[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
WELFARE REFORM
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HUMAN RESOURCES
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
MARCH 15, 2001
__________
Serial No. 107-5
__________
Printed for the use of the Committee on Ways and Means
COMMITTEE ON WAYS AND MEANS
BILL THOMAS, California, Chairman
PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York
E. CLAY SHAW, Jr., Florida FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut ROBERT T. MATSUI, California
AMO HOUGHTON, New York WILLIAM J. COYNE, Pennsylvania
WALLY HERGER, California SANDER M. LEVIN, Michigan
JIM McCRERY, Louisiana BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan JIM McDERMOTT, Washington
JIM RAMSTAD, Minnesota GERALD D. KLECZKA, Wisconsin
JIM NUSSLE, Iowa JOHN LEWIS, Georgia
SAM JOHNSON, Texas RICHARD E. NEAL, Massachusetts
JENNIFER DUNN, Washington MICHAEL R. McNULTY, New York
MAC COLLINS, Georgia WILLIAM J. JEFFERSON, Louisiana
ROB PORTMAN, Ohio JOHN S. TANNER, Tennessee
PHIL ENGLISH, Pennsylvania XAVIER BECERRA, California
WES WATKINS, Oklahoma KAREN L. THURMAN, Florida
J.D. HAYWORTH, Arizona LLOYD DOGGETT, Texas
JERRY WELLER, Illinois EARL POMEROY, North Dakota
KENNY C. HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
Allison Giles, Chief of Staff
Janice Mays, Minority Chief Counsel
------
Subcommittee on Human Resources
WALLY HERGER, California, Chairman
NANCY L. JOHNSON, Connecticut BENJAMIN L. CARDIN, Maryland
WES WATKINS, Oklahoma FORTNEY PETE STARK, California
SCOTT McINNIS, Colorado SANDER M. LEVIN, Michigan
JIM McCRERY, Louisiana JIM McDERMOTT, Washington
DAVE CAMP, Michigan LLOYD DOGGETT, Texas
PHIL ENGLISH, Pennsylvania
RON LEWIS, Kentucky
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Ways and Means are also published
in electronic form. The printed hearing record remains the official
version. Because electronic submissions are used to prepare both
printed and electronic versions of the hearing record, the process of
converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
current publication process and should diminish as the process is
further refined.
C O N T E N T S
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Page
Advisory of March 8, 2001, announcing the hearing................ 2
Witnesses
U.S. General Accounting Office, Cynthia M. Fagnoni, Managing
Director, Education, Workforce, and Income Security Issues..... 6
Library of Congress, Christine Devere, Analyst in Social
Legislation, Domestic Social Policy Division, Congressional
Research Service............................................... 17
------
Center for Law and Social Policy, Mark Greenberg................. 41
Rector, Robert, Heritage Foundation.............................. 50
Submissions for the Record
Association for Children for Enforcement of Support, Inc.,
Sacramento, CA, Geraldine Jensen, statement and attachment..... 84
Coalition on Women and Job Training, statement................... 87
WELFARE REFORM
----------
THURSDAY, MARCH 15, 2001
House of Representatives,
Committee on Ways and Means,
Subcommittee on Human Resources,
Washington, DC.
The Committee met, pursuant to notice, at 11:00 a.m., in
room B-318 Rayburn House Office Building, Hon. Wally Herger
(Chairman of the Subcommittee) presiding.
[The advisory announcing the hearing follows:]
ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON HUMAN RESOURCES
CONTACT: (202) 225-1025
FOR IMMEDIATE RELEASE
March 8, 2001
HR-1
Herger Announces Hearing
Series on Welfare Reform
Congressman Wally Herger (R-CA), Chairman, Subcommittee on Human
Resources of the Committee on Ways and Means, today announced that the
Subcommittee will hold a hearing on the effects of the 1996 welfare
reform law. The hearing will take place on Thursday, March 15, 2001, in
room B-318 of the Rayburn House Office Building, beginning at 11:00
a.m.
In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from invited witnesses only. However,
any individual or organization not scheduled for an oral appearance may
submit a written statement for consideration by the Committee and for
inclusion in the printed record of the hearing.
BACKGROUND:
The Personal Responsibility and Work Opportunity Reconciliation Act
of 1996 (P.L. 104-193), commonly referred to as the 1996 welfare reform
law, made dramatic changes in the Federal-State welfare system designed
to aid low-income American families. The law repealed the former Aid to
Families with Dependent Children program, and with it the individual
entitlement to cash welfare benefits. In its place, the 1996
legislation created a new Temporary Assistance for Needy Families
(TANF) block grant that provides fixed funding to States to operate
programs designed to achieve several purposes: (1) provide assistance
to needy families, (2) end the dependence of needy parents on
government benefits by promoting job preparation, work, and marriage,
(3) prevent and reduce the incidence of out-of-wedlock pregnancies, and
(4) encourage the formation and maintenance of two-parent families.
Associated changes included individual time limits and work
requirements intended to reinforce the new focus on work and
independence for families needing assistance.
Recognizing the significance of the changes made in the 1996
legislation, the authors of the 1996 law authorized the new TANF
program through only fiscal year 2002. As a result, evaluating the
effects of the 1996 changes will play a central role in determining
whether and what adjustments to TANF and related programs may be
necessary. This is the first of a series of hearings the Subcommittee
will conduct during the 107th Congress to answer those questions in
preparation for reauthorization of the 1996 law next year.
In announcing the hearing, Chairman Herger stated: ``Our
Subcommittee looks forward to taking a close look at the effects of the
historic 1996 welfare reform law. We already know there have been
dramatic changes resulting from that law--work is up, caseloads are
down 50 percent, and child poverty is down, too. Now our task is to
evaluate what these and other impacts mean, as well as assess new
priorities as we move toward reauthorization of the 1996 law next
year.''
FOCUS OF THE HEARING:
The focus of this hearing is to review research on the effects of
the Personal Responsibility and Work Opportunity Reconciliation Act of
1996, particularly related to the four primary purposes of the Act
described above. The Subcommittee also will seek information on lessons
learned from innovative State programs and on continuing challenges
facing States and localities as families move from welfare to work.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Any person or organization wishing to submit a written statement
for the printed record of the hearing should submit six (6) single-
spaced copies of their statement, along with an IBM compatible 3.5-inch
diskette in WordPerfect or MS Word format, with their name, address,
and hearing date noted on a label, by the close of business, Thursday,
March 29, 2001, to Allison Giles, Chief of Staff, Committee on Ways and
Means, U.S. House of Representatives, 1102 Longworth House Office
Building, Washington, D.C. 20515. If those filing written statements
wish to have their statements distributed to the press and interested
public at the hearing, they may deliver 200 additional copies for this
purpose to the Subcommittee on Human Resources office, room B-317
Rayburn House Office Building, by close of business the day before the
hearing.
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The above restrictions and limitations apply only to material
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The Committee seeks to make its facilities accessible to persons
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noted above.
Chairman Herger. Good morning. I will convene this hearing.
Welcome to the first hearing of the Human Resources
Subcommittee in the 107th Congress. The subject of today's
hearing is ``Research on the Effects of Welfare Reform.'' Since
this is my first hearing as chairman, I just want to begin with
a personal word about what a privilege it is for me to take
part in the important debate on welfare reform that is about to
unfold.
I know that many Members of this Subcommittee, the full
Committee, and the rest of the Congress, played important roles
in passing the 1996 Welfare Reform law and subsequent
legislation. I will count on all of your expertise and insight
as we move forward with reauthorization in the next 19 months.
Our first hearing will cover research on the effects of the
1996 law. This law, and what we know about its impacts, will
guide us throughout the reauthorization debate. Those impacts
have been, in a word, remarkable. More than two million
families have left welfare, work is up, child poverty is down,
and welfare caseloads have dropped over 50 percent. Everyone,
from those who supported the bill, to those who opposed it,
accepts these facts. So we will be building on a very strong
foundation.
