepared statement of Hon. Dan Burton follows:]


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    Mr. Waxman. Thank you very much, Mr. Chairman. I welcome 
Governor Thompson to our hearing. This is an important hearing 
because as an oversight committee we want to watch to see how 
in the real world changes are taking place and whether the 
original assumptions of our legislation are being lived up to.
    I am glad to be able to be here and report some good news 
about welfare reform. Many former welfare recipients have jobs 
and have been able to move from being recipients to taxpayers. 
In part, these changes are made possible through innovative 
programs like that which Governor Thompson has initiated in his 
State. And in large part these positive changes are the result 
of a strong national economy which created 1.9 million jobs in 
1998 alone. The Council of Economic Advisors attributes about 
half of the decline in welfare rolls to favorable economic 
conditions.
    Unfortunately, the story on welfare reform is not all good 
news. Since the enactment of welfare reform, welfare rolls have 
declined by 46 percent. This sounds like a dramatic 
improvement. But in some States, many people have left welfare 
because they have been forced off by the State, not because 
they have risen out of poverty.
    In December, for example, a Federal court in New York City 
found that applicants had been illegally discouraged from 
applying for food stamps and Medicaid and cash assistance. The 
court found that people were not only improperly denied 
assistance, but new applicants were diverted to private 
sources. And New York City may not be alone. Nationally 
enrollments in the food stamp program have declined further and 
faster than the decline in the poverty rate. The Department of 
Agriculture has initiated investigations into whether States 
have illegally diverted applicants from the food stamp program.
    On the other hand, voluntary agencies have also felt the 
pinch created by welfare reform. A study by Catholic Charities 
U.S.A. found that the demand for food from pantries and other 
church-run programs has increased over 70 percent since welfare 
reform. So we see people going off food stamps. We hope they 
are working and self-sufficient, but at the same time we see 
them turning to Catholic charities and other charitable 
organizations.
    None of these trends would exist if case closures meant 
that all people who left welfare were making a successful 
transition to the work force. But by and large what we have had 
is pretty good news. We hope it will continue. The real test is 
going to be when the economy is not as strong as it is now. And 
then we will have to evaluate whether welfare reform is living 
up to our expectations.
    I applaud the success of individuals who have made the 
transition from welfare to work. I believe that just closing a 
case is not necessarily the true test of whether we have a 
welfare success. As an oversight committee, it is our duty to 
look beyond the case closing as statistics to determine what is 
really happening in welfare programs.
    And so, therefore, Mr. Chairman, I see you have a long list 
of witnesses who are going to give us different perspectives on 
this problem. I think that is very worthwhile. And I know many 
of the Members are not going to be able to be here for the 
testimony, but the record that you will make today will be very 
helpful for all of us on this committee and in the Congress to 
continue our oversight over this important area of interest. I 
yield back the balance of my time.
    Mr. Burton. Thank you, Mr. Waxman. Mrs. Morella.
    Mrs. Morella. Either one, we work together well. I just 
want to welcome you, Governor Thompson. I am one who has had 
some concerns about how well welfare reform systems would work, 
and I am just so pleased to hear such good success stories. I 
guess I also want to--in your remarks if at some point you 
might also look at some of the legislation that we are going to 
have before us. I mean, for instance, legislation that would 
allow people to continue with Medicaid as they work so they 
don't lose health benefits. I guess that is what I am thinking 
of. Have you confronted a challenge with people who need to 
have health care benefits while they are working?
    And second, the concept of training. One of the things we 
did in the Higher Education Act is we allowed some colleges to 
be able to subsidize child care for people returning to school 
to hone their skills or to learn new skills which actually 
would get them off of welfare. So I am also curious about child 
care and about training programs. And I really applaud your 
coming here to help us learn from your experiences. Welcome.
    Mr. Burton. Mr. Shays.
    Mr. Shays. Governor Thompson, I consider you a real role 
model for so many people. You have been out front on these 
issues when they were not popular. But I would add that I also 
consider you a role model because, when you moved forward with 
welfare reform, you didn't just say ``OK now that we have 
passed it, we can go on to the next issue.'' You truly tried to 
make it work, which in some cases has meant you put more money 
into programs.
    I think you have made it very clear that welfare reform is 
not going to work if we don't have the kind of designed 
education and job training that will help people get jobs. You 
are the one who said that welfare recipients are not going to 
move over to jobs if they do not have some continuation of 
health care. You are the one who has made it very clear that 
you need transportation and day care. All of those cost money. 
And I just appreciate that you have done that.
    This may sound partisan, but I find it particularly 
satisfying to see a Republican who has been so out front on 
both sides, in the sense that you want welfare reform, but you 
want to make it work. And you have shown a tremendous amount of 
compassion, so to me you are a real hero.
    I would also conclude that you have an outstanding 
Congressman sitting next to you. I don't know how Wisconsin 
does it, but you have a lot of great members on both sides of 
the aisle. This fellow is tremendous. It is great to have you 
here.
    Governor Thompson. Thank you very much.
    Mr. Burton. Any comments, Mr. McHugh? Mr. McHugh passes?
    Mr. McHugh. Well, Mr. Chairman, let me just very briefly 
welcome the Governor. I would certainly associate myself with 
the remarks of the gentleman from Connecticut. I too look to 
you, Governor, as a source of inspiration, as someone who has 
really, like so many other Governors across this great country, 
forged a new path that we can hopefully continue to follow. I 
want to thank you for your efforts and tell you how much we 
appreciate your being here today. And thank you, Mr. Chairman, 
for allowing us to hear from such a distinguished panelist.
    [The prepared statements of Hon. Bernard Sanders and Hon. 
Dennis J. Kucinich follow:]
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[GRAPHIC] [TIFF OMITTED]57684.008

    Mr. Burton. Thank you. Congressman Ryan, the fine 
Representative from the great State of Wisconsin and one of our 
new members, we appreciate you being here to introduce the 
Governor.
    Mr. Ryan. Thank you, Mr. Chairman. Thank you, members of 
the committee and my colleagues. I am pleased to be here today 
to introduce Governor Tommy G. Thompson from the great State of 
Wisconsin, my home State. Governor Thompson is the first 
Governor in the history of Wisconsin to be elected to four 
consecutive terms. This is a true testament to his abilities 
and how he has served the people of Wisconsin. Time and again 
Tommy Thompson has been willing to throw out the traditional 
approaches to government and experiment with innovative ideas 
in governing, and this is what is going to be shared today. He 
has been and continues to be on the cutting edge of social 
change in health care, long-term care, welfare reform, 
education reform, and several other social issue reform areas.
    It is his innovative W-2, or Wisconsin Works program that 
has brought him before this committee today. This program, 
which has served as a model for the rest of this country, has 
reduced welfare rolls in Wisconsin, and get these numbers: 
under Governor Thompson's leadership, the W-2 program has 
reduced welfare rolls in Wisconsin from when he took office in 
1987 of 100,000 families receiving AFDC to February 1999, 8,865 
families on cash assistance. Let me repeat that just for 1 
second because I think it bears repeating. When he came into 
office 100,000 families on AFDC. Now we are down to 8,865.
    In a State with unemployment below the national averages, 
it is important to have every available person contributing to 
the work force. Governor Thompson's W-2 program continues to 
move new people into the work force by providing training and 
education. As the Governor describes this amazing reform 
proposal here today and as participants and program operators 
from the W-2 program will testify on further panels, I urge my 
colleagues to listen carefully to three elements of the 
Wisconsin welfare program that have been essential to its 
success.
    The first element I urge you to pay particular attention to 
is the program design. The program is designed as a four-rung 
ladder that assesses employment readiness of an individual and 
places those individuals accordingly. As workers receive more 
experience and training, they move up the ladder toward 
independence.
    Second, please take a look at the social services available 
through the W-2 program and the integrative administration of 
these services. If you ever have time in your busy schedules I 
encourage to you come to Janesville, WI and take a look at our 
job center. We retrofitted a K-Mart department store under 
Tommy Thompson's leadership. We have a job center now where we 
have all welfare recipients, other people coming to get one-
stop shopping in social services. This is a very, very 
important point and phase of welfare reform.
    Not only does W-2 assist individuals in finding employment, 
at these job centers it helps link them to services such as 
child care, health care, and transportation. We just had a 
plant shut down in Janesville, WI, Parker Pen. Probably half 
the pens you are using now were once made in Janesville, WI. 
But we had to get training assistance for these displaced 
workers. Where did they go? They went to the job centers that 
Tommy Thompson created in Janesville, WI and other places 
around every single county in Wisconsin.
    Last, please note the public-private partnerships that are 
a vital part of the administration of this program. It is much 
to the Governor's credit that he recognized that the government 
could not operate this type of a sweeping reform in a vacuum 
without the assistance of private sector agencies and 
businesses.
    I believe the Governor can offer a great deal of insight 
not only on the welfare reform but also on Federal barriers to 
that reform. I am pleased that my colleagues will learn about 
the success of the welfare reform in Wisconsin, but also how 
Federal Government agencies and regulations have hindered that 
success. I will also be listening very carefully to the 
Governor's comments on what these barriers are, as well as his 
recommendations on how to address them; and that is something 
that is very serious work that this committee, I hope, will 
undertake in the next couple of years.
    I am sure you are going to agree with me that the 
Governor's accomplishments have become a model for both the 
State and national level. Mr. Chairman, I want to thank you for 
holding this very important hearing. I want to congratulate you 
for the work on this committee. And my hope is that you will 
join me in welcoming Governor Tommy G. Thompson, who is a 
trailblazer in social reform, not only in welfare reform but 
health care and education as well. I thank the Members for 
holding this hearing. Thank you.
    Mr. Burton. Governor Thompson, welcome. And we appreciate 
very much--I know how busy you are in Wisconsin--we appreciate 
your being here, and we really are looking forward to any 
advice you can give us on how we can do additional things to 
help Governors across this country.

     STATEMENT OF TOMMY G. THOMPSON, GOVERNOR OF WISCONSIN

    Governor Thompson. Well, thank you very much, Mr. Chairman. 
I appreciate very much the invitation. I also appreciate your 
leadership in Congress and the fact that you are from a big-10 
State. It is outstanding to have you in Congress. And I thank 
you and all the Members and, of course, my very good friend, 
Representative Paul Ryan, who just celebrated his 29th 
birthday. I tell you. And I am delighted that he is a 
Congressman. And I campaigned with him, and he is a delight to 
see in action. And I thank you so very much for introducing me.
    There are a lot of questions that have already been raised 
by Members in Congress, and I will try and address them as I go 
through my testimony. On behalf of the State of Wisconsin, I 
certainly would like to thank you all for this opportunity to 
address this committee regarding a very important subject to me 
and that is welfare reform. I commend you, the committee, in 
your role in strengthening the connection between Washington 
and the American people by showing them that government is 
listening and that government wants to change for the better.
    And I think that even yesterday with the Congress 
conference committee on educational flexibility, another giant 
step forward--and I want to compliment you on that particular 
piece of legislation as well. I was supportive of that, as well 
as most Governors across the country.
    At this time, Mr. Chairman, I would like to request that my 
entire testimony be included in the record.
    Mr. Burton. Without objection.
    Governor Thompson. I would like to focus my comments today 
on three issues: first, Wisconsin's successful welfare reform; 
second, the role the Federal Government has played in that 
success; and, finally, what we can do to ensure success into 
the 21st century.
    Wisconsin's welfare-replacement program, Wisconsin Works, 
W-2, which we put out and we picked the name synonymous with 
the W-2 slip that you get when you go to work, it has had 
tremendous opportunities as well as expectations and successes. 
W-2 was the first welfare to work program in the Nation and it 
still remains as a model. The program's success can be measured 
in a number of ways: first by the precedent-setting caseload 
reduction, and as Congressman Ryan has pointed out in February 
1999, we just had over 8,800 individual families still 
receiving cash assistance. That is down from 34,000 families in 
August 1997, a 44 percent reduction, and 100,000 families when 
I started in 1987, or a 91 percent reduction in welfare cases.
    Between January 1987 and February 1999, we have been 
successfully reducing our caseload, and it is now down by more 
than 91 percent. Again, this is higher than any other State in 
the country. It probably is one of the reasons I started 
earlier than any other State. And we have had good cooperation 
from Congress. We have received waivers from Presidents Reagan, 
Bush, and Clinton.
    Though it is a good indicator, welfare reform's success, as 
Congressman Waxman pointed out, cannot and should not be 
measured by caseload reduction alone. A second measure of 
success must be the direct impact the program has on our 
participants, their families, and most importantly the 
children.
    That is why Wisconsin's Department of Workforce Development 
has undertaken an evaluation project to determine how our 
former W-2 participants, or ``leavers,'' are doing. To that end 
we have conducted the first in a series of four leaver surveys 
to find out about the well-being of our former participants. 
The results are extremely favorable.
    Some critics of AFDC and W-2 predicted before the end of 
AFDC and the start of W-2 that most people having to leave 
these programs would not make it at all. Instead, what we are 
finding is that many people previously on welfare are making it 
for, perhaps, the first time in their lives.
    The survey shows that 85 percent have worked since leaving 
welfare, that most of those are still working. Additionally, at 
least 80 percent of those with jobs said they were working 35 
or more hours a week. And finally, 70 percent of the leavers 
said that life was better for them now than when they were 
receiving welfare. And we know those leaving are succeeding. 
The average wage for those leaving W-2 is $7.42 an hour, more 
than $2 above the minimum wage. And I also want to point out on 
top of that you get the earned income tax credit from the 
Federal Government, and the State of Wisconsin is one of the 
few States that have a State supplement to that. So if you are 
working, you are able to get an additional $5,200. So just at a 
minimum wage, you are already up to $16,000 if you apply for 
the programs.
    The compassion--the compassion of W-2 shines through in the 
economic as well as the social successes that these families 
and entire communities are seeing. The entire State is 
benefiting from W-2 successes. Here are some impressive and 
very telling statistics: a family of three on W-2 is 30 percent 
above the poverty line of the current average wage of $7.42 an 
hour. On AFDC, this same family was 30 percent below the line 
of poverty. And even at a minimum wage job, which there are 
very few any more in this country, the family is still 15 
percent above poverty; and in Wisconsin you can still apply for 
the Federal income tax--earned income tax credit and the State 
earned income tax which will add an additional $5,000 if you 
qualify for the maximums.
    The child poverty--and this is something that I want to 
address to Congressman Waxman because I know he is so 
interested in it--child poverty in Wisconsin has dropped 14 
percent since 1987. Overall, we have the fifth in Wisconsin, 
the fifth smallest poverty rate in the country and we have the 
fourth smallest gap between the rich and the poor.
    Now wages for the lowest income residents--and I think this 
can be directly correlated to welfare reform--are rising faster 
than any other group. In 1989, Wisconsin ranked 29th in wages 
for the poorest residents. Today, it ranks 12th, and it is 
continuing to grow. The Milwaukee Journal Sentinel just had a 
report done not too long ago that said that the bus drivers 
going into the central city of Milwaukee were surprised that 
their buses in the early hours were filling up with people 
going to work when before they didn't have that kind of 
transportation. And second, the New York Times just had--the 
New York Times has a reporter that is going to be in Milwaukee 
full-time for 12 months covering welfare reform; and he said 
one of the interesting things in the central city of Milwaukee 
is that there are a lot of new tax preparation businesses 
setting up in the central city of Milwaukee, indicating that 
those individuals are working and paying taxes.
    Teen pregnancies are dropping. Wisconsin now is the seventh 
lowest in the country, and before welfare reform it was 
increasing. Crime in Wisconsin has hit its lowest level since 
1973.
    Third, our success can be measured through the personal 
experience of our W-2 participants. I recently, as Congressman 
Burton pointed out, called in welfare mothers to come to the 
residence and have lunch with me. And I asked them what works, 
what doesn't work. I had the opportunity to have one of those 
meetings with a number of our W-2 participants in Milwaukee. 
Our success can be found in the words they shared with me that 
day and that I would like to share with you today.
    Michelle Crawford, who had a lot of problems and she was 
written up in the New York Times this week, a nice display, and 
she said, I was blessed to have found W-2, and I ask others to 
take a chance on W-2 workers and we won't let you down.
    I had the opportunity to invite her to come to my State of 
the State. As the President gives the State of the Union, all 
Governors give the State of the State. And they guard it very 
jealously because it gives them a chance to brag how well they 
are doing. And I decided this year, since I have been doing it 
so long, to do something different. So I brought in Michelle 
Crawford, an individual who I had only known for a couple of 
weeks and asked her to share the podium with me.
    And she got in front of the legislature and told her story 
and told about the fact that she hadn't worked; she had several 
children and had been in an abusive situation and she said now 
she is working. And this was in January and she said I was able 
to buy Christmas presents for my children. And then she brought 
her three children, and they introduced them in the gallery; 
and she pointed to her children and said to her children, she 
said, I tell my children, this is what you can do when you do 
your homework. And there was not a dry eye in the whole 
assembly chambers, and then she put her fist in the air and 
said give us a chance. We can be very productive, loyal 
workers. Give us an opportunity like W-2 gave me.
    We were all, you know, very emotional and it was a 
wonderful, wonderful presentation by somebody that has had the 
opportunity now to be able to get off of welfare into work.
    Roberta Giles, another W-2 success story, had this to say 
about the program: if I had $1 for every time I tell someone 
how great W-2 is, I wouldn't have to work. And finally Connie 
Alston said, thank God for W-2. It works for me; I have seen it 
work for others as well.
    Finally, our success can be found in the innovations 
developed by our W-2 agency. I set it up so the program could 
have very complete flexibility. To be able to adapt programs 
like you have allowed us to do at the State level, Congressman, 
I have allowed the W-2 agencies at the county and the local 
levels, the city levels, to develop flexible programs for 
themselves so they are not hamstrung by rules, so that if they 
see an individual case they can adapt their program and the 
money to help that particular family.
    You are going to hear from a person after this, Julia 
Taylor, who I am so impressed by, is one of those innovative 
thinkers. She wanted to do something so she went out and bought 
a bankrupt factory, a plastics factory. W-2 allowed her to do 
this and under the YWCA, which she runs, she bought a plastics 
factory to teach welfare mothers how to run injection molding. 
And it is an absolute success story. She called it G2P, and it 
is a company created by a nonprofit organization, as I 
indicated, YWCA of greater Milwaukee. Trainees are recruited 
through YW Works, one of Milwaukee's five W-2 providers. We 
split up Milwaukee County and contracted out. The County Social 
Services Department didn't want to do it, so we contracted out 
with private vendors and they bid for the opportunity to set up 
this program.
    Its mission, the YWCA, is to increase the self-sufficiency 
of central city residents by providing living-wage jobs and 
training in skilled labor for low income participants. In its 
first year G2P, this plastics factory, trained 98 W-2 customers 
in office, light industrial, and injection molding positions. 
And upon completion, the participants are prepared for hiring 
by plastics injection molding firms at wages up to $11 per hour 
and some with complete benefits.
    This program not only provides the job skills necessary for 
our participants, but it has also formed partnerships with 
other Wisconsin employers who are in desperate need of skilled 
workers. This is innovation and partnership, I believe, at its 
very best. I won't say any more about G2P because you are going 
to have the opportunity to hear and to speak and to question 
Mrs. Julia Taylor, executive director, who is going to be with 
you later today.
    Undeniably, Wisconsin's success in welfare reform is a 
reflection, however, of the Federal Government because you have 
listened; you have reacted to the needs of each and every State 
in this Nation. And I personally want to come back and just say 
thank you to all of you for supporting us.
    It can also be said that the Federal Government's direction 
on welfare reform is a reflection of what we were able to do in 
Wisconsin, although from a national level it appears that 
changes to the State's' welfare policy took place within the 
larger context of Federal welfare reform. Our success provided 
a blueprint for the Temporary Assistance for Needy Families 
program. In fact, TANF reflects a number of the initiatives we 
started in Wisconsin under the waiver program. Wisconsin 
successfully implemented through the waivers the past 12 years 
time limited benefits, emphasis on work participation, 
emphasizing that teen parents should live at home and providing 
supportive services such as child care, transportation, and 
health care.
    And Congressman Shays is absolutely correct. I have 
testified in front of several congressional committees and have 
always said you can't have welfare reform unless you provide 
for health care first for the mother and the children. You have 
to then provide for adequate and reasonable and safe and good 
child care. Three, transportation. You cannot expect mothers to 
go to work if they don't have a car or good bus services; and, 
fourth, you have to have the training. You can't do it on the 
cheap. In fact, we spend more per case in Wisconsin now moving 
people off of welfare than we did under the old system of AFDC.
    On a broader scale, what has TANF provided States? TANF has 
provided the flexibility States need to be able to change their 
welfare policy. This has been able to allow States to try 
innovative approaches from Connecticut to Indiana to California 
across the whole spectrum to be able to solve problems at the 
State level in order to meet the needs of its disadvantaged 
residents.
    Generation 2 Plastics is a final example of this creativity 
and innovation. In its first year G2P not only gave those 
participants the necessary skills but it also importantly 
increased their self-esteem, gave them the opportunity to think 
for themselves that they could do it; and that is so important 
when you deal with welfare mothers.
    We have been able to tailor W-2 to the needs and the 
problems of its participants thanks to you giving us the 
flexibility to do that. TANF allowed the States to move from a 
dependency model to a model that expects people to assume 
control and yes, the responsibilities over their lives and to 
provide for their families. By removing the entitlement, TANF 
has strengthened the critical length between something of value 
and the expectation that people will take control of their own 
lives if you give them the appropriate incentives.
    And finally, TANF guaranteed the States a fixed funding 
level in order to develop these innovative programs. We 
couldn't have done it without the block grants. We could not 
have done it, and I want to applaud you for it--in order to 
provide the services, and to be able to assist people in taking 
responsibility for their lives. The results have been a 
dramatic number as families have moved off the public 
assistance to work, proving that State TANF innovations are 
working. This country has seen its lowest level of welfare 
recipients in 30 years. And together the Federal Government and 
State governments have achieved this success as partners, and 
now more than ever we must work together to continue this 
success as we move into the 21st century.
    So given the success under TANF, one might ask, as several 
of you have indicated, where is there room for improvement or, 
more critically, where has TANF fallen short? Despite the 
successes, there are a number of areas where removing 
regulatory barriers will also help future successes. However, 
before I address those areas that still require improvement, I 
do want to commend the Department of Health and Human Services 
on the changes--and I haven't done that often, and this may be 
the first time I have done it publicly in a long time--that 
were made to the TANF proposed rules. More specifically, as a 
State we were pleased somewhat to see the following items 
contained in the final rules released early last week: the tone 
has changed dramatically from the Department. It acknowledges 
that States are doing well. The change in definition of 
assistance. This has allowed us to be able to expand the kinds 
of things we can count toward assistance and now we are down in 
Wisconsin to the hardest-to-place people, so we need more 
flexibility in order to move the next 8,800 people off of 
welfare. So I was happy about the fact that they have 
liberalized the definition of assistance and allowed us more 
cooperation in child support and data reporting requirements.
    Separate State programs for MOE, the maintenance of effort 
purposes, the final rules recognized that States are not using 
separate State programs to avoid the TANF requirement, 
something that I argued in Congress we would not do. And it 
recognizes the validity and the use of child-only cases. So I 
want to thank you for listening.
    On that note, where is there room for continued 
improvement? Most importantly, Congress must reject the 
efforts--and I understand that it is something that you are 
always looking at as extra money. Every legislator or 
Congressman in the world always wants to spend more money, it 
is natural. And so Congress must reject the efforts to reduce, 
to rescind, or defer the funding of the TANF block grant. Any 
change in the funding mechanism would represent a breaking of 
that historic agreement between the States and the Federal 
Government which was established in 1996.
    There are a number of factors that Congress must consider 
before thought is given to reducing, rescinding, or deferring 
the funding of the TANF block grant. Once we have a renewed 
commitment of those dollars, Wisconsin and other States will 
need additional flexibility to spend those dollars as we 
provide important supportive services such as transportation, 
child care to our low-income families, improvements in the TANF 
legislation, include giving States more flexibility in spending 
those dollars.
    In order to provide the services to support low-income 
families in the most practical way, States need to be relieved 
of the requirement that expenditures be attached to a specific 
TANF participant. Congress should recognize and applaud the 
States' efforts in welfare reform. States didn't use the 
flexibility of the block grants as some Congressmen said or 
thought would happen, a race to the bottom. Rather we have been 
able to spark a race to the top, coming up with innovative 
programs, moving people off of welfare. Instead States are 
using these dollars for the public good, such as spending the 
block grant dollars to provide work and family stabilization 
services to low-income families.
    Public support for such programs is evidenced by the 
recently released Kellogg Foundation survey which showed 
widespread support for programs to help the working poor. 
Additionally, Congress should modify the data reporting 
requirements. I don't know who reads all that data that you ask 
us to compile. And it just takes away the opportunity. We send 
in reams of paper, and I am sure, Congressman Burton, you don't 
want to read all of that data that you require us to collect. 
Remove that burden. Remove the burden of maintenance-of-effort 
requirements that are placed on States and allow States more 
flexibility in meeting the maintenance-of-efforts requirements.
    Although the final TANF regulations appear to have provided 
some extra flexibility in this area, it appears that not in all 
cases. Let me quickly explain an example. We have reduced our 
caseload down to 8,800 families. Now, in order to maintain our 
maintenance of effort of $173 million, just on those 8,800 
family, we would like to be able to make sure that some of 
those families have moved off of welfare are still able to get 
services. We have a difficulty counting that. We also have a 
homestead tax credit that we give people, low-income families 
that they can apply for. We cannot count that for our 
maintenance of efforts. So we would like to have some more 
flexibility.
    Child care is the most important one. Child care is 
undoubtedly one of Wisconsin's greatest factors to the success 
of W-2. And what more can be done to strengthen this critical 
piece of welfare reform? Again, increased flexibility in 
spending. We would like to be able to have the flexibility, 
Congressman, to be able to move TANF dollars into the child 
care development fund because it allows us to be more flexible, 
more innovative, and the TANF dollars we are very restricted in 
how we can do child care. I am setting up state-of-the-art new 
child care, exceptional child care, centers. In this budget 
that is going to allow for at-risk children in the central 
city, two of these exceptional child care centers--and we found 
that the earliest you can get at children and the brain 
development of that child, the better off you are going to be. 
So we want exceptional child care centers set up to help at-
risk children. We want to be able to put them into a center 
that they are going to hear classical music. They are going to 
hear foreign languages piped in, and all of these things from 
our studies indicate that it is absolutely on the cutting edge 
to helping at-risk children develop properly.
    The results would be better if we had the opportunity to 
have this flexibility, more accessible child care services for 
working families leaving welfare, so as the caseload has 
dropped, due to Wisconsin's efforts, to move those who can work 
into the work force. The portion of Wisconsin's caseload with 
significant barriers--right now 80 percent of our welfare 
caseload of the 8,800 are in Milwaukee County and 60-some 
percent have an alcohol or drug dependency; 50 percent do not 
have a high school education, and 40 percent have never worked 
a day in their life of the remaining 8,800. So you can see it 
is going to cost us more. It is going to have to have more 
individualized counseling and better counseling and more 
programs to develop to move those off of it. Not only is there 
increased focus on these harder-to-serve cases, there is equal 
focus at helping low-income families maintain and to be able to 
advance their position in the workplace. Improvements in the 
TANF legislation should include expanding the use of the TANF 
dollars to help the hard-to-serve TANF eligibles and low-income 
families to prevent recidivism. This current narrow definition 
of work activities is no longer appropriate for the remaining 
case loads that we have to deal with.
    I want to again thank you, Mr. Chairman, and the committee 
for proactively seeking out ways to strengthen the Federal-
State partnership, for serving our Nation's most disadvantaged 
citizens. One way the Federal Government can help to ensure 
this success is to first uphold the commitment to providing the 
block grant dollars and second provide the additional 
flexibility necessary to spend our TANF dollars in a way that 
meets the needs of each State's most needy populations.
    The changes in the final TANF regulations were a good first 
step. However, while these rules are considered final, even 
final rules can be changed. By doing so, the Federal Government 
and State governments can work together to ensure that the 21st 
century is set for success. In Wisconsin, and throughout 
America, welfare reform has demonstrated that States can best 
solve problems when they are given the flexibility and the 
support to do so. Congress gave the States that freedom. They 
gave them the freedom to design their own welfare replacement 
programmings and the block grants to support them. As a result, 
hundreds of thousands of families are now climbing out of 
poverty and pursuing their piece of the American dream.
    We certainly hope that Wisconsin's successes encourages 
Congress to be able to give States even greater flexibility on 
welfare reform and greater freedom on other issues, from health 
care to education to welfare reform. Thank you very much, 
Congressman.
    [The prepared statement of Governor Thompson follows:]
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    Mr. Burton. Thank you, Governor Thompson. Before we start 
the questioning, Mr. Waxman has to leave, so he has a comment.
    Mr. Waxman. I thank you, Mr. Chairman. I do have to leave. 
I have a conflict in my schedule. But I did want to stay for 
your testimony, Governor Thompson. You have given us some 
impressive results in your State. I think you are absolutely 
right. This is a Federal-State partnership to deal with this 
problem. It certainly helps when the Federal Government 
produces an economy of astounding proportions with low 
unemployment and growth everywhere. It also hurts when the 
Federal Government allows immigrants to come in illegally, as 
it has in my State. But we have got to work together and make 
sure that we are living up to all of those promises, and I 
think you put your finger in your remarks on all the things 
that are going to be necessary to be sure that we are doing 
right by people, getting them to work and not just simply 
taking them off of welfare. But thank you so much for your 
testimony. Thank you, Mr. Chairman.
    Mr. Burton. Governor, let me start the questioning by 
saying that you had a number of people who were critics when 
you first started out, and they said that people would be 
moving to the bottom rather than to the top. And you have been 
remarkably successful, because you did talk to these people 
evidently and because you have provided safety nets in areas 
where they didn't anticipate you would do that.
    There are things that would concern some of my more 
conservative friends--but then I am a pretty conservative 
Congressman myself--but when I listen to you, I see the 
reasoning behind it. That is why I think it is important for 
you to be here: we can pass on to our colleagues why it is 
important even as conservatives that these things be done. But 
I think it needs to be elaborated on a little bit more why you 
think additional funding or continued funding needs to be given 
to people who are now working in the private sector and are 
above the minimum wage and are fairly self-sufficient; why 
there needs to be continued expenditures for transportation, 
child care education and these other things that you talked 
about. And if you could elaborate just a little bit, it would 
be helpful.
    Governor Thompson. For several reasons. But first let me 
point out that you are dealing with some very fragile human 
beings. A lot of people on welfare are there for reasons that 
they really didn't have any control over. They may have been in 
an abusive situation. They may have been a mother at a very 
young age. A lot of teenage pregnancy, a lot of even younger 
than teenagers are having children. And they have a self-esteem 
that is extremely low. So moving them into welfare reform, and 
especially now where we are down to the hardest-to-place 
individuals, these are the ones with the most problems and 
multiple problems; and so you are not always going to be 
successful the first move from welfare into work.
    Michelle Crawford was one of those examples. She had fallen 
back into AFDC several different times. And the first time we 
had her in W-2, we had her in a job that didn't pan out for 
her. She was a janitor; she was cleaning up in a factory, and 
she didn't like it. She wanted to be a machinist, and so we 
took what she wanted to do and he taught her how to be a 
machinist, and now she is operating a machine and she just 
blossomed.
    So you are not always going to be successful on the first 
case. So you may have to have some extra efforts, especially 
now when you are moving the easiest people off of welfare, the 
ones that have been on just for a couple of months and have had 
one or two problems and are now off. Now we are down to where 
you really have to put in the extra efforts, individualized 
counseling, individualized case studies in order to move them. 
And so that is why you have to continue funding it.
    The second thing is that we are trying a lot more 
innovative things with welfare reform. It is not just moving 
the people off of welfare. We want to be able to get at the 
working poor--the working poor that are right above that level 
where they could fall back and get back on welfare, or get back 
on assistance but they want to work and they don't have any 
benefits; and in those places we set up a program in Wisconsin 
called Badger Care which is the next step to provide the 
working poor health care for themselves and their family and 
that is very expensive; and we are going to allow them to buy 
into our Medicaid program, and the State is going to spend a 
lot of our own dollars; and with the waiver from the Federal 
Government, we will also be able to get a Medicaid match but, 
we can't do it without the continuation of the block grant.
    The third thing is on transportation and on training. You 
can't expect welfare mothers to be able to improve if you don't 
give them the training, and that is very expensive; and that is 
why the necessary dollars and the flexibility is so important, 
Congressman.