But there is still a lot of work to do. No one should read
anything into our starting this process on the Ides of March. I
am convinced we can and will work together to produce excellent
legislation that builds on the 1996 law. That is my mission,
and I know it is one that is shared by my colleagues on both
sides of the aisle.
For today's purposes, we will pay special attention to
evidence about whether the 1996 law achieved its major
purposes, which include: one, providing assistance to needy
families; two, ending dependence on government by promoting
work and marriage; three, preventing and reducing the incidence
of out-of-wedlock pregnancies; and four, encouraging the
formation and maintenance of two-parent families.
We also are particularly interested in lessons learned from
innovative State programs and ways to address continuing
challenges as families move from welfare to work. Today, we
have a distinguished set of witnesses to answer these questions
and more.
First, we will hear from nonpartisan representatives of the
Congressional Research Service and the General Accounting
Office, who will review what is known from some of the major
studies of welfare reform. Then we will hear from two outside
experts who are very familiar to this Subcommittee, Robert
Rector of the Heritage Foundation, and Mark Greenberg of the
Center for Law and Social Policy.
They will add their perspective on what the research tells
us about impacts of the 1996 law. They will also provide
suggestions for us to consider as we set about making further
changes in the coming year-and-a-half.
Without objections, each Member will have the opportunity
to submit a written statement and have it included in the
record at this point.
Now, before I turn to Mr. Cardin for his opening statement,
I understand we have a vote starting after 11:15, so hopefully
we can at least get through the testimony and maybe even some
questions for our first panel before we have to recess.
I now recognize Mr. Cardin for his opening statement.
[The opening statement of Chairman Herger follows:]
Opening Statement of the Hon. Wally Herger, M.C., California, and
Chairman, Subcommittee on Human Resources
Welcome to the first hearing of the Human Resources Subcommittee in
the 107th Congress.
Since this is my first hearing as Chairman, I just want to begin
with a personal word about what a privilege it is for me to take part
in the important debate on welfare reform that is about to unfold.
I know many of the Members of this subcommittee, the full
committee, and the rest of the Congress played important roles in
passing the 1996 welfare reform law and subsequent legislation.
I will count on all of your experience and insight as we move
forward with reauthorization in the next 19 months. Our first hearing
will cover research on the effects of the 1996 law.
This law and what we know about its impacts will guide us
throughout the reauthorization debate. Those impacts have been, in a
word, remarkable. More than 2 million families have left welfare, work
is up, child poverty is down, and welfare caseloads have dropped over
50 percent. Everyone--from those who supported the bill to those who
opposed it--accepts these facts.
So we will be building on a very strong foundation, but there is
still a lot of work to do. No one should read anything into our
starting this process on the Ides of March. I am convinced we can and
will work together to produce excellent legislation that builds on the
1996 law.
That is my mission, and I know it is one shared by my colleagues on
both sides of the aisle. For today's purposes, we will pay special
attention to evidence about whether the 1996 law achieved its major
purposes, which include:
1. Providing assistance to needy families;
2. Ending dependence on government by promoting work and marriage;
3. Preventing and reducing the incidence of out-of-wedlock
pregnancies;
4. Encouraging the formation and maintenance of two-parent
families.
We also are particularly interested in lessons learned from
innovative State programs and ways to address continuing challenges as
families move from welfare to work.
Today we have a distinguished set of witnesses to answer these
questions and more.
First, we will hear from nonpartisan representatives of the
Congressional Research Service and the General Accounting Office, who
will review what is known from some of the major studies of welfare
reform.
Then we will hear from two outside experts who are very familiar to
this subcommittee--Robert Rector of the Heritage Foundation and Mark
Greenberg of the Center on Law and Social Policy.
They will add their perspective on what the research tells us about
impacts of the 1996 law. They also will provide suggestions for us to
consider as we set about making further changes in the coming year and
a half.
With that, Mr. Cardin, do you have an opening statement?
Mr. Cardin. Thank you, Mr. Chairman.
I want to thank you for, as your first hearing as chairman,
focusing in on TANF, because clearly, the most important
responsibility of this Subcommittee will be the reauthorization
of TANF and the related programs. I look forward to working
with you.
As I listened to your opening statement, you are correct,
that we all have the same purpose for looking at the TANF
program and seeing what will be coming next.
Mr. Chairman, I hope that we won't get into a debate during
this hearing and in future hearings dealing with whether the
1996 welfare law worked. The question of whether it's been
successful or whether it's the benefit of a strong economy--
although, quite frankly, the economy doesn't look quite as
strong today as the stock market opens--or whether we are just
creating a lot of people working in poverty misses the point.
The truth is that all three of those observations have some
truth. Our focus should be what comes next, what is the next
chapter.
Our hearings are important, because there's a lot of
information that we don't know about. We don't know about a lot
of people who have left welfare who are not working, what has
happened to that group.
I was very impressed with Secretary Thompson's testimony
before our full Committee yesterday, Mr. Chairman, and his
commitment to helping people who have left welfare, who are
working, but need the skills and training in order to succeed
in the workplace. What Secretary Thompson was basically saying
is that we don't want to replace generations of families that
were dependent upon welfare with generations of families that
are trapped working in poverty. As Secretary Thompson said--and
I agree--that's going to require a stronger Federal presence,
not a reduced Federal presence.
So as we start our process of evaluating the TANF program
and how it has achieved its initial objectives, I hope that we
will concentrate on what should be the Federal role in the next
level, the next chapter in welfare reform. I would hope that it
will have a strong presence in reducing poverty, particularly
among working Americans who have left welfare, so that we can
truly say the people have left welfare for a better life, a
life where they can succeed in the workplace. We need to take a
look at our welfare programs to make sure that, in fact, they
will achieve those objectives as we reauthorize the programs.
I do look forward to listening to our witnesses, not only
today but in the future hearings of our Committee.
Chairman Herger. Thank you very much, Mr. Cardin, for your
remarks.
At this time I would like to call up our first panel,
Cynthia M. Fagnoni, Managing Director, Education, Workforce and
Income Security Issues, U.S. General Accounting Office, and
Christine Devere, Analyst, Social Legislation, Domestic Social
Policy Division, Congressional Research Service.
Miss Fagnoni, we would be happy to receive your testimony.
STATEMENT OF CYNTHIA M. FAGNONI, MANAGING DIRECTOR, EDUCATION,
WORKFORCE, AND INCOME SECURITY ISSUES, U.S. GENERAL ACCOUNTING
OFFICE
Ms. Fagnoni. Good morning, Mr. Chairman. Thank you.
Mr. Chairman and Members of the Subcommittee, I am pleased
to be here today to discuss welfare reform. Since the Congress
passed welfare reform legislation in 1996, this Subcommittee
has asked us to examine a broad range of welfare reform issues.
Today I will focus on States' progress in implementing TANF and
what we know about families who have left welfare and those who
remain on the rolls.
Our work shows that States are moving away from a welfare
system focused on entitlement to one that emphasizes finding
employment as quickly as possible. In keeping with this ``work
first'' approach, many States and localities have transformed
their welfare offices into job placement centers. In these
offices, welfare workers help TANF applicants and recipients
find jobs and link them to services, such as child care and
transportation, to support their work efforts.
In addition, welfare workers focus more on helping
recipients address and solve problems that can interfere with
employment.
Some States are providing services to low-income working
families not receiving cash assistance, which can help these
families avoid welfare dependency. States' implementation of
more work-based programs facilitated by strong economic growth
has been accompanied, as you mentioned, by a 50 percent decline
in the number of families receiving cash welfare since welfare
reform legislation was signed into law, from 4.4 million
families in August, 1996, to 2.2 million in June, 2000.
With this dramatic drop in the welfare rolls has come
increased interest in how former welfare recipients are faring.