    Mr. Burton. Your comments brought up a couple more 
questions. I have a whole list of questions I would like to 
ask, but there are questions popping into my mind as I listen 
to you because it is very interesting and informative. One of 
the things you said in your opening statement was that the cost 
is actually not any less than AFDC; it is probably the same or 
a bit more to keep these people in productive positions.
    Now a lot of people would say if it is costing more, why 
should we do it. But I want to ask you about tax revenues. By 
making these people workers instead of dependent on welfare, 
does it help the State's economy?
    Governor Thompson. Sure. Absolutely it helps the State's 
economy; but let me tell you--it is from a conservative point 
of view--it is a good investment of dollars because when we 
were on AFDC, we were spending approximately $9,400 per case. 
But now we are spending close to $16,500 per case because we 
are putting more in child care. For instance, we have gone from 
$12 million when I started in 1987 to $175 million in child 
care. That is a huge increase. But even though we are spending 
more on a case and even though we spent a lot more on child 
care, the amount of dollars overall that we are spending on 
welfare are less because the caseload has declined. So even 
though we spent more individualized cases--on individualized 
cases, the overall amount of dollars being spent is actually 
less because the declining numbers.
    And so it is a tremendous investment. As far as the 
economy, just by the numbers our unemployment is at 3 percent 
in the State of Wisconsin, similar to Indiana. And we are 
having good cash-flow and the amount of wages that are going 
down, I mean, the wages are going up; but the decrease from the 
rich to the poor is declining in Wisconsin, and we think it is 
definitely correlated to more people working at the lower ends 
getting better wages by the training, so it is helping our 
economy overall.
    Mr. Burton. Very good. Mr. Davis.
    Mr. Davis of Illinois. Thank you very much, Mr. Chairman. 
Governor, let me also welcome you and indicate that I 
appreciate your testimony as well as the work that you have 
done in the State of Wisconsin with this issue. Not only do I 
appreciate your work but I appreciate the passion with which 
you have done it. You display a passion for this issue in terms 
of trying to really make it work. Information that I have 
looked at, some of it, indicate that the welfare rolls in 
Wisconsin have declined by 85 percent since March 1994. How do 
you equate that with the decline of poverty? I am saying, do 
you equate a decline in the welfare rolls also with a decline 
in poverty? And if so, would the rate of poverty be close to 
the rate of welfare decline?
    Governor Thompson. I don't know if it is a direct 
correlation, but I think it is close. We have seen in Wisconsin 
our child abuse has gone down 13 percent. We were ranked 29th 
in the country in 1989--27th in the country in 1989, 
Congressman Davis, as far as disparity between the rich and the 
poor. This year we are ranked No. 12th, so it is definitely the 
lower income is increasing faster.
    Our teenage pregnancy is down. The fact that our difference 
between rich and poor is fourth in the country, and poverty we 
are the fifth lowest in the country, so I would say that all of 
those statistics are getting better as our welfare rolls are 
going down, Congressman.
    Mr. Davis of Illinois. And so the factors which contribute, 
if you add them all up in terms of what we ultimately define as 
being a poverty profile, certainly would have had some impact.
    In Illinois we have had the experience of there being an 
increase in the number of persons lacking health care or 
without health care as they have come off welfare, about an 8 
percent increase. What have the experiences been in Wisconsin?
    Governor Thompson. Well, in Wisconsin we have 94 percent of 
our population covered, Congressman Davis. And we have 1-year 
transitional Medicaid coverage under our W-2 program. And we 
are starting a new program as of July 1 called Badger Care that 
will provide health care to families. They will be able to buy 
into Medicaid. We just got a waiver from the Federal Government 
in January to do that, Congressman Davis, and we are going to 
set this new program called Badger Care that we think will 
become a model for the country that you will be able to buy 
into Medicaid and be able to cover the working poor up to 185 
percent of poverty, so we are at 93 to 94 percent covered right 
now in the State of Wisconsin, the highest of any State. We are 
tied with Hawaii. And we expect that to go up to about 97 or 98 
percent after we really implement Badger Care in the State of 
Wisconsin.
    Mr. Davis of Illinois. So then in reality, in Wisconsin 
there are not many people having serious difficulty acquiring 
health care or with access to health care?
    Governor Thompson. It is obvious that it is not when you 
have 93 percent covered and you are the highest in the United 
States.
    Mr. Davis of Illinois. You indicated in your earlier 
testimony that child care obviously is one of the great cost 
areas and cost factors as we deal with the whole question, 
especially given the fact that so many single women with 
children are the individuals who have a need to move. Do you 
have an indication of how many new jobs were actually created 
as a result of the increase in utilization of child care 
services and whether or not the job creation really becomes 
sort of a tradeoff for the costs for the increased costs?
    Governor Thompson. It is hard to quantify that, 
Congressman. Let me tell you a little bit of what we did in 
child care so that you understand more completely. I said that 
we could not expect a welfare mother to go to work unless we 
provided child care, so we went from $12 million to $175 
million this past year in child care. We also did something 
that I don't think many States have done. We have allowed for a 
provisional license, especially for the central city of 
Milwaukee because we were told there would be a lot of minority 
mothers and aunts and uncles and so on and so forth, grandmas, 
that would like to be able to take children in three or four of 
their neighbors or their immediate relatives; and so we 
provided for that. So we have created sort of a cottage 
industry in the child care field. And we have increased it. And 
we put in $25 million for building capacity and I am happy to 
be able to report to you we have no waiting list in the State 
of Wisconsin for child care, none at all.
    Mr. Davis of Illinois. Finally, I am a proponent of 
something called the livable wage; and what that means to us is 
that individuals should not have to work for less than $7.65 an 
hour as being a base pay that they can manage on. Are there any 
ceilings beyond the minimum wage in Wisconsin?
    Governor Thompson. No, there isn't. But there are several 
communities in Wisconsin that have passed living wage in the 
city council and the county. And we have found in our studies 
of moving welfare mothers to work, the average hourly wage is 
$7.42. And you were not here when I pointed out that on top of 
that, in Wisconsin they get the Federal earned income tax 
credit but we are one of the few States that also has a 
supplement to that State earned income tax credit. So even at 
$7.42 an hour or at minimum wage, you are still qualified for a 
large infusion of dollars from the Federal Government, the 
State, if you are working. That could amount up to a maximum of 
about $5,400 on top of your wages. You qualify for the maximums 
of both the Federal earned income tax credit and the State 
earned income tax credit.
    Mr. Davis of Illinois. Thank you very much. And I certainly 
appreciate your efforts in this arena and compliment you again 
on the passion with which you have tackled this problem.
    Governor Thompson. That I have, Congressman. Thank you very 
much.
    Mr. Ryan. We have a vote right now. We have 6 minutes left 
on the vote. We were going to try to keep the hearing going, 
but we have to recess for 10 minutes. We will be back. Thank 
you.
    [Recess.]
    Mr. Burton. We will reconvene the hearing. We have Members 
wandering in and out now, Governor, because we have a vote on 
the floor and 15, 16, or 17 or so committees and we are 
beginning the markup phase and we have votes. People are 
running around. That is why we are all so thin. We are running 
back and forth to the floor all the time.
    Let me just ask my colleagues, do you have any questions at 
the moment? Well, let's go right down the line. Mrs. Biggert, 
we will start with you.
    Mrs. Biggert. Thank you, Mr. Chairman. It is good to see 
you, Governor. You may not remember, but I served in the 
Illinois general assembly. We had an opportunity to discuss a 
lot of these issues and you were very helpful. My question is, 
and being on the other side now, you talked a little bit about 
the block grants. It is still a concern from the State 
perspective that there will be kind of backsliding from the 
Federal Government once we see success and to start limiting 
the funds and everything. I hope that you will remind us as we 
move along. In Illinois we have a low income tax but we also 
have a low threshold. So it is very difficult for some of the 
people coming off of welfare and getting established and 
suddenly they are faced with being in an area, a bracket, where 
they are going to have to start paying income tax. Do you have 
a higher threshold as far as just above poverty for paying 
income tax?
    Governor Thompson. Yes, we do. First, let me congratulate 
you on your promotion. It is great to have you in Congress. I 
will be reminding you and anybody else that will listen to me 
about keeping your hands off of the block grant because we need 
to do that. Right now we are moving into the next phase, 
several States are moving into the next phase to really use the 
money to place the hardest to place individuals. In my case we 
are now down to 8,800 families from 100,000 families, and 80 
some percent of them in Milwaukee and 66 percent or more have 
got alcohol or drug problems, sometimes a combination of those, 
and 50 percent have not graduated from high school and about 40 
percent have never worked. So you can see that we have a really 
difficult time. But what we did in the last session of the 
legislature along with this is we were able to reduce the 
threshold from anybody. The families making less than $18,000 
would not have to pay any income tax in the State. That should 
solve a lot of the problems. But there is no question that a 
lot of individuals that have never worked before or haven't 
worked consistently are now finding out the luxuries of paying 
income taxes and they are sometimes complaining. Some of them 
more than likely may become Republicans as a result, so it is 
not all bad.
    Mrs. Biggert. Along with that, I think that something that 
was important in Illinois with having people that had never 
worked before was the training and the actual skills training. 
If you have reduced your role so much, you may not have to be 
providing that so much--the actual training on how to get up in 
the morning and dress.
    Governor Thompson. We are actually spending more because 
the harder to place require more individualized counseling and 
more individualized training. A lot of the cases we got right 
now are not going to be successful on the first try. So you may 
have to train them for something and find out that they are not 
suitable for that and retrain them for another. We are actually 
spending more money on training right now. We are also moving 
to the next step in trying to followup for 6 months anybody 
that is placed so that if they need some extra training, extra 
counseling, so on and so forth, we will not just be putting 
them into a job and walking away. We are continuing to give 
them counseling and giving them services. Also we provide for 
individuals that don't receive any cash, that if they want to 
come in and get some counseling on different things, maybe food 
stamps, some transportation assistance, we do that as well. 
There is still a lot of dollars going out there to help the 
working poor. Our Badger care, which is a new health insurance 
program for all of those up to 185 percent of poverty, is also 
very expensive for the State but it is also a partnership with 
our State and Federal Government through the Medicaid program. 
We just got a waiver to do that. We are the first State to have 
a waiver in that regard.
    Mrs. Biggert. What about businesses? I know that we were 
successful in being able to find jobs for people because of the 
help of businesses and committing to finding so many jobs and 
ensuring that they were not splitting somebody else's job or 
taking away hours from other people. It was something that 
really helped Illinois to be able to get these people back to 
work or to work for the first time.
    Governor Thompson. I know that was a big concern in 
Congress about splitting jobs and about displacing jobs, but I 
don't think that has happened. Jerry Greenwald from United 
Airlines is the national chairman, along with the cochairs and 
myself and Governor Tom Carper, to encourage employers all 
across America to hire welfare mothers. I think it has been 
extremely successful. I think we are up to close to 30,000 some 
employers who have indicated their desire to hire welfare 
mothers and taken the pledge that they will hire at least one 
welfare mother in the next 12 months. I think that is growing 
and we are trying to move that across America. I think that we 
have to encourage because mostly a lot of employers have got 
the typical stereotype of a welfare mother that doesn't want to 
work and is going to work one day. We found just the opposite. 
We found that they are very productive. Once they are able to 
find their niche, they are extremely loyal because somebody has 
given them hope and somebody has given them a chance and they 
are very loyal and very productive employees, the vast majority 
of them.
    Mrs. Biggert. I would congratulate you on your success. 
Thank you, Mr. Chairman.
    Governor Thompson. It is our success. It is the success of 
Governors, but also the success of this Congress who had the 
foresight and the vision to give us the flexibility to do what 
had to be done. So I compliment you as well.
    Mr. Burton. Mr. Hutchinson.
    Mr. Hutchinson. Thank you, Mr. Chairman. Thank you for 
holding this hearing. I want to express my appreciation to 
Governor Thompson. We in Arkansas have followed what you have 
done and we congratulate you and we hope that we can strive to 
do just as well. I wanted to relate to you something that is 
happening in our State in the private sector that helps in this 
regard and then one problem area that I would like for you to 
respond to.
    In my northernmost county, Benton County, we have the 
Benton County single parent scholarship program that raises 
private funds. They do an outstanding job. They give 
scholarships to single parents and they also provide mentoring 
to them. But the scholarship is to help them move from welfare 
to get more education. I have actually heard the experiences of 
one person who moved from welfare, got a 4-year degree with the 
assistance of this program and became an accountant. It was 
quite a transition that they made and they are really doing 
remarkable work. One thing that related, though--these are not 
full scholarships that cover everything. It is just an 
assistance to help them. But the work requirement part of 
temporary assistance program, I think there is a 12-month 
limitation on education and they want that extended. They say 
that 12 months just gets them started and all of a sudden they 
have to go to work and they can't go to work and raise a kid 
and go to school full-time as well or even sufficiently. So it 
is a real burden, that work requirement.
    I want to add to that, before I give you plenty of chance 
to respond here, I would like permission of the committee. I 
have asked for the committee's consent to submit a letter from 
the Arkansas Department of Human Services and some of their 
comments on this hearing, today.
    Mr. Burton. Without objection.
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    Mr. Hutchinson. One comment that they made: While we 
support TANF's time limit provision and the emphasis on 
employment outcomes as a matter of broad social policy, the 
department has found that the legislation went too far in 
limiting the State's ability to achieve such outcomes for a 
portion of its caseload through educational activities. 
Although a small number of cases may involve higher education, 
a vast majority of cases infected with this limitation are 
those needing basic remedial education and post secondary 
vocational educational services that often extend beyond the 12 
months.
    Governor, if you could, just comment about that 12-month 
limitation.
    Governor Thompson. I don't think that you should change 
that, Congressman. I think that this Congress made a decision 
that work is vitally important. There was a lot of flexibility 
built into that. The 12-month was part of that flexibility. A 
lot of people work. A lot of people raise children and go to 
college and so on. I think the 12 months is the thing. I think 
once you start retracting from the mandates of work, I think 
then you are going to set a sort of slideback and not be able 
to get more people motivated that they have to work and get off 
of welfare. The work provisions were set up so that States and 
the Federal Government had requirements that made people get 
off of assistance and go to work. Education of 12 months is 
there, but you can continue--there is a lot of programs that we 
set up in the State to allow them to work half time and 
continue on with their education after work and so on. We 
provide with training and encouragement to do that. I am a big 
believer in education but I think relaxing the 12 months, I 
think there is more harm that can be done than good.
    You are going to find individual cases, I am confident, 
Congressman, that will solidify and corroborate your position. 
I think that I can find more cases to indicate to you that we 
should continue the work requirements because that is the 
driving force to move people from welfare, off of welfare. That 
is so important, to get that motivation going.
    Mr. Hutchinson. Thank you very much. I yield back.
    Mr. Burton. Will the gentleman yield to me very briefly. I 
just had one comment and one question, Governor, and that is 
that you indicated one lady who has been a real success story. 
She went to work as a janitor. That didn't work out and she 
went to this injection molding plant and I guess has done very 
well. Do you give aptitude tests for these people on welfare? 
Have you thought about that?
    Governor Thompson. We give a lot of testing, but not all 
testing is going to be successful because a lot of individual 
welfare mothers have a lot of problems and the testing will not 
show those problems like drugs and alcohol, lack of high school 
education, and so on.
    Mr. Burton. I was just curious about that.
    Governor Thompson. In this case this woman never told 
anybody, but her father was a machinist and she always wanted 
to be a machinist. She was working in this G2 plastics factory 
cleaning up. She wanted to go out and learn how to run the 
machine. She finally got the courage to ask if she could be 
trained to work on the machine. She didn't like the work of 
cleaning, but she loved the job of running that machine. She 
has been very extremely successful.
    Mr. Burton. Very good. The last thing I would like to say, 
and I thank the gentleman for yielding, is that you indicated 
that paperwork is causing you and the other Governors a great 
deal of problems. I wonder if you and the other Governors that 
have worked on welfare reform could send us a letter or some 
kind of a statement telling us how we could reduce the 
paperwork legislatively that would help you do your jobs 
better.
    Governor Thompson. I don't know about the other Governors, 
but I will love to do that, Congressman.
    Mr. Burton. Get something to this committee and we will get 
legislation drafted, if possible, to deal with that.
    Mr. Terry.