Information available shows that most adults who left welfare
had at least some attachment to the workforce. Our 1999 review
showed employment rates ranging from 61 to 87 percent for
adults and families who had left welfare in seven States. In
some instances, these rates measured whether an adult in the
family had ever been employed since leaving welfare, rather
than steady employment.
A recent report by the Urban Institute, based on its 1999
nationally representative sample, finds that 64 percent of
former TANF recipients reported that they were working at the
time of their follow up, while another 11 percent reported
working at some point after leaving welfare.
Former recipients in the seven States we reviewed had
average annual earnings that generally ranged from $9,500 to
about $15,000, if the families had worked all year long--and
many did not. This estimated annual earned income is greater
than the maximum annual amount of cash assistance and food
stamps that a three-person family with no other income could
have received in these States. But if these earnings were the
only source of income for these former welfare families, many
of them would remain below the Federal poverty level.
More comprehensive information on total household income
and use of other government supports is needed to fully
understand the circumstances of these families. The State
studies we reviewed typically did not provide such
comprehensive information.
Regarding the adults who continue to receive cash
assistance, a higher percentage are combining welfare and work
than previously. In fiscal year 1997, 17 percent of TANF
recipients worked, compared with 25 percent in fiscal year
1999. But a majority of TANF recipients are not working or
engaged in work activities. This is in part because many have
characteristics, such as health problems and disabilities, that
make it difficult for them to get and keep jobs.
To better meet the needs of these TANF recipients, all six
of the States we recently visited have modified their ``work
first'' programs to include strategies for hard-to-employ
recipients. These strategies include improving and expanding
case management, providing programs and services targeted
specifically to prepare the hard-to-employ for work, and
drawing on programs run by non-TANF agencies and organizations
that deal with specific problems, such as substance abuse and
mental illness.
During our site visits, State and local officials reported
program success at the local level. For example, in Grand
Rapids, MI the local TANF agency had stationed two case
managers at a large company that employs TANF recipients to
help the hard-to-employ retain their jobs. These on-site case
managers serve as a resource, both for employees and for the
employer, helping employees cope with crises that might
otherwise cause them to lose their jobs and intervening on
behalf of the employer at the first sign of trouble.
Company officials directly attributed the higher retention
rates for TANF than for non-TANF employees to on-site case
management and cooperation from the local TANF agency. While
hard-to-employ recipients may find the transition to work
difficult, the States have found that some do, in fact, find
jobs.
In closing, States have made significant progress in
transforming the Nation's welfare system into a work-based,
temporary assistance program for low-income families. As
welfare reform evolves, attention will be focused on
emphasizing and enhancing work-based strategies, both for
families who have already left welfare for work, and for those
who may need more assistance to become employed.
Mr. Chairman, this concludes my prepared statement. I would
be happy to answer any questions you or Members of the
Subcommittee may have.
[The prepared statement of Ms. Fagnoni follows:]
Statement of Cynthia M. Fagnoni, Manager Director, Education,
Workforce, and Income Security Issues, U.S. General Accounting Office
Welfare Reform: Progress in Meeting Work-Focused TANF Goals
Mr. Chairman and Members of the Subcommittee: Thank you for
inviting me here today to discuss the progress of welfare reform and
our related work. The 1996 Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (P.L. 104-193) (PRWORA) significantly
changed federal welfare policy for low-income families with children,
building upon and expanding state-level reforms. It ended the federal
entitlement to assistance for eligible needy families with children
under Aid to Families With Dependent Children (AFDC) and created the
Temporary Assistance for Needy Families block grant (TANF), designed to
help needy families reduce their dependence on welfare and move toward
economic independence. Under TANF, states have increased flexibility to
meet four broad goals:
Providing assistance to needy families so that children
may be cared for in their own homes or in the homes of relatives;
Ending the dependence of needy parents on government
benefits by promoting job preparation, work, and marriage;
Preventing and reducing the incidence of out-of-wedlock
pregnancies; and
Encouraging the formation and maintenance of two-parent
families.
In addition, PRWORA requires states to impose federal work and
other program requirements on most adults receiving aid and to enforce
a lifetime limit of 5 years, or less at state option, on the receipt of
federal assistance.
As states have implemented TANF, this Subcommittee has asked us to
examine a broad range of welfare reform issues. My testimony today will
focus on the progress of welfare reform related to the goals of
providing assistance and reducing dependency by promoting work. More
specifically, it discusses (1) states' progress in implementing TANF,
(2) the status of families who have left welfare, (3) the
characteristics of adults currently receiving TANF and state strategies
for helping hard-to-employ recipients find jobs, and (4) emerging
issues as welfare reform evolves. The information on former welfare
recipients is from our 1999 review of state studies and more recent
studies. Information on current welfare recipients and state strategies
for serving hard-to-employ recipients is drawn from our latest review
of national data, numerous research studies, and visits to six states
from a new report to this Subcommittee to be released soon.
In summary, our work shows that states are transforming the
nation's welfare system into a work-based, temporary assistance program
for needy families, with a focus on moving people into employment
rather than signing them up for cash assistance. States' implementation
of TANF, undertaken in a time of strong economic growth, has been
accompanied by a 50 percent decline in the number of families receiving
cash welfare--from 4.4 million in August 1996 to 2.2 million as of June
2000. Our review of state-sponsored studies available in 1999 and
several more recent studies show that most of the adults in families
remaining off the welfare rolls were employed at some time after
leaving welfare. Of adults who continue to receive TANF cash
assistance, national data show that a higher percentage is currently
engaged in work than previously--17 percent in fiscal year 1997
compared to 25 percent in fiscal year 1999. A majority of those on the
rolls, however, are not working or engaged in work activities, in part
because many have characteristics that make it difficult for them to
get and keep jobs. All six of the states we visited have modified their
``work first'' programs--designed to move recipients quickly into
jobs--to better serve recipients who face difficulties in entering the
workforce. States have found that some of the recipients with such
difficulties do, in fact, find jobs. While states have made significant
progress in meeting work-focused goals, as welfare reform continues to
evolve, attention should be paid to these issues:
Emphasizing and enhancing work-based strategies,
including engaging hard-to-employ recipients in work and
helping families stay off welfare and increase their earnings;
and
Fostering and facilitating improved management and
service delivery approaches by states.
AS STATES IMPLEMENTED WELFARE REFORM AMID STRONG ECONOMIC GROWTH,
WELFARE CASELOADS DROPPED 50 PERCENT
Consistent with the thrust of the federal welfare reform law,
states are moving away from a welfare system focused on entitlement to
assistance to one that emphasizes finding employment as quickly as
possible, called a ``work first'' approach. Our work and other studies
show that many states and localities have transformed their welfare
offices into job placement centers. In some locations, applicants are
expected to engage in job search activities as soon as they apply for
assistance and may be provided support services, such as child care and
transportation, to support their work efforts without adding them to
the welfare rolls. Our recently issued report on child care noted that
spending on child care programs for low-income families under TANF and
the Child Care and Development Fund increased substantially in recent
years, from $4.1 billion in fiscal year 1997 to $6.9 billion in fiscal
year 1999 in constant dollars.\1\
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\1\ Child Care: States Increased Spending on Low-Income Families
(GAO-01-293, Feb. 2, 2001).
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As many welfare offices have increased their emphasis on work
activities, welfare offices and workers are also focusing more on
helping clients address and solve problems that interfere with
employment. In addition, some states are using the flexibility allowed
under TANF to continue providing services to families who left the
welfare rolls as a result of employment, including, in some cases,
providing case management services to help ensure that families can
deal with problems that might put parents' jobs at risk. Some states
are also providing services to low-income working families not
receiving cash assistance.