    Mr. Terry. Thank you, Mr. Chairman. Governor, good to have 
you here today. I am from the State of Nebraska. After our 
football season, our claim to fame is that we gave Barry 
Alvarez his coaching start.
    Governor Thompson. We are very happy you did. He has done 
well in Wisconsin.
    Mr. Terry. Yes, he has. There are so many areas that we 
could have a good conversation for the next couple of hours, 
but I will try to limit it to 5 minutes. There are two ways to 
look at the success of welfare reform. First of all, I missed 
your opening but I have read it here since, or at least gleaned 
it. One is the success of the individual, and you have stressed 
that. I wonder if you have done any type of a study that 
economically shows how, on average, the people that have gotten 
off of the welfare system and into the work force in Wisconsin, 
how much better they are off economically today versus when 
they were on welfare. I noticed that one of the statistics is 
that for the lowest income people in your State, that Wisconsin 
ranked 29th and now they are 12th. I have a feeling that you 
are better off, but have you gauged that?
    Governor Thompson. There is no question about that. You are 
absolutely correct. We have gone from 29th in 1989 to 12th as 
far as increasing the wages of the lowest wage earners in 
American. We are also the fifth lowest in poverty and the 
fourth lowest between rich and poor, the disparity between the 
rich and poor. It is obviously the working poor coming off of 
welfare and getting an opportunity.
    But there are some statistics that I think really point out 
crystal clear what your position is and my position is. You 
can't get out of poverty by not working. The old FDC, just 
getting the FDC benefits, you were 15 percent below the lines 
of poverty. At minimum wage currently in America you are 15 
percent above poverty. The people coming off of welfare in 
Wisconsin were averaging out at wages of $7.42 an hour. That is 
30 percent of poverty. You add to that then when you work the 
opportunity to qualify for the earned income tax credits of the 
Federal Government, which is around $3,900. Then in Wisconsin 
it is one of the few States that have added to that an earned 
income tax credit from the State, which is another $1,500. So 
you can actually qualify for the maximums for an additional 
$5,400 by working which is added onto your wages. That really 
helps you a great deal. The minimum wage, if you qualify for 
the maximums with all of the credits in Wisconsin, you will get 
$16,000 for a family, which is $6,000 more than if you 
qualified for everything under AFDC. So on minimum wage, you 
are bound to be better off by working. That is the principle 
that we as Governors have worked from. You are better off as a 
person and family by working.
    Mr. Terry. That would make sense to me; $6,000 better off. 
That is impressive. That certainly answers some of the critics. 
The other fact is how it helps the State and the economy. Have 
you been able to gauge the impact?
    Governor Thompson. It was interesting. The New York Times, 
which is not a paper that I religiously read or quote, but they 
have placed a reporter full-time in Milwaukee to cover welfare 
reform. They had a report just recently saying it was 
interesting to note that some of the new businesses in the 
central city of Milwaukee were small tax preparers setting up 
offices to prepare taxes from the central city. That is a 
strong indication. The Milwaukee Journal just had a report done 
not too long ago that interviewed several bus drivers of 
Milwaukee that were the bus drivers in the central city of 
Milwaukee, say before W-2 started they didn't have very many 
passengers in the early hours when they drove into the central 
city. But now their buses are full taking people from the 
central city to other areas of the city or to the suburbs for 
working.
    There is every indication, anecdotally as well as the fact, 
that our unemployment is 3.2 percent in Wisconsin. Our wages 
for the lowest income people are going up. All of these are 
strong indications that the overall economy of the State is 
much better off because we have started W-2.
    Mr. Terry. One last question. One of my frustrations coming 
from local government is the job training type programs, 
especially under the old Federal edicts that simply scored you 
on how many people you could get into the system and then would 
never follow through with the people that actually dropped out 
of the system, couldn't find a job or couldn't hold a job. What 
are you doing in Wisconsin and what can the Federal Government 
do by way of empowering you to get to the people that need the 
most help with job training, make it successful as it can be?
    Governor Thompson. The best thing that you could do is 
compress the 163 programs in the job training field at the 
Federal level and compress them into a block grant and give us 
the complete flexibility to do it. I would applaud you and that 
would be the greatest thing that would ever happen in Congress 
and it would be as big as welfare reform and accomplish just as 
much.
    Mr. Terry. I agree. I think that we now have our project 
for next year.
    Mr. Burton. 163 programs. Mr. Davis.
    Mr. Davis of Illinois. Let me just say, Mr. Chairman, I 
certainly want to agree, Mr. Governor, that work is worthwhile. 
I always say that it is a virtue and actually the greatest 
builder of self-esteem that there is. When one works you not 
only earn a livelihood but contribute significantly to the well 
being of the environment of which you are indeed a part.
    The one question that I have got is you have gone around to 
that group of individuals--Mr. Chairman, let me also just agree 
that when it comes time to reduce this paperwork, sign me up.
    Governor Thompson. I applaud you, Congressman.
    Mr. Davis of Illinois. I think that certainly could go a 
long way. Some individuals have been taken off the rolls 
because of infractions in terms of not being in compliance with 
some rules and regulations. How do you feel about that?
    Governor Thompson. Well, I don't want to lose anybody, 
Congressman. I want to get everybody moving as much as 
possible. There are going to be some that fall through the 
security blanket. What we have tried to do is tried to go back. 
Now we are down to such a small caseload that we are going back 
now that--we call it--it is a LEAP program. The W-2 agencies in 
Wisconsin, in Milwaukee, that is where the biggest problem is, 
that we are going back to those individuals. We have advertised 
on television and radio. We are actually going door to door in 
some areas where we know that there is a family that needs some 
help. What we are trying to do is encourage them to come in to 
one of our W-2 agents and be able to sit down and we can assess 
them and see if they have had an infraction, what is the 
infraction. We do a lot of in-depth counseling to find out what 
the problem is. Is it domestic abuse, is it problems with the 
children, and so on.
    I am sure that you would be supportive of this, 
Congressman, but also we found in some instances that W-2 
mothers have had some disabled children. They would like to 
work and they couldn't because they couldn't find a proper 
child care center to take care of the disabled child. So in my 
budget that is being debated right now we have set aside some 
TANF dollars to set up child care centers in Milwaukee to take 
care of that population.
    Then we found out another big problem was when a welfare 
mother wants to go to work and her child is at home sick. Then 
sometimes she doesn't know that she has to call to say she 
can't be at work, she doesn't show up, and gets penalized or 
maybe gets kicked off the program. What we have done to address 
that, Congressman, in this budget--we haven't set it up right 
now--we are also trying to set up a child care center for a 
central collecting place in the city where we could have for 
sick children to go. Maybe they have the flu or a cold or 
something like this. And then we are hoping to diagnose them 
and catch early a contagious disease or something like this. 
That has not been set up but that is the next step in both of 
those areas. We feel that that will also reduce a number of 
infractions and penalties because we found a lot of people have 
worked, they were doing well, but then they don't show up for 3 
or 4 days, the employer gets mad and they don't call in and 
fires them and then they are off the program. We are trying to 
address these problems to keep them working.
    Mr. Davis of Illinois. Is that what you are also doing with 
the hard to place, the core group that you are down to now, 
really the untouchables, the unreachables, the most difficult 
element of our society, that extensive counseling?
    Governor Thompson. That is what we are doing. Congressman. 
We are now--as can you well imagine, 8,800 families are the 
ones if they could have had some skills, they probably would 
have been working by now. Most of them are in Milwaukee County; 
80 percent of our remaining 8,800 are in Milwaukee County. We 
found about two-thirds of those have at least an alcohol or 
drug problem or combination of the two. About 50 percent do not 
have a high school education and about 40 percent have never 
worked before. So what we have really now, we have to spend 
more money and really give the in-depth counseling.
    We have to have the flexibility, Congressman, to be able to 
adapt a program to almost an individual family. We may even 
have to go out to that family and get them up in the morning 
and transport them to work to teach them how all of these 
programs work. And so it is a big job, but we want to make sure 
that we do it and we do it right. That is why we are spending 
more money to accomplish that. That is why I need the 
flexibility.
    I think that buttresses what I told this Congress about 4 
years ago, trust the Governors. We will not have a race to the 
bottom. Give us the flexibility to develop innovative programs 
and you will be surprised with what we come up with.
    Mr. Davis of Illinois. Thank you, Mr. Chairman, and again I 
appreciate it.
    Mr. Burton. Thank you, Mr. Davis. Mr. Souder.
    Mr. Souder. I wanted to followup on one of the comments 
that you made just a few minutes ago regarding parents with 
disabled children or some sort of special needs child because, 
as you have pointed out, you are getting down to those where it 
is almost like an individual case-by-case basis. I have run 
into a few cases in my district where the health insurance risk 
of those kids--I mean it is hard enough with the wage rates to 
try to figure out how to do the transition on the health care, 
and the health cares costs are often horrendously large in 
those cases. Have you run into that much and how are you 
addressing that?
    Governor Thompson. There are four things that really 
prevent a welfare program from being successful and from moving 
a welfare mother from welfare to work. The first one is health 
care. The second one is child care. The third one is training 
and the fourth one is transportation. In order to be 
successful, you have to address each one of those four items. 
What we have done in Wisconsin, we allow for the State under 
our W-2 provisions--we got a waiver, I believe that waiver we 
got from President Bush, was to allow for them to continue on 
with Medicaid for a year after they started working. Now we 
just got a waiver from the Federal Government in January of 
this year for the working poor and all of those coming off of 
welfare to be able to buy into our successful Medicaid program 
and up to 185 percent of poverty. That of course is a waiver 
from the Federal Government. We had to assure the Federal 
Government that it wouldn't cost more. You have the Federal 
program and CHIPs for taking care of poor children. We have 
found that if the parents are not included, they are not as apt 
to sign up just the children. So we had to get a waiver to use 
the CHIP program and to be able to use our successful Medicaid 
program to allow the working poor, and that is those coming off 
of welfare, up to 185 percent of poverty. Then if they get on 
the program while they are still under 185 percent of poverty, 
they can stay on 200 percent of poverty. The State is 
backfilling that with our own State dollars. It is expensive, 
but if you are going to be successful you have to do something 
like that.
    Mr. Souder. That sounds like an excellent way of 
transition, something logical, and I am glad to see some 
flexibility with that. In the catastrophic cases, much like we 
are seeing with IDEA in the schools where all of a sudden you 
have this level and one State that takes $200,000. Do you see 
very many of the--you could still have a break of where the 
insurance costs are running $3,500--that would be a way 
understatement. It can be $50,000 a year for that parent----
    Governor Thompson. You can but most of the time those 
individuals would qualify for SSI.
    Mr. Souder. So you have a second fallback that you work 
with. One of the early criticisms that we have some statistics 
here, that Wisconsin was merely dumping their caseload into 
Illinois, but I see Illinois is down 40 percent, Indiana went 
down 46 percent and Michigan down 59 percent. The question is 
it doesn't seem like a lot of dumping if there they are all 
going down as well. Did you find that out in your individual 
case work, that while initially people may have tried to escape 
Wisconsin because you were first, now you are actually seeing 
individuals where you are making the progress?
    Governor Thompson. There was so much distrust, so much 
false information about what W-2 was all about that there was a 
lot of skepticism. Now the more that we are in it, the more 
people we are helping, the more people we have convinced that 
it is the right thing to do, the more people are out there 
applauding what we are doing. Those individuals that come off 
of welfare and working, they are really happy. They are the 
biggest supporters. If you have a typical welfare mother that 
has been in an abusive situation, has been a teenage mother and 
has got very low self-esteem and you encourage her to get the 
training and to be able to know that she can do a job and do it 
successfully and she gets promoted once or twice and starts 
being able to buy her children some gifts and clothes and so on 
and so forth, that person just blossoms.
    That is what we have been able to do in welfare reform. 
That is so exciting to me to see somebody that has been beaten 
down have the opportunity to step forward and get the chance to 
prove themselves and prove their self-worth. They are 
exceptional.
    Mr. Souder. You were one of the first if not the first to 
see the interrelationship of education and welfare issues. I 
know you tried learnfare, and got bottled up a little bit on 
that. I would be interested if you have any additional comments 
on that. Also with the Milwaukee choice program, do you think 
that some of the reason that parents want to move their kids 
into these choice programs is that if they don't have the 
traditional all weekend, always draw the welfare check, and the 
success in the workplace or also seeing that success in the 
workplace that that has energized some of Wisconsin choice in 
education programs and other things that you are doing?
    Governor Thompson. I think it has. We had an interesting 
election 2 weeks ago in Milwaukee. We had a school board that 
was dominated by people that were not reform minded and they 
were most of those individuals on the Milwaukee school board. 
The five reform minded candidates won the election against 
three incumbents--two incumbents and two open seats and one 
reform minded candidate won; but all five reform minded. But in 
one instance, the citywide candidate for the school board had 
$500,000. I don't think this has ever happened in America; 
$500,000 was spent against that one person. Most of the money 
came from outside the State of Wisconsin to defeat that reform 
minded candidate because he was pro-choice and pro-change and 
pro-opportunity, and he won by 60 percent of the vote.
    That has completely energized the educational system. 
Milwaukee is the only city in America now that you have the 
complete choice to send your child to a public school, a 
private school non-sectarian and a private school religious, a 
charter school run by the school district, a charter school run 
by the city, a charter school run by the university, a charter 
school run by the school and a complete science school set up 
by an individual stand-alone charter school. No other city in 
America has as many choices as the city of Milwaukee does right 
now.
    I am confident that, since it is only starting this year, 
that you are going to see the education quality improve 
considerably over the next several years. It is going to be 
almost as big an eye opener as welfare reform has been to this 
country.
    Mr. Burton. Thank you, Mr. Souder. Ms. Schakowsky.
    Ms. Schakowsky. Thank you, Mr. Chairman. I come from 
Illinois and the Illinois State Legislature----
    Governor Thompson. This committee is dominated by people 
from Illinois.
    Ms. Schakowsky [continuing]. Where at one time I chaired a 
task force on welfare reform, so I know how hard it is. I 
applaud your entrepreneurial spirit in dealing with this issue 
and showing, I think, that real welfare reform does require on 
a per person basis that you spend real money, in your case even 
more money than you were spending before. We have some 
wonderful programs in Illinois, including More Pays, where TANF 
recipients can keep more of the money that they earn. Also, a 
concern that of the 40 percent decrease in the rolls, as Mr. 
Souder said, about half of the people that are leaving welfare 
right now are doing that because they have failed to make an 
appointment. A number of us are raising those kinds of 
concerns, why are people off the welfare rolls. We are also 
finding, and maybe it has been brought up before, forgive me it 
if it has, but there has been a decrease in programs like 
Medicare and Medicaid and food stamps that even those not 
receiving cash assistance would be eligible for.
    At the same time we are seeing increases in food pantries, 
Catholic Charities, new ports. I want to ask you a question 
about what is going on in that regard in Wisconsin. I am told 
that in your current policy manual and your draft request for 
proposals for the next round of W-2 contracts, that W-2 
agencies are specifically directed to not proactively offer 
these entitlements. Is there any truth to that?
    Governor Thompson. I hope not. Unless we are complying with 
the Federal laws in that regard. In regards to----
    Ms. Schakowsky. Let me put it this way then. Do your front 
line people try to make sure that those programs, that people 
ineligible for cash assistance, are eligible for it. Do you 
promote those programs?
    Governor Thompson. Yes, we do. I want to point out we did 
see a decrease in food stamps, but now it has leveled off and 
we are seeing a slight increase back up of people qualifying 
for food stamps. We make no apologies for that at all. We think 
it is good. We think it is good that people are using it to 
supplement their earned income and be able to qualify. We have 
no problems with that whatsoever. It is a Federal program and 
we are going to qualify for it.
    Wisconsin is one of the few States--we are the 49th. I keep 
talking to Congressman Ryan about giving us some more Federal 
dollars. We are 49th in America about getting any help from 
Washington.
    Ms. Schakowsky. We are pretty low, too, in Illinois.
    Governor Thompson. But a lot better in Wisconsin. You are 
still higher.
    Mr. Ryan. You are still higher.
    Governor Thompson. The Midwest as a block of States get 
fewer Federal dollars. As far as food stamps, if we qualify, we 
are going to certainly accept it.
    Ms. Schakowsky. It is understandable how a former 
beneficiary might think that off is off. They might not 
understand----
    Governor Thompson. I understand that. The question was 
raised by Congressman Davis. We are down to the hardest to 
place individuals. We are doing a lot of followup. We are also 
extending the W-2 counseling for an additional 6 months to 9 
months for those people that have gone off of work to keep 
counseling them to see what we can do to make sure they stay in 
their jobs and find out if any cross training needs to be done, 
what other kind of programs we can be of assistance. W-2 is 
just not cash. W-2 is a whole plethora of programs encompassing 
the human person to try to get that individual trained, get 
them into a job that is going to be one that they are going to 
like and be able to perform at. We are not going to be 
successful 100 percent of the time. I don't want to leave that. 
If we can get those individuals placed, we are going to do 
everything that we possibly can do, and we are going to make 
their life as easy as possible.
    Ms. Schakowsky. This may have been asked before. I know 
that you have private agencies that conduct the W-2 program. Is 
there the kind of followup so that you know where people are 
and what has been happening to them, et cetera?
    Governor Thompson. Not as good as I would like. I am the 
first that would admit that. But what happened with the W-2--W-
2 has only been in operation for about 16 months. We have been 
tremendously successful. Since W-2 started we reduced our 
caseload 74 percent and 90 percent totally from the time I 
started in 1987 with our first pilot program. We had so many 
people going off of AFDC the first couple months that we had a 
terrible time. It was difficult tracking everybody. Now we have 
set up a new procedure. We have had our first study done and we 
are going to do four more quarterly studies, where these people 
are, how well they are doing. Their criticism was constructive. 
We are doing a much better job now and it is not nearly as good 
as it is going to be a year from now of tracking people. We 
will have a lot more empirical data a year from now if you call 
me back to give you that.
    Ms. Schakowsky. Thank you very much.
    Governor Thompson. I would like to point out we do have 
private, we do have profit, and we do have nonprofit agencies 
running our W-2 but we also have the counties as well. They all 
bid it and the one that wants to do the best job will do that.
    Mr. Burton. Mr. Ryan.
    Mr. Ryan. Governor, I think that we have heard some very 
enlightening questions and testimony here today. Mr. Waxman was 
asking about some instances where New York State or New York 
City, they are pushing working poor off the cliff and going to 
the charities and other places. Ms. Schakowsky had some 
insightful questions on what happens after W-2. You have shed 
so much light on welfare reform, on bringing our States 
throughout this country onto the road of welfare reform. Now 
that we are beginning to mature through that process, given 
some of the concerns that we look at welfare reform that people 
going off of welfare are just going off of a cliff, could you 
shed some light on how Wisconsin is making sure that W-2 
recipients aren't slipping through the cracks? And then I would 
have a followup question.
    Governor Thompson. What we are doing is a lot of 
counseling, Congressman Ryan, and we are also doing a lot of 
followup. Ms. Schakowsky pointed out that she wants to make 
sure that people are not dropping through the cracks, as you 
are and everybody in Congress. We have not done as good as job 
as I would have liked. It was just because of the tremendous 
numbers that we were dealing with at the beginning. So we are 
following up completely. We are also trying to find out--in 
this budget we have gotten extended for another 6 to 9 months--
for in-depth counseling of everybody that we placed to work to 
find out how well they are doing and what their problems are 
and how the State could benefit them and be a partner with 
them. We don't want to dictate, we want to be their partners. 
We also are doing a lot of innovative things as far as Badger 
care. The next step is health care. We have got a waiver on 
that, as I mentioned to one of the previous Congressmen, and 
that we are going to provide health care up to 185 percent of 
poverty, especially to the working poor. Once that kicks in 
that is going to help them keep their jobs much better because 
they can't afford health insurance. It is much better to keep 
them working and have the State help them with their health 
insurance.
    In child care we are going the next step. I am really 
passionate about this and excited about it, setting up in this 
budget a completely new kind of quality child care centers for 
children at risk and trying to get to them at an early age so 
that when their brains are in the formative stages that we can 
impact on that correctly. It is sort of an exciting thing.
    These are the things that we are doing and I think that it 
is sort of model setting, but it is the right thing and we are 
helping to be able to move the remaining people off of welfare 
over the next several years.
    Mr. Ryan. I just want to compliment you on the way you are 
implementing this at the county-by-county level. I have toured 
the job centers in the First Congressional District, and it is 
just astounding to see how the one-stop shopping principal is 
being applied within Wisconsin. In Janesville, WI, I don't know 
if you have been to that job center where you took an old K-
Mart department store and retrofitted it and changed it into a 
job center. If you do have job training problems, health care 
problems, child care problems, you can go to the job center and 
meet with a consultant and they can help you get on the road to 
self sufficiency.
    One of the things that Congressman Davis mentioned was 
getting a livable wage. I think there is an unjust criticism on 
welfare reform in general that we are simply putting people in 
the minimum wage jobs. I know that that is not the case with W-
2, but could you just enlighten us a little bit about how W-2 
specifically deals with promoting people to getting off of 
minimum wage jobs into higher paying jobs?
    Governor Thompson. I certainly can, Congressman, but I 
would just like quickly to comment on your one-stop shopping 
center. This is something that we started in Wisconsin. A lot 
of States are doing it. It is a combination of the State, city 
and county. If you were able to give the employment training 
provisions in the block grant, you would, Congressman Ryan, do 
so much to unleash the innovation of different States on 
training people and getting them off of low skilled into higher 
skilled. It does work. You can go in there and take your 
children in. They will be taken care of in the child care 
center while they are there. In the city, if you have a problem 
with whatever, we are going to take care of you. That to me is 
the beauty of it. You don't have to waste going from one agency 
to another. If it is a city problem or a county problem or a 
State problem, they are all going to be dealt with in that one-
stop shopping center. You have been there, you know they are 
successful. But if we could get that block grant on the 
employment training, I could tell you we could do so much more 
for your constituents and for mine and for the people of this 
country. People have the mistaken belief that you are able to 
get out of poverty by being on welfare. You are 15 percent 
below the poverty line on AFDC standards. The only way to get 
out of poverty in this country is by working. It just makes 
common sense. If you are 15 percent below poverty staying on 
welfare, you are never going to get above it. It is impossible. 
So the only way to get above poverty is by working. Even at the 
minimum wage, which everybody knows you don't find many minimum 
wage jobs in many places across this country because people are 
working. When people are at full employment or close to full 
employment, wages go up. McDonald's is always used. Why are you 
training people to go into McDonald's? McDonald's, I am sure, 
are paying $7 an hour right now just starting. Most of the 
welfare case workers that we have are people that have moved 
off of welfare into work, are making on the average of $7.42 an 
hour, which is $2 above the minimum wage. On top of that, at 
$7.42 you are 30 percent above the minimum wage, above the 
lines of poverty. And on top of that in Wisconsin, you qualify 
for earned income tax credit and from the Federal you get that 
any place in this country, which you can't get when you are on 
AFDC. That, if you qualify for the max, is $3,900, over $300 a 
month on top of that. Even at minimum wage you can qualify for 
that. Then on top of that in the State of Wisconsin, we are one 
of the few States that has their own State earned income tax 
credit, which can give you another $1,500. So actually you can 
get an additional $5,400, more than $100 a week, just by 
working, from the Federal and State government, if you qualify 
for the maximum earned income tax credit. So it makes sense to 
work.
    Mr. Ryan. Just to bring you up to date, Governor, as vice 
chair on one of the subcommittees on this committee, the 
Natural Resources, Economic Growth, and Regulatory Affairs 
Subcommittee, we are going to launch a series of hearings 
looking at Federal barriers toward State and local government 
reform. That is why it is so informative and helpful to have 
you come up and testify and tell us precisely what those 
barriers are. Just for the record, I wanted to get this down, 
which is you need assistance with the job training block 
grants. You need the paperwork burden to be lessened or 
removed. Is there anything else off the top of your head----
    Governor Thompson. If you could get those two, you would 
make my life a lot better and every Governor in this country, 
and you would do so much to help improve the quality of life.
    Mr. Ryan. We look forward to working with you.
    Governor Thompson. Thank you so very much.
    Mr. Burton. Let me just say, Governor, before I yield to 
Mr. Mica, that if you will get through to Mr. Ryan or directly 
to me these requests for changes, I will talk to some of the 
other committee chairman of the relevant committees and see if 
we can put some of that on a fast track.
    Mr. Mica.
    Governor Thompson. Thank you, Mr. Chairman.
    Mr. Mica. Thank you, Mr. Chairman. First of all, Governor, 
I would be remiss if I didn't compliment you on the incredible 
record of accomplishment that you have achieved. I came into 
the minority in 1992 from the business sector determined to 
balance the budget, welfare reform, and other reform of some of 
the Federal programs that had gone askew. We had some 
incredible battles and we appreciate your assistance. We were 
defeated several times, but we finally came back and won at the 
Federal level. During that debate I always liked to use the 
quote from Thomas Jefferson that said dependency begets 
servitude.
    I think that you have freed in your State and across the 
Nation thousands and thousands of people. I think history will 
record that as probably the most significant thing that we have 
done in a generation, really, at the Federal and State level, 
to help people gain self-respect, self-worth, and dignity and 
part of what this country is about, economic opportunity and 
personal freedom, not being dependent on government programs. I 
just had to say that.
    One of the things that has concerned me is that as we take 
people from welfare to work is, again, they are going to enter 
at the lower paying level. I think Mr. Davis asked you a 
question about health care, which is of great concern to me. 
You don't want to take people out of a system that they have 
been dependent on and also gone to for health care and for 
other benefits that they can't get because we provided more not 
to work than to work. Then if you work, you have got less and 
you have got fewer benefits.
    If I am a parent, I am concerned about health care. I was 
astounded by the figure that you said, 93 or 94 percent of your 
folks have health care coverage in your State, which I think 
should be a model for this country. It is a sin that 43 million 
Americans do not have health care coverage. Could you tell us 
how you did that and maybe recommend how we could do that? If 
we could do welfare reform and we could do that, we have 
accomplished two great things, allowing people to work and then 
allowing them to have the most important benefit, which is 
health care coverage in my estimation.
    Governor Thompson. I can't take that much credit for it, 
Congressman. It is sort of the whole State has pulled together. 
We have a lot of insurance companies in the State of Wisconsin. 
We were one of the first States to start managed care and HMOs. 
It was very helpful in getting people covered by health care. 
We were the first State to start the COT program which allowed 
people to choose to stay in their own home rather than going 
into a nursing home. Then under the welfare program, we just 
made it a policy that we were going to cover welfare mothers 
for a year after they left welfare so that they would have the 
security of knowing that they would be covered.
    There are four things that prevent a welfare mother from 
going to work. The first one was health care, which was 
dominant. I looked at that. We got a waiver. I believe it was 
under President Bush that we got that waiver to provide for 
health coverage for 12 months after they started working so 
that there would not be the immediate falloff. The second thing 
is day care, which we provided. The third one is transportation 
and the fourth one is training. Now we tried Badger care. That 
is going to raise our level from 93 to 94 percent. We are tied 
with Hawaii for having more people covered by health insurance. 
Hawaii has sort of universal health, but they are only about 93 
or 94, so we are tied right there. So we are going to have 
Badger care for the working poor. We just got a waiver from the 
Federal Government to do that. We are hopefully going to have 
it up and running by July.
    The Federal Government says for this waiver, we can't cost 
the Federal Government any more money. So it is going to be an 
expensive program for the State, but it is the right thing. It 
is an investment in the health care. It is the working poor--
that person that has never asked for anything, maybe coming off 
of welfare, but also maybe a poor farmer in the State or 
somebody just above minimum wage that just can't afford it. We 
are going to allow that family to be able to buy into our 
successful Medicaid program up to 185 percent of poverty. Then 
if they get in below 185 percent of poverty, they can stay in 
until they reach 200 percent of poverty. It is going to, we 
think, increase the number of people that are covered by health 
insurance in Wisconsin from about 93 percent all of the way up 
to about 98 percent.
    Mr. Mica. Thank you again, Mr. Chairman. Thank you, 
Governor.
    Mr. Burton. Let me just say, Governor Thompson, first of 
all, I am sorry that our Members weren't all here at one time. 
This has been a very busy day. You can see they have been in 
and out. The information that you have given us I think will 
lead to legislation. I can tell you from my own personal 
standpoint, and I am sure Mr. Ryan and others on the committee, 
that we will do everything that we can do to help you to reduce 
the paperwork burden and maybe streamline some of our other 
programs and get money back to help solve the problems. If you 
will get that information to us through Congressman Ryan we 
will really work on that.
    I would like to say one more thing. You are living proof 
that good government is good politics. I know that Wisconsin is 
a switch State. For you to be Governor for 13 years proves you 
are doing the job right, and we really appreciate what you do. 
Thank you, sir, very much.
    Governor Thompson. You are a wonderful person. Thank you 
for having me, Congressman.
    Mr. Burton. Thank you, Governor. Our next panel is Claude 
A. Allen, secretary of the Virginia Department of Health and 
Human Resources; Michael Poole, chairman of the Board of 
Directors of the Florida Work and Gain Economic Self 
Sufficiency Program; Jason A. Turner, commissioner of New York 
City Human Resources Administration; Julia Taylor, the CEO of 
YW Works; Cassandra Tucker, a former welfare recipient and now 
gainfully employed; Genevieve Kukla, president of Central 
Overhead Doors; and Wendell Primus, director of income security 
of the Center on Budget and Policy Priorities. Would you all 
come forward and sit here at the table. Before we start, we 
have one of our valued members of the committee from the great 
State of Florida, Ms. Ileana Ros-Lehtinen, who would like to 
make a remark or two about some of her constituents.
    Ms. Ros-Lehtinen. Thank you, Mr. Chairman. It is a pleasure 
for me to welcome Mr. Michael Poole, the chairman of Florida's 
Work and Gain Economic Self Sufficiency Wages. This is a 
program that has performed an outstanding job in reducing 
Florida's welfare caseload while improving services to the 
truly needy. With the wages effort under the leadership of Mr. 
Poole, this program began in 1996 while our State of Florida 
has led the Nation's eight largest States in the decline of its 
welfare rolls. The number of families on welfare has dropped by 
more than 60 percent and more than 140,000 individuals have 
returned to work. As a result of this amazing success story, 
more than $250 million in savings has been used to reinvest in 
clients who face more formidable barriers and as a rainy day 
fund for a possible future economic recession. Another $70 
million in wages savings has been used for the very important 
needs of child care for the working poor.
    Recognizing the benefits are limited and taking advantage 
of increased employment assistance, the average stay on welfare 
in Florida has dropped significantly from 23 months to 14 
months in July 1998. The most comprehensive State study ever 
taken shows that over 75 percent of Florida families who have 
left the welfare rolls have found employment and that most 
believe that they are far better off since leaving the welfare 
system.
    We congratulate Mr. Poole and the reforms that he has 
adopted. They have been very effectively implemented in the 
State of Florida with a strong Federal-State partnership 
reducing welfare rolls while utilizing our State's private 
sector with economic incentives to boost payrolls. I welcome 
him to our panel and I thank you, Mr. Chairman, very much for 
inviting us in Florida to participate and boasting about what a 
good job we have been doing.
    Thank you, Mr. Chairman.
    Mr. Burton. Thank you, Ms. Ros-Lehtinen. And the other 
Congressman from the State of Florida, Mr. Mica, has a comment.
    Mr. Mica. Thank you, Mr. Chairman. I won't take too much 
time, but I just want to associate myself with the remarks of 
my colleague from Florida and also welcome Mr. Poole and 
compliment him on the outstanding job that he has done, 
compliment the wages program in Florida and what it has done to 
allow people self-sufficiency and local control and local 
responsibility, and we are so pleased to have him with us.
    I really would like to utilize the rest of my time, sir, to 
hear from him. Thank you, and I will yield back.
    Mr. Burton. Thank you, Mr. Mica. Mr. Ryan.
    Mr. Ryan. I would just like to welcome Julia Taylor, 
Cassandra Tucker, and Genevieve for coming today. We just heard 
from our Governor, Tommy Thompson, about how he structured W-2, 
how it is working and how the policy works. I am looking 
forward to hearing from you how it is working on the front 
lines, how it is working in reality and in practice. I am very 
excited about having you here. I am glad your plane made it on 
time. Good to have you.
    Mr. Burton. Speaking of planes, I think Mr. Primus is going 
to have to leave in a little bit, so we will get you on the 
program here relatively soon. But you will probably get out to 
the airport, if it is National, and you would probably be 
waiting anyhow.