States' implementation of more work-based programs, undertaken
under conditions of strong economic growth, has been accompanied by a
dramatic decline in the number of families receiving cash welfare. As
shown in figure 1, the number of families receiving welfare remained
steady during the 1980s and then rose rapidly during the early
1990s.\2\
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\2\ A Congressional Budget Office (CBO) model attributes more than
half of the growth in AFDC caseloads between 1989 and 1992 to increases
in the number of female-headed families (especially never-married
females) and approximately one-fourth of the growth to the recession
and to the weak economy that preceded and followed the recession. CBO
Staff Memorandum, Forecasting AFDC Caseloads, With an Emphasis on
Economic Factors (CBO, Washington, D.C.: July 1993).
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The caseload decline began in 1995 and accelerated after passage of
PRWORA, with a 50 percent decline in the number of families receiving
cash welfare--from 4.4 million families in August 1996 to 2.2 million
families in June 2000. Caseload reductions occurred in all states,
ranging from 10 percent in the District of Columbia to 85 percent in
Wyoming.\3\ While economic growth and state welfare reforms have been
cited as key factors to explain nationwide caseload decline, there is
no consensus about the extent to which each factor has contributed to
these declines.\4\
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\3\ Data on caseload reductions for families by state utilize
January 1997 to June 2000 data.
\4\ Studies have specifically cited the following reasons for the
caseload decline: changes made by PRWORA; state changes to welfare
programs that preceded PRWORA; changes in client and caseworker
behavior; past increases in the minimum wage; and low unemployment
rates. See Council of Economic Advisers, The Effects of Welfare Policy
and the Economic Expansion on Welfare Caseloads: An Update (Washington
D.C.: Council of Economic Advisers, Aug. 1999). See also Rebecca M.
Blank, What Causes Public Assistance Caseloads to Grow? (Cambridge,
Mass.: National Bureau of Economic Research, Dec. 1997).
Figure 1: Number of Families Receiving Welfare From 1982 Through June
2000
[GRAPHIC] [TIFF OMITTED] T3533A.001
MOST ADULTS IN FORMER WELFARE FAMILIES WERE EMPLOYED AT SOME TIME AFTER
LEAVING WELFARE, OFTEN AT LOW-WAGE JOBS
Information on former welfare recipients shows that most adults who
left welfare had at least some attachment to the workforce. Our 1999
review on the status of former welfare recipients identified studies
from seven states that provided representative data on families leaving
welfare.\5\ Employment rates among adults in the families who left
welfare in these seven states ranged from 61 to 87 percent.\6\ However,
the employment rates were measured in different ways. Studies measuring
employment at the time of follow-up reported employment rates from 61
to 71 percent. Studies measuring whether an adult in a family had ever
been employed since leaving welfare reported employment rates from 63
to 87 percent. A more recent review of state and local-level studies
supported by funds from HHS' Office of the Assistant Secretary for
Planning and Evaluation (ASPE) shows similar patterns.\7\ In addition,
a recent report by the Urban Institute, using data from its 1999
National Survey of America's Families (NSAF)--a nationally
representative sample--finds that 64 percent of former recipients who
did not return to TANF reported that they were working at the time of
follow-up, while another 11 percent reported working at some point
since leaving welfare.\8\
---------------------------------------------------------------------------
\5\ See Welfare Reform: Information on Former Recipients' Status
(GAO/HEHS-99-48, Apr. 28, 1999). In this report we identified 18
studies about former recipients and summarized the findings from eight
of these studies (representing seven states) based on whether the
results could be generalized to most families who left welfare in the
state at the time of the study. The states we studied are Indiana,
Maryland, Oklahoma, South Carolina, Tennessee, Washington, and
Wisconsin. Because the seven states' studies differed in time periods
covered--from as early as 1995 to as late as 1998--and categories of
families studied, the results are not completely comparable.
\6\ Employment rates in various studies generally excluded families
who returned to welfare. Removing families who return to welfare from
the employment rate calculations results in higher employment rates,
because many former recipients who return to the welfare rolls are not
employed.
\7\ ASPE has encouraged the use of comparable measures among
research focused on former recipients. ASPE awarded grants to states
and the research community in fiscal years 1998, 1999, and 2000 for
studies in 10 states and three large counties.
\8\ Pamela Loprest, How Are Families Who Left Welfare Doing Over
Time? A Comparison of Two Cohorts of Welfare Leavers (Washington, D.C.:
Urban Institute, Dec. 8, 2000). Respondents had been off TANF from
between 3 months to more than 12 months at time of follow-up interview.
---------------------------------------------------------------------------
Not all families who leave welfare remain off the rolls. In the
seven studies we reviewed, the percentages of the families who left
welfare and then returned to the rolls ranged from 19 percent after 3
months in Maryland to 30 percent after 15 months in Wisconsin. In
ASPE's recent review of state and local-level studies, the proportion
of families who returned to welfare within 12 months after exit ranged
from 12 percent in San Mateo County, California, to 29 percent in
Cuyahoga County, Ohio.\9\ The study using 1999 NSAF data reported that
22 percent of those who had left the rolls were again receiving
benefits at time of the survey follow-up.
---------------------------------------------------------------------------
\9\ Julia B. Isaacs and Matthew Lyon, A Cross-State Examination of
Families Leaving Welfare: Findings From the ASPE-Funded Leavers
Studies, presented at the National Association for Welfare Research and
Statistics 40th Annual Workshop in Scottsdale, Ariz. (Aug. 1, 2000;
revised Nov. 6, 2000).
---------------------------------------------------------------------------
Of those who left welfare, former recipients in the seven states we
reviewed had average quarterly earnings that generally ranged from
$2,378 to $3,786 or from $9,512 to $15,144 annually.\10\ This estimated
annual earned income is greater than the maximum annual amount of cash
assistance and food stamps that a three-person family with no other
income could have received in these states.\11\ However, if these
earnings were the only source of income for families after they leave
welfare, many of them would remain below the federal poverty level.\12\
---------------------------------------------------------------------------
\10\ We estimated annual incomes by extrapolating quarterly
earnings; states did not provide information on annual earnings. Using
this method may overestimate the annual earnings, as a former recipient
may have worked fewer than four quarters.
\11\ In these seven states, for a single-parent, three-person
family with no income, the maximum annual amount of cash assistance and
food stamps combined ranged from $6,000 in Tennessee to $9,744 in
Washington as of January 1997.
\12\ For 1998, the federal poverty level for a family of three was
$13,650.
---------------------------------------------------------------------------
In addition to information on individuals' earned incomes, former
recipients' total household income and use of other government supports
are key to understanding the circumstances of these families. For
example, the recently expanded earned income credit (EIC) can increase
the incomes of qualified low-income families by as much as $2,271 for
families with one child and $3,756 for families with two or more
children.\13\ The ASPE review of state and local-level studies reported
that there were limited data on total household income. Reports from
the few states that attempted to gather this information found that 45
to 50 percent of household income comes from the adult leaving TANF, 20
to 40 percent from others in the household, and between 3 and 8 percent
from other sources, such as child support and Supplemental Security
Income. More is known about former recipients' use of other government
supports. Some of the state studies we reviewed reported that between
44 and 83 percent of the families who left welfare received Medicaid
benefits, and between 31 and 60 percent received food stamps. More
recent research at the state level and nationally also shows
differences in the rate of Medicaid and food stamps receipt among
former welfare recipients.
---------------------------------------------------------------------------
\13\ The EIC is a refundable tax credit for qualified working
people who have earned incomes below certain specified levels.
---------------------------------------------------------------------------
STATES ARE TAKING STEPS TO HELP HARD-TO-EMPLOY RECIPIENTS FIND JOBS
While many adults have left the welfare rolls for work, those
remaining on the rolls have increased their work efforts. Nationwide,
the percentage of TANF recipients combining welfare and work has risen
from 17 percent in fiscal year 1997 to 25 percent in fiscal year 1999.
Most current recipients, however, are not engaged in work or work
activities as defined by PRWORA. At least in part, this may be because
many current recipients have characteristics that make it difficult for
them to work, according to data from national surveys and several
studies, as well as from officials in the six states that we
visited.\14\ The states we visited had taken steps to help hard-to-
employ recipients move into jobs, such as improving and expanding case
management or providing programs and services targeted specifically to
prepare them for work. While recipients with one or more work-impeding
characteristics may find the transition to work difficult, the states
have found that some do find jobs.
---------------------------------------------------------------------------
\14\ For Welfare Reform: Moving Hard-to-Employ Recipients Into the
Workforce (GAO-01-368, forthcoming), we visited six states: California,
Connecticut, Florida, Maryland, Michigan, and Washington. In addition,
we collected and analyzed caseload data from these states and from
Oregon, New York, and Wisconsin.
---------------------------------------------------------------------------
A Majority of TANF Recipients Are Not Engaged in Work Activities, in
Part Because Many Have Characteristics That Make It Difficult
for Them To Get and Keep Jobs
The proportion of TANF recipients nationwide who were engaged in
unsubsidized employment increased during the past few years. According
to our analysis of HHS data, the percentage of recipients who were
engaged in unsubsidized employment increased from 17 percent in fiscal
year 1997 to 25 percent (or 400,000 recipients) in fiscal year
1999.\15\ In the states we reviewed that provided us with data on their
caseload characteristics, the percentage of the caseload that was
employed ranged from 6 percent to just under 40 percent.\16\ This wide
range of rates may be explained in part by the varying state policies
on the amount of earnings a person may retain while still remaining
eligible for welfare.\17\
---------------------------------------------------------------------------
\15\ Percentages represent the average monthly number of families
with at least one adult engaged in unsubsidized employment divided by
the number of families in the overall work rate, as defined by the
Administration for Children and Families. The families included in the
overall work rates are all TANF families except (1) child-only cases
and (2) families disregarded for one of the three reasons allowed under
federal law: (a) they have a child under age 1; (b) they are
participating in the tribal work program; or (c) they were sanctioned
during the month but not for more than 3 of the past 12 months.
\16\ Data were reported by states and may not be consistent with
each other.
\17\ Some experts have speculated that this wide range may also be
because states that have enforced ``work first'' are likely to have
experienced the greatest caseload decline and thus lower work levels
for those remaining on the rolls.
---------------------------------------------------------------------------
Although more TANF recipients are combining welfare and work, in
fiscal year 1999 a majority did not participate in work activities--a
monthly average of nearly 60 percent of all TANF recipients nationwide.
Although this may have been caused by weak implementation of state work
programs, the characteristics of TANF recipients may affect their
abilities to engage in work and work activities. Studies have shown
that having certain characteristics, such as poor health or disability,
no high school diploma, limited work experience, exposure to domestic
violence, substance abuse, and limited English proficiency, makes
engaging in work activities more difficult. Based on data from its 1997
National Survey of America's Families (NSAF), the Urban Institute found
that the greater the number of these characteristics a TANF recipient
has, the less likely that recipient is to be engaged in work or work
activities.\18\
---------------------------------------------------------------------------
\18\ NSAF is an ongoing, nationally representative survey, of the
non-institutionalized, civilian population of persons under age 65 in
the nation as a whole. Sheila Zedlewski. Work-Related Activities and
Limitations of Current Welfare Recipients (Washington D.C.: The Urban
Institute, July 1999).
---------------------------------------------------------------------------
The survey showed that 88 percent of recipients who had none of
these characteristics were working or engaging in work-related
activities, compared to 59 percent with one of these characteristics
and 27 percent with three or more (see figure 2).\19\ Officials in all
six of the states we visited agreed that recipients with one or more
work-impeding characteristics find it hardest to successfully enter the
workforce, and are often referred to as hard-to-employ recipients.
However, states have found that while having these characteristics
makes employment difficult, some recipients do, in fact, find jobs.
---------------------------------------------------------------------------
\19\ The Urban Institute analysis counted only those
characteristics shown to significantly depress work activity as
obstacles to employment: less than a high school education, last
employment 3 or more years ago, child under age 1, either very poor
mental health or health condition that limits work, caring for a
disabled child, and limited English. NSAF did not collect data on
domestic violence or substance abuse.
[GRAPHIC] [TIFF OMITTED] T3533A.002
Our analysis of existing studies showed that a considerable
percentage of TANF recipients have characteristics that make it
difficult for them to work. Table 1 identifies the range of estimates a
number of studies provide on the prevalence of some of these
characteristics in the welfare population. For example, estimates of
the proportion of the welfare caseload with health problems or
disability range from 20 to 40 percent, and the proportion of the
caseload with no high school diploma from 30 to 45 percent.
TABLE 1: PREVALENCE OF SELECTED CHARACTERISTICS AMONG TANF RECIPIENTS
BASED ON SELECTED STUDIES
------------------------------------------------------------------------
Estimated range Number of
of TANF selected
Characteristic recipients with studies
characteristic measuring this
(percent) characteristic
------------------------------------------------------------------------
Health problems or disabilities...... 20-40 12
Lack of high school diploma.......... 30-45 8
Current domestic violence............ 10-30 7
Lack of job skills................... 20-30 3
Substance abuse...................... 3-12 8
English as a second language......... 7-13 4
Multiple barriers.................... 44-64 5
------------------------------------------------------------------------
Note: Studies were conducted between 1997 and 1999. The estimates
provided by each study are not directly comparable to those from other
studies because each defines characteristics slightly differently and
examines a different specific population. For example, when measuring
the incidence of substance abuse, one study counted only recipients who
self-reported seeking substance abuse treatment while another counted
recipients believed by case managers to need to address substance abuse
problems. Likewise, the scope of the studies varies; most cover only a
single state or community while one is national in scope. Because of
difficulties identifying and measuring these characteristics, these
studies may understate the prevalence of these characteristics among
TANF recipients. Nonetheless, together these studies give a rough
indication of the prevalence of these characteristics among TANF
recipients.
Information from the states we visited is consistent with the
studies' data. Officials in these states indicated that many recipients
have poor mental or physical health, have substance abuse problems, or
were victims of domestic violence. Some officials noted that the actual
extent of these characteristics can be hard to determine because most
states and localities rely on recipients to disclose this information
about themselves to their case managers, which they are often reluctant
to do.
All Six of the States We Visited Have Modified Their ``Work First''
Programs to Better Serve Hard-to-Employ Recipients
The six states we visited implemented a TANF program that can be
characterized as ``work first'' and, as a result, their TANF programs
share a few common elements. All of the programs seek to move people
from welfare into unsubsidized jobs as quickly as possible. Officials
expressed the belief that the best way to succeed in the labor market
is to join it, and the best setting in which to develop successful work
habits and skills is on the job.\20\ However, to varying degrees, these
six states have modified or enhanced their approach to better serve
recipients for whom the ``work first'' approach is not successful
because they have characteristics that may impede employment. The
states we visited differ markedly in their approach to identifying
recipients who have these characteristics so that they can either be
exempted from work requirements or provided with targeted programs and
services that would help them obtain employment. Some states and
localities require TANF recipients to look for a job and offer enhanced
services only to those who are unsuccessful, while others begin by
screening and assessing new applicants to identify those with
characteristics that might impede their ability to get a job. The
strategies states use to assist those recipients identified as hard-to-
employ also vary. Some of the states we visited have focused their
efforts on improving and expanding case management, while others have
targeted programs and services specifically to prepare hard-to-employ
recipients for work. All six of the states we visited also refer
recipients to programs run by non-TANF agencies and organizations that
help recipients deal with specific problems such as substance abuse and
mental illness that may affect their ability to get and keep a job.
---------------------------------------------------------------------------
\20\ A recent study by the Manpower Demonstration Research
Corporation (MDRC) reviews 20 welfare-to-work programs and assesses the
effectiveness of these programs at increasing the employment and
earnings of single-parent welfare recipients. The study found that
employment-focused welfare programs resulted in higher earnings for the
most disadvantaged recipients than education-focused programs, but that
programs with a mix of activities tended to help the broadest range of
people. See Charles Michalopoulos, Christine Schwartz, and Diana Adams-
Ciardullo, What Works Best for Whom: Impacts of 20 Welfare-to-Work
Programs by Subgroup (New York, N.Y.: MDRC, Aug. 2000).