    Mr. Allen, would you like to start off? If it is possible, 
I would like for you to try to confine your remarks to 5 
minutes because we have so much we have to cover.

 STATEMENTS OF CLAUDE A. ALLEN, SECRETARY, VIRGINIA DEPARTMENT 
 OF HEALTH AND HUMAN RESOURCES; MICHAEL POOLE, CHAIRMAN, BOARD 
 OF DIRECTORS, FLORIDA WORK AND GAIN ECONOMIC SELF SUFFICIENCY 
  PROGRAM; JASON A. TURNER, COMMISSIONER, NEW YORK CITY HUMAN 
    RESOURCES ADMINISTRATION; JULIA TAYLOR, CEO, YW WORKS; 
 CASSANDRA TUCKER, FORMER WELFARE RECIPIENT; GENEVIEVE KUKLA, 
PRESIDENT, CENTRAL OVERHEAD DOORS; WENDELL PRIMUS, DIRECTOR OF 
 INCOME SECURITY OF THE CENTER ON BUDGET AND POLICY PRIORITIES

    Mr. Allen. Certainly. Thank you, Mr. Chairman, members of 
the committee. It is indeed a pleasure to be here on behalf of 
Governor Jim Gilmore and the citizens of the Commonwealth of 
Virginia. In November 1993, the citizens of the Commonwealth 
elected Republican George Allen to be Governor of the State 
with a mandate, among other things, to reform Virginia's 
welfare reform program. At that time, the average welfare 
recipient received about $291 per month in food stamps, 
Medicaid, and other ancillary benefits like transportation and 
child care assistance, which has been talked about here 
earlier. The former system, however, penalized individuals for 
working, getting married, and saving money. We realized that 
the best intentions of the former welfare plan had done more to 
keep people in poverty than to help them out of it. It created 
a greater dependence on government than on one's self, one's 
family, or one's community. Welfare programs rewarded people 
for dysfunctional behavior that tore families apart rather than 
bring them together.
    I am proud to say that 1\1/2\ years prior to the passage of 
the Personal Responsibility and Work Opportunity Reconciliation 
Act of 1996, Virginia passed and began to implement our 
historic Virginia Independence Program.
    In the past 3\1/2\ years, Virginia has experienced 
unprecedented success in moving welfare recipients to work 
while reinstilling the values of personal responsibility. 
Virginia's welfare caseload has declined 51 percent from 73,000 
families to under 36,000 families on welfare. More than 73 
percent of the VIEW participants are working and 90 percent of 
those are working in full-time, unsubsidized employment. VIEW 
participants are averaging wages in excess of $834 per month, 
which is almost triple the average welfare payment of $291.
    Virginia's welfare recipients have earned and contributed 
more than $130 million back to Virginia's economy through 
employment, therefore becoming taxpayers and consumers, not tax 
burdens. Virginia's welfare reform program and success are 
greatly attributed to the enormous support and efforts of the 
local communities and businesses. Virginia has created hundreds 
of partnerships with each facet of the community, nonprofit 
organizations, businesses, and faith based organizations to 
provide the necessary support and services needed by welfare 
clients to achieve lasting employment and self sufficiency.
    Despite these clear successes, there are some critics who 
want to claim that welfare reform has failed. These are people 
who argue against mandatory work requirements and the use of 
sanctions to change behavior. These opponents initially paint 
vivid and horrifying pictures of women and children being cast 
adrift in a sea of public indifference. An example of this 
would be where estimates of a million children would be thrown 
into poverty and homeless shelters would be exploding with all 
of the women and children.
    This indeed has not happened in Virginia. I doubt that it 
has happened throughout the United States. By any standard of 
empirical, anecdotal, or statistical measure, the conservative 
pro-family welfare reform initiatives implemented in Congress 
and by the Republican Governors have been an overwhelming 
success.
    There are, however, a few things that Virginia recommends 
in the continued implementation of welfare reform, and I will 
touch on those briefly. Federal work participant rates do not 
measure outcome. These work participation rates that States 
must meet in order to receive full TANF funding is a process 
rather than an outcome measure and does not measure the number 
of individuals who have left welfare for work or have been 
diverted from welfare rolls. Many States, including Virginia, 
have seen significant caseload declines and many individuals 
who have gone to work and are now successfully supporting their 
families with higher income than when they were on welfare.
    However, under the Federal participation rate requirements, 
States are actually given more credit for keeping someone in a 
subsidized job and on welfare than for placing that person in a 
job with a sufficient income so that he or she no longer is 
eligible for cash assistance.
    Second, flexibility is needed in the food stamp program. In 
the era of welfare reform, the food stamp program remains an 
old style entitlement program with its major emphasis on being 
payment accuracy rather than on measurement of outcomes, such 
as increased nutrition or movement of clients beyond 
dependency. To come in line with the direction taken in the 
TANF program, several changes are needed.
    First, we would recommend amending Section 17 of the Food 
Stamp Act to allow the Secretary of the Department of 
Agriculture to approve a broader array of waivers. Second, we 
would urge the committee to consider expanding the definition 
of cost neutrality in the waiver approval process to take into 
account savings over multiple years and in all Federal programs 
rather than in measuring cost neutrality over 1 year limited to 
the food stamp program alone.
    In closing, Virginia's last recommendation to this body 
would suggest that you continue to provide maximum flexibility 
to States so that they can identify and solve the problems 
unique to their individual populations. What is vital to the 
citizens in the Commonwealth of Virginia is that you do not 
retreat from the foundational principles of work first and time 
limited assistance. By any measure, it is clear that all of the 
people of Virginia have benefited from this program. I thank 
you again and I would be glad to entertain any questions at the 
appropriate time.
    Mr. Burton. Thank you, Mr. Allen.
    [The prepared statement of Mr. Allen follows:]
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    Mr. Burton. Mr. Poole, we would love to hear from you next.
    Mr. Poole. Thank you, Mr. Chairman. Mr. Chairman and 
Members of Congress, on behalf of the Florida WAGES Board and 
the Governor, Jeb Bush, I thank you for giving the opportunity 
to share my experiences and insights gained in the 
implementation of welfare reform in our State.
    The State of Florida began implementing welfare reform on 
October 1, 1996, approximately 2\1/2\ years ago. The Florida 
Legislature passed the WAGES law prior to the Federal Personal 
Responsibility and Work Opportunity Act. Of chief importance, 
our welfare program was designed with strong philosophical 
foundation and substantial program flexibility.
    The philosophy is best described as local control, local 
responsibility. I have discovered, though, that while control 
is always embraced, responsibility is often avoided. Individual 
and community acceptance of responsibility is a learning 
experience, and although it has been difficult, we have 
succeeded because of the willingness of community leaders to 
sacrifice and contribute countless hours to helping neighbors 
on the road to work and self-sufficiency.
    The organizational structure of our effort is unique. In 
essence, the State WAGES Board acts as a holding company that 
oversees 24 subsidiaries we call the local WAGES coalitions. 
State WAGES Board is comprised of 17 members, 9 of whom are 
volunteers with diverse business and leadership backgrounds. 
The remaining members represent various State departments and 
agencies and State-sponsored economic development partnerships. 
An organizational chart, I believe, has been provided to you.
    On the local level, welfare reform in Florida is 
implemented through 24 local WAGES coalitions comprised of 
volunteer business and community leaders who are responsible 
and accountable for overseeing the design, delivery and funding 
of services. You can say that no two organizations, by the way, 
are the same; all service deliveries are different across the 
board.
    A fundamental factor behind our success is the enormous 
flexibility that these local communities have in addressing 
barriers in helping people become self-sufficient. We all work 
together under common guiding principles. We are customer-
focused, community-based, outcome-driven. We try to be caring 
communities, including our business leaders who are engaged in 
the process, and we are flexible and open to new ways and 
innovations. The board sets the policy, the local coalitions 
implement it, and we all work together in focusing on the 
results.
    Some of the successes that we have accomplished are these: 
The number of families subject to time limits and work 
requirements has declined by 71 percent as of today. We do lead 
the Nation's eighth largest State in welfare caseload declines 
and people in Florida staying on welfare for shorter periods of 
time, decreasing from 23 months to 14 months.
    We just finished research on 45,000 families, which we were 
told is the largest study of families leaving welfare in the 
country, and we found that 75 percent of those who have left 
WAGES report that they have found employment. They are stable. 
In fact, 60 percent of those who found employment are still in 
the same job that they left welfare for. Approximately 60 
percent left the welfare rolls due to employment or earnings.
    And as it relates to sanctions, we found that only 8 
percent have left welfare due to noncompliance with the 
program. And although these highlights point to good success, 
we do have concerns. Most of our workers earn between $6 and $7 
per hour, and this is not a wage that will allow self-
sufficiency in our State. The majority of those who have left 
welfare for work are working in jobs without health benefits.
    And many people are unaware that they might qualify for 
other governmental assistance programs, such as food stamps and 
child care and housing, et cetera, when they do leave welfare 
because they consider welfare being any benefit that they 
receive from the government. It is to say that we are in the 
process of looking at these issues and concerns and are trying 
to find ways to improve those areas.
    I do want to highlight three issues. Governor Thompson, 
before us, hit on the new regulations, and there are three 
issues that we have. I won't go into detail, but do want to 
highlight them.
    The way we are interpreting the law prevents us from using 
the reserve funds to serve families who are off of welfare. It 
seems that we are also having to account for them as two 
different funding sources, the current funds and the reserve 
funds, the unspent money. So I would ask you to look at that 
interpretation. Maybe we are wrong in the interpretation. 
Whatever you could do to help us with that.
    Another one is the interpretation of the adjustment to the 
participation rate requirement that the States receive for 
caseload reduction. And I would ask you to look at that issue 
and the regulations requiring extensive reporting. They have 
increased the elements from 60 to, I believe, over 200, and we 
are just wondering how much paperwork again do we have to have 
to show results.
    On the areas of innovations in our State, because of the 
entrepreneurship, it is kind of hard to go into all of them, so 
I would ask to you look at the paperwork we provided on these, 
because what I want to do is shift my remaining time to 
recommendations to have you all look at.
    One is I would like you to look at the redefinition of 
poverty. It is an old definition. It has been created back in, 
I believe, the 1940's and the 1950's and underestimates what it 
costs to be in poverty or the level of poverty. It is archaic. 
It doesn't have any relevance to today's economics, and you 
should look at that issue.
    I think that we should allow remedial education to count as 
a work activity. It is hard to put someone into a job and have 
them on the road to self-sufficiency if they can't read, write 
or do math. And as long as it is within the work element, that 
should be counted as a work activity.
    We need to start redefining economic development. Currently 
economic development is viewed as job creation. We need to 
broaden our definition to embrace the concept of improving the 
income of the working poor.
    I would like you to look at--welfare reform in reality is 
really an expanded version of the unemployment compensation 
program that we have. The common denominator to both programs 
is requirement to seek work. The only difference is the level 
of benefits one receives. And I would encourage to you explore 
how the public and private side of welfare reform and 
unemployment compensation can work together.
    I believe that to implement the successful policy of 
welfare reform and other governmental assistance programs, I 
think some of the work-first ideas that have worked on this 
cash payment program could work related to housing and food 
stamps and other what I would call welfare programs that the 
government provides.
    I would also look at the distribution systems of our 
welfare system, and that is, why not combine food stamps and 
housing subsidies and child care subsidies into one income 
stream? It would make sense. It is more efficient. Companies do 
this all the time, and I think that we can work up some common 
philosophies like the earned income tax credit, which is 
probably the most direct welfare program that we have in our 
country. We would save a lot of time and money in helping 
people.
    And last, I would encourage to you look at the issue of the 
living wage, and I want to hasten to point out that to me this 
is not raising minimum wage. I don't think that is the right 
way. But we can do things to encourage businesses to pay a 
living wage. It costs a lot of our communities every time a job 
is created that doesn't pay a living wage. Someone has to 
subsidize that family, and one way that you all might help in 
doing that is to award extra points to a company bidding on a 
contract that shows and demonstrates that they are paying their 
employees a living wage, which might include health benefits.
    I thank you for your comments and look forward to your 
questions.
    [The prepared statement of Mr. Poole follows:]
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    Mr. Burton. Before I go to the next witness, let me say 
that any recommendations that you have, if you can be sure to 
give them and condense them as much as possible. People send us 
volumes of things, and we just don't have the time to go into 
them all, even our staff. So if you can condense, give us the 
Henny Youngman one-liners, and we will see if we can do 
something to accommodate you as much as possible.
    Let me go to Mr. Primus. I know you have to catch a plane.
    Mr. Primus. I am fine. I have to leave by 1:20.
    Mr. Burton. Oh, you are in good shape.
    Mr. Turner.
    Mr. Turner. Thank you, Mr. Chairman. First I would like to 
give you two one-liners on food stamps. I agree with Mr. 
Allen's remarks that food stamps is an archaic program in the 
sense that its proponents argue that it really isn't welfare, 
that it is a nutrition program. But studies show that food 
stamp recipients use the money just the way they use cash. And, 
in fact, if you look at what the amount of food and the kind of 
food that people who receive food stamps use it on, you find 
that both people who have income from food stamps and others in 
studies where cash has been given instead of food stamps end up 
both having the same amount of food and getting the same amount 
of nutrients, calcium, protein, vitamin B.
    We need to look at food stamps like it is. It is a welfare 
program. And what I would like to suggest to this committee is 
that food stamp benefits should be merged with cash assistance 
and made possible to impose the same kinds of work and other 
requirements that we at the local level have as a condition of 
receiving cash assistance for food stamps. Right now the 
Federal food stamp rules don't permit that. And I will send you 
a very short summary of how those changes could be made.
    Mayor Giuliani has reduced the number of welfare recipients 
in New York City by over 450,000 individuals, over a population 
greater than the size of the second largest New York State 
city, that is, Buffalo. At this point, 1 in 17 households in 
the city of New York is a household that was receiving welfare 
benefits in prior administrations and now is free from welfare. 
That is quite a number.
    In July, the mayor went further. He said he wanted all 
individuals who were receiving welfare benefits to be engaged 
in work activities for 35 hours a week or 35 hours a week as a 
standard, meaning that typically 3 days out of the 5 would be 
in work experience programs in various things like working in 
the parks or working in the courthouses, cleaning and so on, or 
doing other things that are making New York City more 
beautiful, and the other 2 days would be in other activities 
leading to immediate employment.
    Your 1996 welfare reforms, the U.S. Congress, although they 
make it--although we have a lot of work to do to get to our 
objective, gave us a clean and clear run for the end zone so we 
can actually do what we want to do to meet that objective of 
the mayor's because of the reform that it is Congress gave us, 
and we appreciate that very much.
    I think what you are going to hear over the next several 
years in playing out the debate as to whether the reforms were 
a good idea or not, is many individual anecdotal examples of 
things where individuals supposedly are falling through the 
cracks. But let me describe a way to interpret those anecdotes 
that you are going to hear in a way that I think makes sense 
for us.
    You heard from Governor Thompson, and as he mentioned, the 
New York Times is doing an in-depth 1-year study of Wisconsin's 
reforms. About a month ago, there was a front page article in 
the New York Times in which a grandmother was confronting her 
daughter in a jail who had given up her daughter, the mother's 
daughter, to the grandmother because she was not following 
through on her work assignments and had no income. And you saw 
in the news article the grandmother insisting that the mother 
in jail was not meeting her responsibilities and that she was 
burdened with this young child. And I think the news article's 
cast on that was that this was somehow a necessary failure as 
we move to welfare reform.
    Actually, I saw that article in a different way. It was a 
success in this sense--in this important sense: What we have 
done is shift the anonymous giving through welfare where people 
were not responsible to each other, even within families, and 
we have made individual mothers responsible and fathers, for 
working in exchange for benefits.
    And when they failed to do that, what you are finding is 
interactions between parents, grandparents, and children and 
mothers. And it is a constructive reorganization of 
responsibility within the family unit which is actually making 
people responsible to one another. So I would encourage this 
committee not to be overly concerned when they hear stories 
which actually are part of the solution in the long run to 
responsibility.
    Finally, I want to just say that I am heartened to hear and 
agree with many of the others who say the first job that you 
get, even if it is a minimum wage job, is a way out of poverty. 
In New York State now, because of welfare reforms and the 
earned income tax credit, even a mother with two children going 
from no job on welfare below the poverty line to only 20 hours 
of work at minimum wage, that is like the lowest threshold in 
the private sector you could imagine, the mom and two kids 
brings their family out of poverty when you include the earned 
income tax credit and the residual amounts she receives still 
on welfare, plus Medicaid and other things.