---------------------------------------------------------------------------
During our site visits, state and local officials reported program
success at the local level. For example, in Grand Rapids, Michigan, the
local TANF agency has stationed two case managers at a large company
that employs TANF recipients to help hard-to-employ recipients retain
their jobs. These on-site case managers serve as a resource both for
employees and for the employer, helping employees cope with crises that
might otherwise cause them to lose their jobs, and intervening on
behalf of the employer at the first sign of trouble. The company's
retention rate for current and former TANF recipients was 81 percent,
as compared to only 33 percent for their non-TANF employees. Company
officials directly attributed the higher retention rates to on-site
case management and cooperation from the local TANF agency.
EMERGING ISSUES AS WELFARE REFORM EVOLVES
As states have taken steps to implement a work-based, temporary
assistance program for needy families, key issues have emerged,
including continuing support for work--for those on the welfare rolls
and those already employed--and building state and local management and
service delivery capacity.
Emphasizing and Enhancing Work-Based Strategies
As many TANF recipients have moved into employment, emerging issues
are related to helping those remaining on the rolls move into the
workforce, enforcing work requirements in future years, and helping
former welfare recipients maintain their employment. The states we
visited in 2000 said that while some TANF recipients with work-impeding
characteristics are able to successfully enter the workforce, many need
considerable time and support in order to become work-ready, including
services and work-preparation activities that address their specific
needs. To be successful in moving hard-to-employ TANF recipients into
the workforce within their 5-year time limit for federal benefits,
states will need to provide work-preparation activities tailored to the
needs of their hard-to-employ recipients. To help states with this
challenge, we have recommended that HHS do more to promote research and
provide guidance that would encourage and enable states to estimate the
number and characteristics of hard-to-employ recipients. In addition,
we have recommended that HHS expand the scope of its guidance to states
to help them use the flexibility they have under PWRORA to provide
appropriate work-preparation activities for hard-to-employ recipients
within the current TANF rules. During our site visits we discovered
that some states and localities did not understand the full range of
flexibility they have under the law.
In addition to working with hard-to-employ recipients, states must
enforce federal work requirements for most TANF recipients. The robust
economy has generally helped states meet federal work participation
rates. In fiscal year 1999, the highest percentage of TANF adult
recipients meeting federal work participation rates--66 percent--was in
unsubsidized employment. Moreover, states were also aided in meeting
federal participation rates by receiving credits for the recent
caseload reductions as allowed under PRWORA. In the event of an
economic downturn when jobs may be less readily available, more states
may turn to alternative activities for meeting their work requirements.
These activities could include subsidized employment, work experience,
community service, and on-the-job training, which we call work-site
activities. However, states have more limited experience with work-site
activities; nationwide only about 14 percent of TANF recipients meeting
federal work participation rates were in such activities in fiscal year
1999. As a result, implementing large-scale work programs may prove
challenging.\21\ To provide valuable information for administrators and
policymakers on what could in the future become an increasingly
important part of TANF programs nationwide, we recommended that HHS
take steps to collect more information on work-site activities,
including supporting evaluations of them, and disseminate such
information to the states. HHS has taken steps to support some
evaluations in this area.
---------------------------------------------------------------------------
\21\ Welfare Reform: Work-Site Activities Can Play an Important
Role in TANF Programs (HEHS-00-122, July 28, 2000).
---------------------------------------------------------------------------
While promoting work among those receiving welfare is essential,
some states have turned their attention to supporting the work efforts
of those who have left the rolls. Many former welfare recipients are
employed in low-wage jobs and at risk of returning to welfare. TANF
provides states the flexibility to devise and implement strategies that
help such families maintain and advance in their jobs. Some states and
localities have undertaken efforts to help low-wage workers upgrade
their job skills to improve their job prospects. For example, when we
visited states in 1998, we found that Michigan had set aside $12
million for postemployment training for TANF clients who were already
meeting their work requirements. Similarly, Wisconsin had a $1 million
Employment Skills Advancement Program under which poor working
parents--including TANF clients--received grants for attending training
programs through the workforce development system.\22\ HHS is
evaluating some projects designed to help former welfare recipients
retain their jobs and advance in the workplace.
---------------------------------------------------------------------------
\22\ Welfare Reform: States' Implementation and Effects on the
Workforce Development System (GAO/T-HEHS-99-190, Sep. 9, 1999).
---------------------------------------------------------------------------
Fostering and Facilitating Improved Management and Service Delivery
Approaches
As welfare agencies focus on moving needy families toward economic
independence by providing a wide array of services, such as child care,
food stamps, and employment and training services, they are drawing on
numerous federal and state programs--often administered by separate
agencies.\23\ These are sweeping changes that have profound
implications for the information needs of states and the automated
systems designed to meet those needs. Although automated systems in the
15 states we examined in 1999 supported welfare reform in many ways, a
number of these systems have major limitations in one or more of three
key areas--case management, service planning, and program
oversight.\24\ We found, for example, that some state and local
agencies had difficulties in accessing data on the characteristics of
TANF recipients that the agencies could use to identify and meet the
service needs of their caseloads. We also identified a gap in the
ability of automated systems to support enforcement of the 5-year TANF
time limit across states. While states are making efforts to improve
their systems, they face obstacles--including some at the federal
level, such as the complexity of obtaining federal funding for systems
projects that involve multiple agencies. To facilitate states' efforts,
we recommended that HHS establish an interagency group to help overcome
this and other difficulties. HHS, Labor, and Agriculture have begun
meeting regularly to address these issues. Sustained high-level
attention will be needed to move forward in this important area.
---------------------------------------------------------------------------
\23\ The Department of Health and Human Services oversees programs
such as TANF, Medicaid, child care, and child support enforcement; the
Department of Agriculture oversees food stamps; and the Department of
Labor oversees employment and training programs.
\24\ Welfare Reform: Improving State Automated Systems Requires
Coordinated Federal Effort (GAO/HEHS-00-48, Apr. 27, 2000).
---------------------------------------------------------------------------
Welfare agencies' increased focus on helping needy adults with
children find and maintain employment brings them directly into the
province of the workforce development system.\25\ When we reviewed the
role of the workforce development system in providing services to
welfare recipients in the states in 1998, we observed that workforce
development and welfare systems were still largely independent. When
the Congress created the Welfare-to-Work grant program in 1997, under
which it authorized $3 billion in grants to be administered through the
Department of Labor to help hard-to-employ individuals, it provided an
opportunity for the two systems, in participating states, to
collaborate. In addition, the passage of the Workforce Investment Act
(WIA) of 1998, designed to integrate and streamline federal employment
and training services, requires most employment and training services
to be provided through a single system, called the One-Stop Center
System. These recent changes in the workforce development system, along
with welfare reform, give states and localities an opportunity to
reassess how employment-related services are coordinated and delivered.
While providing TANF services through one-stop centers is a state and
local option, we noted in our 2000 report that at the local level, 24
states reported providing at least some TANF services on-site at a
majority of their one-stop centers.\26\ Seven states provided TANF
employment and eligibility services, Medicaid, and food stamp services
at a majority of their one-stop centers. While it is too early to know
what service delivery approaches may prove most effective and
efficient, as welfare reform and WIA implementation evolve, research
will be warranted to determine best practices.
---------------------------------------------------------------------------
\25\ We define the workforce development system as the state or
local entity responsible for administering programs that originate
through the Department of Labor, such as the state Employment Service
or Workforce Investment Act programs.
\26\ Workforce Investment Act: Implementation Status and the
Integration of TANF Services (GAO/T-HEHS-00-145, June 29, 2000).
---------------------------------------------------------------------------
Mr. Chairman, this concludes my prepared statement. I will be happy
to respond to any questions you or other Members of the Subcommittee
may have.
GAO CONTACTS AND ACKNOWLEDGMENTS
For future contacts regarding this testimony, please call Cynthia
M. Fagnoni at (202) 512-7215 or Sigurd Nilsen at (202) 512-7003.
Individuals making key contributions to this testimony included Sonya
Harmeyer, Gale Harris, Katrina Ryan, Kim Scotten, and Andrea Romich
Sykes.
RELATED PRODUCTS
Child Care: States Increased Spending on Low-Income Families (GAO-
01-293, Feb. 2, 2001).
Welfare Reform: Work-Site-Based Activities Can Play an Important
Role in TANF Programs (GAO/HEHS-00-122, July 28, 2000).
Welfare Reform: Improving State Automated Systems Requires
Coordinated Federal Effort (GAO/HEHS-00-48, Apr. 27, 2000).
Welfare Reform: State Sanction Policies and Number of Families
Affected (GAO/HEHS-00-44, Mar. 31, 2000).
Welfare Reform: Assessing the Effectiveness of Various Welfare-to-
Work Approaches (GAO/HEHS-99-179, Sep. 7, 1999).
Welfare Reform: Information on Former Recipients' Status (GAO/HEHS-
99-48, Apr. 28, 1999).
Welfare Reform: States' Experiences in Providing Employment
Assistance to TANF Clients (GAO/HEHS-99-22, Feb. 26, 1999).
Welfare Reform: Status of Awards and Selected States' Use of
Welfare-to-Work Grants (GAO/HEHS-99-40, Feb. 5, 1999).
Welfare Reform: Early Fiscal Effects of the TANF Block Grant (GAO/
AIMD-98-137, Aug. 18, 1998).
Welfare Reform: Child Support an Uncertain Income Supplement for
Families Leaving Welfare (GAO/HEHS-98-168, Aug. 3, 1998).
Welfare Reform: States Are Restructuring Programs to Reduce Welfare
Dependence (GAO/HEHS-98-109, June 18, 1998).
Welfare Reform: HHS' Progress in Implementing Its Responsibilities
(HEHS-98-44, Feb. 2, 1998).
Welfare Reform: Three States' Approaches Show Promise of Increasing
Work Participation (GAO/HEHS-97-80, May 30, 1997).
Chairman Herger. Thank you very much, Ms. Fagnoni.
Miss Devere.
STATEMENT OF CHRISTINE DEVERE, ANALYST IN SOCIAL LEGISLATION,
DOMESTIC SOCIAL POLICY DIVISION, CONGRESSIONAL RESEARCH
SERVICE, LIBRARY OF CONGRESS
Ms. Devere. Thank you.
Good morning, Mr. Chairman, Mr. Cardin, Members of the
Subcommittee. Thank you for inviting me to appear before you
today.
My testimony this morning will briefly summarize what we
have learned from major welfare reform efforts in two areas:
first, what has been the impact of policies designed to promote
work, and second, what do we know about the circumstances of
families who have left welfare.
The main points from my testimony this morning are: Point
number one, mandatory welfare-to-work programs increase
employment and earnings. However, only when mandatory welfare-
to-work programs are combined with cash incentives have these
programs increased income.
Point number two. There has been little, if any, impact on
decisions to marry or have additional children among welfare
mothers, although this has received relatively little
attention.
Point number three. Mandating work among welfare mothers
does not appear to systematically harm or help children.
Point number four. Most leave welfare for employment and
are employed for a period of time. Loss of employment is the
most common reason they return.
The bulk of welfare reform research completed since the
mid-1980s has focused on the impact of mandatory welfare-to-
work programs on promoting work. Evaluations indicate that
mandatory welfare-to-work programs--both ``work first''
programs that emphasize immediate work, and programs that
provide education and training--generally increase employment
and often also increase earnings and decrease cash assistance
payments.
However, only when mandatory welfare-to-work programs are
combined with cash incentives have these programs increased
income among participants. These income gains have come at the
cost of increasing welfare payments and prolonging the duration
of welfare receipt. At least in the short run, evaluations
indicate that many TANF recipients will be unable to escape
poverty through work unless provided with some form of earnings
supplement.
The TANF law has two new goals for family welfare: reducing
nonmarital pregnancies and promoting and maintaining two-parent
families. To date, the impact of welfare-to-work programs on
these outcomes has received relatively little attention. A
Minnesota program reported an increase in marriage among
welfare mothers, but the majority of studies indicate little,
if any, impact on these outcomes.
The impact of welfare reform on child well-being has also
received relatively little attention, although research is
forthcoming on this issue. Available studies indicate that
mandating work among welfare mothers does not appear to
systematically harm or help children. In programs that combine
mandatory work with cash incentives, parents report
improvements in school achievement among elementary school age
children. However, these children still appear to be
disadvantaged when compared to the overall child population.
There is very little information on the effects of these
policies on infants or adolescents.
While a number of these findings have application to many
State TANF programs, these programs do not encompass all the
initiatives in the State TANF programs. For example, the first
families will not begin reaching the Federal 5-year lifetime
limit until the fall of this year. Individuals have begun
reaching shorter, State-imposed time limits, but these
individuals were also receiving cash incentives. The cash
incentives led to an increase in income, but when the recipient
reached the time limit, they were no better off than those not
subject to the time limit as their income decreased when they
lost the cash incentives. As the evaluations illustrate, it is
possible that these policies may have offsetting effects.
Recently, there has also been considerable interest in the
circumstances of those who have left welfare. Based on results
from studies in 38 States and the District of Columbia, the
majority leave welfare for employment. Thus far, a relatively
small share of the national caseload has been removed from the
rolls for time limits or reported as sanctioned off the rolls.
Compared to those who left welfare for other reasons,
individuals whose benefits were cut off by a time limit do not
face increased difficulties or hardships.
Between 55 and 65 percent of welfare leavers are employed
at any given time, with average hourly wages ranging from $5.50
to $8.80 an hour. Although the majority of leavers are
employed, based on wages alone, many remain poor.
A number of welfare leavers continue to receive food stamps
and Medicaid. Among those not participating in these programs,
some welfare leavers did not think they were eligible, while
others said they did not need these services or that it was too
much hassle to receive them. A number of eligible welfare
leavers received child care subsidies, while some indicate a
lack of need for these subsidies.
In a very small number of studies, less than half said that
they had filed for or received the earned income tax credit.
Between 18 and 35 percent of leavers have returned since exit,
with lack or loss of employment the most common reason for
return.
Mr. Chairman, this concludes my formal statement. I would
be happy to answer any questions that you or Members of the
Subcommittee may have.
Thank you.
[The prepared statement of Ms. Devere follows:]
Statement of Christine Devere, Analyst in Social Legislation, Domestic
Social Policy Division, Congressional Research Service, Library of
Congress
Good morning Mr. Chairman, Mr. Cardin, Members of the Subcommittee.
Thank you for inviting me to appear before you today. My testimony this
morning will briefly summarize what we've learned from major welfare
reform efforts in two areas. First, what has been the impact of
policies designed to promote work; and second, what do we know about
the circumstances of families who have left welfare? This testimony is
an update of work completed by the Congressional Research Service at
the request of the House Committee on Ways and Means, included as
Appendix L in the 2000 House Committee on Ways and Means Green Book.
The main points from my testimony today are as follows:
1. Mandatory welfare-to-work programs \1\--both programs that
emphasize work and programs that emphasize education--increase earnings
and employment, and generally decrease cash assistance payments.
---------------------------------------------------------------------------
\1\ For purposes of this testimony, mandatory welfare-to-work
programs are those programs that require participation in some activity
as a condition of continuing welfare benefits. Some of these programs
have emphasized a work-first approach where the focus is immediate
employment,while others have reburied participation in education or
training.
---------------------------------------------------------------------------
2. The impact of welfare-to-work programs on decisions of welfare
mothers to marry or have additional children has received relatively
little attention. Available findings suggest little, if any impact on
these outcomes.