    So the real solution is to move people into early 
employment at first possible opportunity and that is the way to 
make steps up the ladder, not to withhold people while they go 
through some extended training program hoping to get a so-
called living wage. Let us get them into early employment, and 
then they will move up. Thank you.
    Mr. Burton. Thank you, Mr. Turner. And that deductive 
reasoning you used in looking at that article, I think I agree 
with. It shows that it is putting family pressure, trying to 
get people to do the right thing. I think it is great.
    [The prepared statement of Mr. Turner follows:]
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    Mr. Burton. Mrs. Taylor.
    Ms. Taylor. Good afternoon, Mr. Chairman, and members of 
the committee. We are pleased to be here today. As a matter of 
fact, I think we used some of the same innovation and ability 
in the program to get on the planes and change planes to get 
here today.
    We are grateful for the opportunity to speak to you about 
the strides we have made in Wisconsin in building a community 
of work through partnerships with employers in the greater 
Milwaukee area. Government alone cannot address the challenges 
of welfare reform. Rather, a broad range of community 
partnerships must be involved to refocus the welfare to work 
system. I am pleased to provide the committee with an overview 
of our experience in establishing linkages with these partners 
and suggest ways that the delivery of service could be 
enhanced.
    Joining me today are Genevieve Kukla, president of Central 
Overhead Door Co. in Milwaukee, and Cassandra Tucker who you 
will hear from in a moment. We are here to provide firsthand 
testimony of the way in which our program, YW Works, has built 
a bridge between the cycle of dependency in the former welfare 
system and the world of personal responsibility and work.
    YW Works was formed in 1997 and selected by the State of 
Wisconsin to be one of the private agencies to manage the 
Welfare to Work Program in Milwaukee. We did form an 
entrepreneurial venture with our partner, CNR Health, and 
Kaiser Group to make W-2 work for participants, employers, and 
community-based organizations. With over 14 months of 
experience, I believe that our performance and results deserve 
to be graded very highly.
    As Governor Tommy Thompson indicated in his testimony 
today, Wisconsin has achieved much success in its historic 
Wisconsin Works or W-2 program. This program provides 
assistance to individuals for job preparation, work and support 
services to enable them to leave the program and become self-
sufficient.
    Since the inception of W-2, well over 10,000 AFDC 
recipients began moving into new unsubsidized jobs in 
Wisconsin. In 1998 alone, YW Works placed 925 people into 
employment with an average wage of $6.71 an hour. One of the 
underlying philosophies and goals of W-2 has been to enhance 
the ways communities and employers support individual efforts 
to achieve self sufficiency. We are very proud of the part we 
have done, but we couldn't have done it without the support of 
private sector employers such as Ms. Kukla and the 
determination and discipline of people such as Cassandra 
Tucker.
    Our success lies in the fact that most individuals truly 
want to become self-reliant members of the work force if they 
are given the opportunity, the training, and the family support 
services. And we have seen that borne out.
    A key ingredient of our success has been the involvement of 
not only employers but other community resources, including 
advocacy groups and community-based nonprofits. They have 
helped immeasurably in creating an environment that translates 
into jobs for lower-skilled workers. And the environment is 
characterized by a new culture in which innovation and reform 
is rewarded as is individual achievement and effort.
    Despite our early success, we must be realistic in terms of 
the prospect for the future. In the wake of a declining 
caseload, we are now seeing individuals with more severe 
barriers to employment. Our continuing challenge will be to 
improve the network of employment and behavioral health 
services available to job seekers. We are seeing three factors 
that will shape our future work participation rates.
    The first is that there is a much lower level of job 
readiness. As our caseloads have declined, so have the skill 
levels of participants. Measurements such as reading levels and 
a higher incidence of alcohol and drug abuse and mental illness 
suggest a need to develop basic skills and to streamline the 
model for delivery of AODA and other mental health services 
before a complete transition can occur.
    Some of the basic problems are lack of knowledge by the 
participant on how the system works in terms of getting into 
services. We have a very active EAP program at YW Works staffed 
with clinicians who provide basic assessment and referral for 
both mental health and AODA symptoms.
    Consumer education with participants about what they can 
expect from health care providers is greatly needed. Our staff 
provides a great deal of one-on-one education and client 
advocacy within the current system. An initial orientation and 
well-developed curriculum on what to expect would be an 
important first step.
    I strongly suggest that States and localities implementing 
welfare reform programs initiate onsite EAP programs at their 
site and upfront education and orientation on AODA issues and 
how the health care system works.
    Another factor is transporation. We have often experienced 
supportive employers with a supply of jobs but located in areas 
unreachable by public transportation. Housing and transit 
strategies need to be developed to address these problems, and 
we have seen employers go to extraordinary lengths, including 
one that just established a $100,000 pool for us to get workers 
out to their site in Waukesha.
    A final factor is potential economic downturn. We are at 
near record low unemployment in Wisconsin. So we need to watch 
what is going to happen as unemployment rates rise to continue 
to increase people staying in jobs.
    One of the other big issues that we have been looking at 
and working on is trying to get applicable transferable skills 
in employers's industries and we have been doing a lot of 
training for specific skills and on-the-job experience. But 
what we have seen is the wage at placement correlates directly 
with the amount of training that we can work with a person on 
before placement.
    Particularly if that training is at the employer's site. We 
have the highest level of wage placement in the Milwaukee area 
as an agency, and it is because we spend the most on training. 
Innovative and flexible approaches such as Generation 2 
Plastics which the Governor mentioned, and our house project, 
which Cassandra
is going to mention, give you an idea of new approaches that 
can be used. But innovation and flexibility is very important 
or entrepreneurial agencies such as ours the not be able to 
function. Thank you.
    Mr. Ryan [presiding]. Perfect timing, thank you, Ms. 
Taylor.
    [The prepared statement of Ms. Taylor follows:]
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    Mr. Ryan. Mrs. Tucker.
    I think we are going to go with Mrs. Tucker next, and then 
Mrs. Kukla we will go in the order of the witnesses.
    Ms. Tucker. Good afternoon, Mr. Chairman, my name is 
Cassandra Tucker. I am currently employed as a project 
coordinator at Central Overhead Door. I got a job through the 
YWCA, also through the W-2 project. I know I wrote a lot of 
things on my paper. Understandably, you know, I have heard a 
lot of things today that--some I disagree with; some I agree 
with. But I really, you know, to treat a person with respect 
and dignity, no matter where they are is, I think, the first 
principle of anything.
    You want someone to be successful, then you treat them as 
if they were human beings. And being in the W-2 program, I 
found positive people on the way, yes, but there are negative 
people out there that hold power. You know, power-hungry 
people. You understand what I am saying, you know? And they 
feel that they have your destiny in their hands and they can 
control your life, and, therefore, if they are controlling your 
life, you feel like you have no control and therefore you 
don't.
    Now, if you want to empower me--that is what I have been 
hearing today. You want to empower people like myself. If you 
want to empower me, it starts with giving me self-respect, 
dignity. I need to know how to read and write. When I came in 
the W-2 program I had college under my belt; I had worked a 
full-time job. I have six children. You know, and I had to find 
a way to support them when I got divorced.
    So, therefore, YW Works came into my life, you know, and it 
was a positive thing. They gave me the training I needed. Now I 
am a foreman. I have an all-male crew that is under me, you 
know, and I get to hire, and I get to fire people. But first it 
had to start at the basics. They said, you can do it.
    Halfway through the program, I am giving up. I am saying, I 
can't do this. And they were like, yes, you can, you know. And 
they encouraged me, and they supported me. Yes, they even 
checked up on me after I got the job. And they still call me, 
and say how you are doing? Is everything going OK? That is 
giving somebody a basis, a foundation. And I hear that, that is 
what you guys are talking about today, that you want to give us 
the foundation, and a basis. That is the starting point, you 
know?
    I understand they are saying, well we are giving money. 
There is only 1 cent--I researched this--out of every dollar 
going to W-2, and it is like where is your other 99 percent 
going? But you don't look at that. You are saying I am giving 
you. You are not giving me anything. If I worked for it, then 
hey, OK, I am on the system for a moment, briefly. You 
understand?
    Some people don't want to be on the system, that is why 
they go to shelters. That is why they are overloading food 
pantries, because they are ashamed and they feel that they have 
been stigmatized. They are not going to get food stamps, nor do 
they want the medical assistance. Their child could be dying, 
and their pride is in the way. But yet still we are statistics.
    We are figures on pieces of paper. But we are human beings 
first of all. And I need, you know, to hear--I understand you 
have done research, but have you been to my neighborhood? You 
know, have you checked up on the people that are supposed to be 
overseeing the program? I mean the social workers, all of those 
people. Until you come down to the basics, you are not going to 
have a successful program.
    Mr. Thompson said a lot of positive things. And they have 
been incorporated, you know, into W-2 in Wisconsin. I can only 
speak for Wisconsin. I don't know about any other State. But 
they have been incorporated.
    But my point is, the necessities are out there. But, yet, 
still some people are ignorant to the fact that they are there. 
I need you to help other people to realize that they are there. 
And when they go there, not feeling as if you, you know, they 
are just a piece of dirt, honestly, that you decided to sweep 
up.
    Instead of, you know, portraying that issue, you should 
say, look here I know you are down on your hard luck, hard 
times now, but we are here to get you back on your feet. That 
is the whole basis; that is all I had to say. Thank you for 
your time.
    Mr. Burton. Thank you, Cassandra. That was very 
interesting.
    [The prepared statement of Ms. Tucker follows:]
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    Mr. Burton. I want to pursue some questions with you, but 
in fairness to the other witnesses we will continue with Ms. 
Kukla.
    Ms. Kukla. Good afternoon. I run a small business located 
in central Milwaukee which provides customized garage overhead 
doors installation for commercial and residential applications. 
Our experience with W-2 was born out of a need.
    We had received a large contract and required additional 
personnel to meet the job-site requirements. We took a stab of 
contacting the YW Works to help us find workers. Our experience 
has been very positive. We have found that workers' attendance 
is good. Their performance is good or better than regular 
employees, and they have more buy-in. They feel they have been 
given an opportunity they might not normally have gotten, and 
their attitude reflects that.
    Employees such as Cassandra come to work and do a job. It 
is hard to find in today's market people that want to work, and 
they are eager to better themselves. Women such as Cassandra 
are also having a positive impact in the workplace. They are 
entering in nontraditional jobs such as construction and 
changing attitudes about career paths for women.
    What makes the system work is individual one-to-one 
relationships whenever possible. I have tried to provide 
personal and job-related guidance--from helping employees to 
proper transportation to child care to encouraging them to 
continue their education.
    Both my late husband and I strongly felt an obligation to 
seek out young people who have not had all the advantages in 
their homes or education. It was also being my interest to 
mentor Cassandra and help her develop additional skills so that 
she can assume more responsibility within our company. So ours 
is a story of--success story, not just for women like 
Cassandra, but for our company and for me personally.
    My message to other employers is that programs such as W-2 
work and will make your business stronger. After all, if I can 
do it at my age, other businesses can and should take advantage 
of it.
    I want to tell you that for our experience, Cassandra--I 
start our people--our W-2 people at $8 an hour. We have 
Cassandra take some under her wing because we have trained her 
for that and scrutinize the ones that are good. The ones that 
are not working, she lets them go. And we do prevailing wage 
jobs. They are eager to go because they get the prevailing 
wage.
    The prevailing wage in Wisconsin runs anywhere, we are 
doing carpenter work, they run about $20, $22 an hour for 
laborers or helpers, or trainees it runs about $18. And we have 
a lot of that, and they are eager to perform. And we have been 
told on jobs there were never any minorities working. We have 
opened the doors for them. And we have gotten such a response 
that they recommend us for jobs.
    And I am very happy to be here to talk about this W-2 
because I have seen it work. And I would hope that it would be 
used throughout the country. It is like Cassandra says, they 
need a responsibility, they need to be known that they are 
going to grow in their business and that they are going to have 
positions that will be able to grow. If they don't want to, 
say, stay with that company they can go some place else and 
they have got experience and they have a record of good work. 
Thank you for the opportunity to come before you.
    Mr. Ryan. Thank you for your testimony.
    [The prepared statement of Ms. Kukla follows:]
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    Mr. Ryan. Mr. Primus.
    Mr. Primus. Mr. Chairman, I very much appreciate your 
invitation to testify on the impact of welfare reform on low-
income families.
    Under the welfare legislation enacted in 1966, States 
currently are receiving considerably more Federal funding than 
they would have under prior law and are given more flexibility 
and how to spend those moneys. The conventional wisdom is that 
welfare reform is working because welfare caseloads have 
declined sharply. Caseload reduction, however, is a very poor 
measure of welfare success. Any assessment of the success of 
welfare reform law should take into account not only caseload 
declines but also evidence of whether welfare reform has 
improved the economic circumstances of poor, single-mother 
families.
    Improvements in the well-being of poor, single-mother 
families can only take place if increased earnings and 
increased child support collections are sufficient to replace 
lost benefits of cash assistance and food stamps.
    Preliminary data to answer this question are just becoming 
available on a national basis. These data suggest just that 
while welfare reform has undoubtedly improved the lives of some 
families, some other families are losing ground and appear to 
have been made worse off as a result of changes in the welfare 
system.
    Our study uses the public census files; and, using standard 
techniques, we have concentrated on single-mother families and 
have arrayed them from low- to high-income, adjusted for family 
size, and then compared economic circumstances of those 
families in 1993, 1995, and 1997.
    Our study shows two kinds of major findings. First, program 
caseloads are falling much more rapidly than need. As you can 
see in the chart, between 1993 and 1995, the number of people 
receiving AFDC and food stamps began a gradual decline. And the 
economy largely explains that decline. The number of poor 
people declined about as much as the decline in the caseload.
    However, between 1995 and 1997, the situation changed 
dramatically. Caseload declines can no longer be explained 
primarily by changes in the economy. As you can see here, the 
number of people receiving food stamps declined about 17 
percent while the number of poor individuals declined only 2 
percent.
    The next figure shows exactly the same thing with respect 
to TANF. Between 1995 and 1997, the number of poor individuals 
in female-headed families declined by 4 percent, but the 
caseloads declined 22 percent. A fivefold difference between an 
objective measure of need and what is happening to caseloads.
    The most telling finding from this analysis are centered in 
the divergent income paths of the bottom two quintiles of 
persons in single-mother families between 1995 and 1997. Each 
quintile has about 5.7 million individuals in it, to give you 
some basis. So if you look at those numbers in the chart, it is 
also in your testimony on page 4, you can see that the picture 
was very good between 1993 and 1995. Families in that second 
quintile actually gained in after-tax real income $2,000. About 
a 15 percent gain. There were also gains in the bottom decile 
and in the second decile, and you can look at those bottom 
numbers in terms of a percentage of poverty.
    The situation though--and that is because earnings 
increased and they were only offset by a very small amount of 
welfare benefits declining. The situation changes dramatically 
between 1995 and 1997. The earnings gains that we saw in the 
earlier 2 years came to a halt, basically; and we see huge 
declines in the level of benefits these families receive.
    So in the second quintile, you will see economic welfare 
has stayed about the same. In fact, improved a little bit. And 
even in the second decile, families are doing OK. But in that 
bottom decile, again about 2.8, 2.9 individuals about equal to 
5 congressional districts, they have lost ground. About $1,000 
on average. And that is because earnings have remained roughly 
constant, and welfare benefits have declined significantly. 
There are many reasons for that.
    And I guess in conclusion, I would argue that a healthy 
economy, policies that make work pay such as increased EITC and 
State welfare policies have provided the supports to move 
welfare recipients into jobs. A large portion of that research 
has shown is due to the increased EITC. However, other poor 
mothers have not fared as well. On average, the economic well-
being of persons in the poorest single-mother families has 
decreased substantially. No one predicted such a result would 
occur during a period of strong economic growth and before any 
sizable number of welfare recipients reached their time limits.
    This result is disturbing and should give us considerable 
pause before we simply pronounce welfare reform a success. I 
think these preliminary results need to be examined in light of 
more national data that will become available later this year 
as well as other efforts to evaluate the findings in several 
States. Hopefully, States can respond to this challenge and use 
their TANF block grant moneys to improve the well-being of poor 
children in single-headed family households.
    [The prepared statement of Mr. Primus follows:]
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    Mr. Ryan. Let me just ask you a question, since you just 
finished. Is it your opinion, given the totality of the 
results, given the testimony here by Cassandra and Ms. Taylor 
and others, that with hindsight being close to 20/20 as 
possible, do you believe the welfare reform law was a prudent 
law to be passed that the President signed into law? Given the 
fact that we don't have the statistics yet available to help us 
target the resources as well as we would like to, and that we 
might in the future, do you think it is a good idea that we 
passed the welfare reform law?
    Mr. Primus. Well, as an economist, I am going to say yes 
and no. I think the increased funding that is available to the 
States was a good thing. I think the States did need more 
flexibility. And there were a lot of work requirements, and I 
believe in work. In fact, I believe in it so much that I am 
going around to States and arguing that our child support 
system has to also be more focused on moving men, the men look 
very much like the mothers here into the labor force. So there 
are some good aspects.
    Mr. Ryan. So the premise and the principles--you pretty 
much revealed the main principles of welfare reform.
    Mr. Primus. But I do think that the downside of this is 
that there is no emphasis on moving families out of poverty. 
And there is no incentives to serve low-income families with 
children. And so when I look at incentives in the block grant, 
and the pressures that State legislatures and decisionmakers 
are under, we see welfare declining much more rapidly.
    And I think we should be concerned about that $1,000 loss 
of income in the very poorest single-mother families. And that 
is why I think the test of welfare reform is does it make 
children better off? And this is preliminary data. We need a 
lot more data before we can reach a final conclusion.
    Mr. Ryan. Thank you. And I think Governor Thompson 
highlighted that very point. We have 8,800 people left on W-2 
assistance. It is going to take some work. And it is going to 
take many more dollars to rescue those people, to get them on 
to self-sufficiency. So I think what you are saying essentially 
corroborates the point that we are now getting to the people 
who really need the assistance, who really need the help; and 
we have to figure out how to handle that.
    Mr. Primus. If I can say one other thing. I mean, I guess 
it is a little disconcerting to me when he said poverty 
decreased 14 percent, but caseloads have declined 85 percent. 
It seems to me that is somewhat out of balance, and we are all 
for poverty reduction, and indeed the studies that I have 
looked at coming out of Wisconsin suggest some people are 
better off. But there are a lot of people that don't have a job 
and are, indeed--I think the numbers that are in the one study 
is that 66 percent of people are worse off than the month 
before they left welfare reform.
    So I think people should work, but some people are going to 
need support; and our goal should be to help them climb the 
economic ladder and not take benefits away as they enter that 
work force.
    Mr. Ryan. Thank you.
    Cassandra, I just wanted to ask you a quick question. I 
found that was a very interesting point that you made about 
some of the people who are refusing to go to the job centers, 
to W-2 to seek assistance because of pride. You say they are 
going to Catholic Charities or the soup kitchens because they 
don't like the stigma that is attached to getting help.
    How do we get to those people? What would you say we do to 
try to get over that obstacle to give them the self-esteem, to 
show them that this is not welfare, this is not a bad thing, 
this is a program to help get you up and on your feet moving as 
you described. What do you think we should do?
    Ms. Tucker. From my opinion, if they need a high school 
diploma, some people need, like the gentleman said down there, 
basic education. How can you ask them to go into a job you know 
there is no room for progressing at all because they can't read 
nor write, but they can do the job function in that particular 
area. They need the basic education. They also need the job 
training.
    Some people even need nurturing skills, like she said, 
counseling. It is deeper than what you see. I am just stating, 
you see a bunch of numbers; you don't see the people. And today 
I am just representing all the people, you know. I am on both 
sides so I understand. That is all I am saying.
    Mr. Ryan. Thank you.
    Mrs. Taylor, I wanted to ask you a question. With your 
extensive experience and putting together the welfare-to-work 
program--through your own personal experience, what do you see 
as the biggest obstacle for moving individuals from welfare to 
work and what do you think is the most important component of 
the W-2 program?
    Ms. Taylor. I think one of the biggest issues is trying to 
get people to be upfront about all the issues in their lives 
especially with case managers. We have built in a lot of pieces 
in our program where we have people that are staying in touch 
with people and spend more than a half hour with them. But to 
establish that level of trust so people will be upfront about 
the issues going on. And then to wrap around the services.
    When I was talking about the EAP and the behavioral health 
component, that has been critical for us for success in our 
program; and that is going to be one of the most critical 
things going forward. People need supports to get their life 
together to go to work and be successful.
    Mr. Ryan. Mr. Mica.
    Mr. Mica. I heard Mr. Primus say that we needed more data 
information on some of these specific cases; is that correct?
    Mr. Primus. Yes, I think that data will be forthcoming; and 
I am just cautioning before we judge it a complete success, we 
need to see what is happening to the economic well-being of 
these families.
    Mr. Mica. Then I heard Mr. Poole from Florida saying that 
we are spending too much time and money on regulatory 
paperwork, data collection, for reporting requirements. Mr. 
Poole what do you think?
    Mr. Poole. Well, I think it all depends what we are 
collecting data on. I think the issues that maybe Mr. Primus is 
trying to figure out is what is happening at family level, not 
collecting data about who they are before they come on to 
welfare. And to our analysis is what is really happening at 
family level.
    I agree with Mr. Primus, it is too soon to call it a 
success. We know that about 80 percent of our families in our 
study say they are better off, but we have 17 percent of our 
families saying that they are not. And the question is whose 
responsibility is it? We know it is individual responsibility 
to participate and to have those people denied themselves of 
their own responsibility rights or is it our failure to provide 
quality service?
    And I think that is where we have to dig down--just as a 
company would have to dig down to figure out why customers are 
unsatisfied and not buying their product--we have got to figure 
out why are people who are poor and in poverty not buying the 
product of our service which is to help them get to self 
sufficiency.
    Mr. Mica. Since the adoption of Federal welfare reform, 
what changes have you seen in reporting requirements, and what 
parts of that would you modify?
    Mr. Poole. I believe the initial rules there were 60 data 
elements that the Federal Government asked us to report on and 
it has now gone up to 232; 140 of them, I understand, represent 
something about the client. When you multiply that times how 
many people are on our welfare rolls and how many people come 
off and on, that is an awful lot of data collection. In our 
State we started off with 30 performance measurements. We are 
down to six. I think I will get down to a couple more after 
analysis of what is really important, and what is really 
important is the measurement of self sufficiency.
    Mr. Mica. So you have gone from 30 to 6 and we have gone 
from----
    Mr. Poole. From 60 to 232.
    Mr. Mica. So we are headed in the wrong direction.
    Mr. Poole. Just a tad.
    Mr. Mica. Are there any other recommendations? We passed 
this thing, and I am sure it is not perfect. I am sure from the 
Federal level we can improve it. One thing you mentioned is 
data reporting and information that is required. If you had 
one, two, three, your top priorities for the Feds to change to 
help you improve what you are doing, what you would recommend, 
Mr. Poole?
    Mr. Poole. Maybe being flip but also straight forward, 
maybe tear up the regulation book and asking the States to be 
responsible for the money that you have given them and look at 
the results. And let the States be responsible. What you have 
told us in our communities is that when the communities in our 
State look at it, they recognize that if they don't help 
someone to self-sufficiency in 2 years they are going to have 
to take 100 percent of the burden because you are going to stop 
the funding for that individual. That is pretty strong 
responsibility. You don't need any regulation other than that.
    Mr. Mica. Basically you would favor some block grant with 
minimal reports, and the reporting would be from the State to 
the Federal?
    Mr. Poole. Correct.
    Mr. Mica. Any other majors?
    Mr. Poole. That would be major enough.
    Mr. Mica. What do you think about that, Mr. Primus?
    Mr. Primus. I guess in terms of recommendations to this 
committee I want to agree with Governor Thompson. I think you 
shouldn't be reducing or rescinding or deferring the size of 
the block grant. I think that was a commitment you made, you 
ought to keep. I also want to compliment the Governor, I think 
one of the innovations he has done is passing through all of 
the child support. And you might want to consider ways of 
encouraging States to follow that example in Wisconsin.
    I don't think you should followup on his recommendation to 
reduce the maintenance of effort. I think again, it was part of 
the deal. I think there are plenty of needs among low-income 
custodial families with children and needs of the father who we 
should be concentrating on as well. And so before you reduce 
the maintenance of effort, I think I would really make sure 
there is no need left. And I think that would be a hard thing 
to establish.
    I think the reporting requirements were put in there by the 
majority, and I think they are good. And before you reduce 
them, I think you run the risk of not understanding what we are 
about in welfare reform. And so I urge caution. And I think the 
HHS has issued a good final rule and again, I just urge 
caution.
    Mr. Mica. Thank you.
    Mr. Ryan. Mrs. Biggert.
    Mrs. Biggert. Thank you, Mr. Chairman. In Illinois, when we 
started to revise the welfare reform, we did an Illinois bill 
as well as then having the Federal reform, and the biggest 
problem that we had was the computer. And to start to solve a 
problem was to figure out what was happening before that, and 
to go to a one-stop shopping. And we discovered that with all 
of the different agencies that we had was that we were double-
counting. Families were not listed as families, but everyone 
was given a number. And then if they were out of the process 
and came back, they were a new entry.
    So this was the biggest thing that we had. And I wondered 
if some of you have had that problem, because it took an awful 
long time to find a computer system that was sufficient, 
really, to be able to put that data. We finally have a 
warehousing for the reform. But I would like to know what 
happened as far as computers.
    Mr. Allen. I will be glad to try to address that. In 
Virginia, we still have a challenge with adapting the existing 
computer systems to try to accommodate not only going from 60 
reporting requirements to 232, but all of the various programs 
trying to bring in the food stamp program, bringing child 
support enforcement on line, coordinating that with Medicaid, 
which is, in our State, a different agency. But having to 
coordinate those is not only a challenge in and of itself, but 
being pushed up against the Y2K issue as well. So you cannot 
make the changes that are going to be necessary to try to keep 
up with the paperwork that is being required from Washington.
    So we continue to have ongoing challenges and struggles 
with our technology trying to keep up with the rules and regs 
that are being imposed upon the States to provide information 
to the Federal Government.
    Mr. Poole. I would say that we have had the similar problem 
of information. We have had a data collection system related to 
food stamps and referral before, and now we are trying to move 
to a case management local-network system so different agencies 
and providers can talk to each other. And we are, at least, 
probably a good year away from having a decent system. And this 
is true, I think around the State in our research.
    Mrs. Biggert. And then to Ms. Tucker, I think something 
that is very important is to go out and see what is happening. 
And in the Illinois general assembly, I spent a lot of time 
going throughout the State, particularly with the Department of 
Children and Family Services, to talk to the clients, to talk 
to food stamp foster parents, to talk to case works, et cetera, 
and I think that is very important.
    And one of the things that we put in as far as the welfare 
reform was the training for the one-stop shopping so that the 
person that a client comes into see is that one person can make 
such a difference in how--the reaction, and the treatment there 
is by the training of the case manager. And so that is 
something that I think you bring up and is a very good point to 
be sure that they are well treated and that the State is very 
concerned about that first contact.
    Ms. Taylor. If I could respond to the computer question. We 
have a State system called CARES that we use that basically was 
built as an eligibility system years ago. And we have developed 
a system ourselves that is a web-based software system known as 
GEMS that is actually a case management system that measures 
behavioral changes, changes in skill-building, we can input 
different test levels and track where people are at, and it is 
a much more user-friendly system as well. But it is something 
that we spent time developing, and we have actually been using 
it in other States at this time.
    Mrs. Biggert. Thank you, thank you all.
    Thank you, Mr. Chairman.
    Mr. Ryan. Mr. Turner, we haven't heard from you yet, and I 
understand that you were one of the gentlemen responsible for 
putting together Wisconsin's W-2 program and that now are 
attempting to do the same in New York. New York City's caseload 
was probably greater than many States we have heard from yet 
today and in recent history here. What do you think of the 
concerns raised by Mr. Primus, as you have read some of his 
studies earlier and his testimony now? Given the fact that you 
have been through the Wisconsin experiment, and you are doing 
the same thing in New York.
    Mr. Turner. I am sorry he had to step out.
    Mr. Ryan. He is still here.
    Mr. Turner. Good, I am happy about that. As it relates to 
poverty in the lower quintiles in those remarks, I would like 
to mention that the Congressional Budget Office looking at CPS 
data in a recent year showed that for nonmarried mothers, aged 
18 to 44, with kids under 18, that is your hard-core welfare 
population, welfare-at-risk population, the percent of the 
labor force recently is about 59.5 percent. That is up from 
49.2 percent only 2 years before. That is a social revolution. 
That is something that we have just never seen before.
    Mr. Ryan. We have seen employment gains to the tune of 10 
percentage points in that decile.
    Mr. Turner. No, that is a little bit of a different cut of 
the cat. This is all nonmarried women with children under 18, 
what portion of that group, rich and poor, are engaged in the 
labor force; 59.5 percent are. And it was 49.5 percent only 24 
months before. You can't imagine any kind of social policy 
legislated from the Congress that could have had that impact 
other than what you did, combined with a strong economy.
    So with that, combined with availability of the earned 
income tax credit which takes virtually anybody that works 
full-time at any wage out of poverty, I can only say there is 
not much more that I can think of that could be done by the 
Congress that could be more constructive than what we have 
already done. And I think, at this point, it is up to both the 
local governments running the programs and let us not forget 
the individuals who are moms with children, to take available 
positions and move up and out. I think that is the solution.
    Mr. Allen. Mr. Ryan, if I may, because we have touched on 
this twice, I think it is important that we recognize what the 
purpose of welfare reform was. It was not to eradicate poverty. 
The purpose of welfare reform was to put those who were 
currently in poverty, who were participating in public 
assistance programs on the road to self sufficiency. And I 
think Ms. Tucker's testimony bears this out that only 17 
percent of those who were in poverty actually participate in 
public assistance programs. So the vast majority of people that 
would qualify for being in poverty are not in any program 
whatsoever. And so we need to be very careful when we try to 
change the focus or the goal of welfare reform after the fact. 
It was not to eradicate poverty. Rather it was self-
sufficiency. And I think that we shouldn't get away from that 
to recognize that, therefore, we can declare in many States 
welfare reform a success. But we do need to be very cautious as 
we move into the deeper caseloads and the more difficult to 
employ.
    Mr. Ryan. Thank you. You mentioned in your testimony, Mr. 
Allen, that earlier estimates prior to welfare reform's 
implementation--I think Mr. Primus is one of those who 
estimated that we would see 1 million children thrown into 
poverty in welfare reform.
    Mr. Allen. Absolutely.
    Mr. Ryan. Could you just comment on that? I would think 
that he would probably redo his estimate now that we have some 
facts in front of us.
    Mr. Allen. I can comment on Virginia, and I think that is 
nationally we have not seen the type of dramatic downshift or 
the dramatic outcomes of women and children being thrown into 
poverty. That just has not happened. Some have moved out much 
quicker, but many, and most, are actually above the poverty 
level. And that is what we need to be looking at, that we are 
on the road to success.
    It will take time, indeed, for them to move from that 
minimum wage job into higher levels once they get additional 
training, education. We do need to provide those wraparound 
services to afford them that of transportation and health care. 
But at the same time we can't say that it has not been 
successful and that, I think, is what is very key to recognize. 
And we also need to coordinate the programs that are currently 
existing out there. We have children's health insurance program 
which will also benefit this population greatly.
    Mr. Ryan. Thank you. This has been a very interesting 
panel. What we have seen with this panel is a cross-section 
between the policy formulators, the policymakers, the policy 
receivers, and the doers who are on the front lines doing this. 
Mrs. Kukla, with your business on trying to implement welfare 
to work, seeing and hearing from you exactly what you go 
through to accomplish that.
    Cassandra, to hear from you what it is that--the 
psychological change that you have experienced, I think as 
Governor Thompson said, it is a blossom. That is precisely what 
we were hoping to achieve with this. It is helpful to hear you 
share your story with us so that the policymakers here who are 
seated to your right and those of us who are trying to do a 
better job of bringing people into the lives of self-
sufficiency. That helps us do our jobs better here. Thank you 
to everybody on this panel. I think it has been a very 
interesting panel. At this time I like to say this hearing is 
adjourned. Thank you.
    [Whereupon, at 1:30 p.m., the committee was adjourned.]

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