3. Most mandatory welfare-to-work programs have reported no impact
on total income, as participants often replace welfare benefits with
earnings. Some mandatory work programs that include financial
incentives to work have been particularly effective in raising income
among program participants, although these income gains have come at
the cost of increasing welfare payments and prolonging the duration of
welfare receipt.
4. Mandating work among welfare mothers does not appear to
systematically harm or help children. Parents in mandatory work
programs that also include financial incentives to work, that raise the
income of working parents, report improvements in school achievement
among elementary school-aged children. However, this finding is based
on a small number of studies, and these children still appear to be
disadvantaged when compared to the overall child population.
5. Among those who leave welfare, the majority attribute their exit
to employment and are employed for a period of time, although the data
suggest that some employment is not continuous. Based on wages alone,
many former welfare recipients remain poor and continue to receive
Medicaid and food stamps, although participation rates in these
programs have also fallen as the welfare caseload has declined. Among
those who have returned to welfare, loss of employment is the most
common reason.
EVALUATING POLICIES TO PROMOTE WORK
Since the mid-1980s, states and localities have increasingly
experimented with policy initiatives designed to promote work and end
dependency on government benefits. These welfare reforms have included
work requirements, financial rewards for work, financial penalties for
failure to engage in work, time limits on benefits, rules to promote
marriage, and rules to penalize additional births to welfare mothers.
Formal evaluations were required of many of these initiatives as a
condition of waiving federal rules under AFDC, prior to enactment of
the welfare reform law of 1996. Congress and welfare reform
administrators wanted to know what worked and for whom and at what
cost. To date, what we have learned from policies to promote work is
from programs initiated before the 1996 welfare reform law. Many states
have built their TANF programs on elements of their AFDC waiver
programs and some have converted their welfare-to-work provisions under
these waiver programs into their TANF programs. Thus, while evaluations
discussed in this review are of programs that precede the 1996 law,
some of the findings have application to TANF programs.
Evaluation studies of welfare-to-work programs examine the
difference that policy changes made on selected outcomes, or their
``impact.'' They do so by comparing outcomes, such as earnings and
employment rates under a new set of policies versus what would have
occurred in the absence of these policies. These impact evaluations
have examined two kinds of programs that seek to move recipients from
welfare to work. The first type of program is a ``work first'' program
with a strong employment focus, where immediate job search is usually
required among participants. The second type of program requires
participation in education or training among participants, also
referred to as a ``human capital development'' program. While the focus
of these programs is employment or education, these programs often
include other policy initiatives such as increased supportive services,
time limits on assistance, financial penalties for noncompliance, and
policies to discourage out-of-wedlock births.
Mandatory welfare-to-work programs--both work-first
programs and programs that provide education--increase employment and
earnings, and generally decrease cash assistance payments.
The bulk of welfare-to-work research has focused on the impact of
these policies on promoting work and ending dependence on cash
benefits. Among welfare-to-work programs, evaluations find that
mandatory welfare-to-work programs generally increase employment, and
often also increase average earnings and decrease cash assistance
payments. These findings apply both to work-first programs and programs
that provide education and training. This increase in employment
reported in the evaluations is also consistent with national data that
illustrate an increase in the employment rate among single mothers from
57% in 1992 to almost 73% in 2000.\2\ Though both types of programs
have succeeded in raising employment and earnings, their impacts appear
at different times. Work-first programs produce immediate impacts
because they emphasize immediate work. However, their impacts sometimes
fade, as individuals subsequently lose their jobs or those in the
comparison group find employment. Programs that emphasize education
have delayed impacts, as individuals receive education or training for
a period of time before they enter employment. Of the welfare-to-work
programs evaluated, two of the most effective provided ``work first''
for some participants, but provided basic education for those
determined to need it before entering the labor force. These programs
are commonly referred to as ``mixed services'' programs.
---------------------------------------------------------------------------
\2\For additional information, see CRS Report RL30797, Trends in
Welfare, Work, and the Economic Well-being of Female-Headed Families
with Children, by Thomas Gabe.
---------------------------------------------------------------------------
The impact of welfare-to-work programs on decisions of
welfare mothers to marry or have additional children has received
relatively little attention. Available findings suggest little, if any
impact on these outcomes.
The TANF law set two new goals for family welfare: reducing
nonmarital pregnancies and promoting and maintaining two-parent
families. The impact of welfare-to-work programs on encouraging
marriage and reducing out-of-wedlock births has been the subject of
much less systematic analysis than changes in employment and earnings.
Among the small number of evaluations that examine these outcomes, the
majority report that these policies have had no impact on decisions to
marry or have additional children among women receiving welfare. One
evaluation of a welfare-to-work program in Minnesota reported that the
state's welfare policy initiatives led to an increase in marriage among
single mothers and a decrease in marital break-up among two-parent
families, but these results have not been reported in other
evaluations. Evaluations of programs targeted at teenage mothers have
also found no significant impacts on rates of pregnancy or
childbearing. Evaluators of these programs contend that the ``right''
mix of interventions to help teenage parents has not been found.
Most mandatory welfare-to-work programs have reported no
impact on total income, as participants often replace welfare benefits
with earnings. Some mandatory work programs that include financial
incentives to work have been particularly effective in raising income
among program participants, although these income gains have come at
the cost of increasing welfare payments and prolonging the duration of
welfare receipt.
A recent focus of welfare reform research has been to examine
programs that mandate work, but also offer financial incentives to
work. These programs, which include the Minnesota program mentioned
above, allow participants to combine work and welfare by disregarding a
larger percentage of their earnings than was previously allowed in
determining their continuing eligibility for cash benefits. Under TANF,
the vast majority of states are offering some form of a financial work
incentive to welfare recipients. Evaluations illustrate that financial
incentives to work have been particularly effective in increasing
employment and earnings. Additionally, while programs that mandate work
report no impact on income, these financial incentives to work have
been effective in raising the total income among program participants.
However, these income gains have come at the cost of increasing welfare
payments and prolonging the duration of welfare receipt. Evaluations
indicate that, at least in the short run, many TANF recipients will be
unable to escape poverty through work unless taxpayers provide an
earnings supplement of some kind.
Mandating work among welfare mothers does not appear to
systematically harm or help children. Parents in mandatory work
programs that also include financial incentives to work, that raise the
income of working parents, report improvements in school achievement
among elementary school-aged children. However, this finding is based
on a small number of studies, and these children still appear to be
disadvantaged when compared to the overall child population.
Most federal and state welfare policies apply directly to parents,
not children. At the time of passage of TANF, some proponents
maintained that the new program would help children by increasing
earnings and hence family income, thereby providing more resources to
meet children's needs, and by also giving children the positive role
model of a working parent. However, policies that promote and support
work may also alter the child's well-being in other ways. For example,
they may increase tension or stress in the adult's life because of the
need to balance work with home and child care responsibilities. In
addition, requiring mothers to work reduces their time to nurture
children and requires them to find other caregivers. Some critics
maintained that TANF time limits and mandatory work requirements could
result in harmful outcomes for children.
Evaluations of mandatory welfare-to-work programs report few
impacts on child outcomes, with the bulk of this research focused on
elementary school-aged children. The few impacts have been small, and
have been both positive and negative. Parents in mandatory work
programs that also include financial work incentives report
improvements in school achievement among elementary school-aged
children, but these children appear to remain at risk given their high
levels of disadvantage. At the same time, parents in a time-limited
welfare-to-work program in Florida also reported a decrease in school
achievement among adolescents. Additional research on the impact on
child well-being is forthcoming.
While evaluations discussed in this review are of programs that
preceded the 1996 law, some of the findings have application to TANF
programs as many states have included similar policy initiatives in
their state TANF programs. However, it is important to point out that
these programs do not encompass all the initiatives undertaken by the
states in their TANF programs. Additionally, while some individuals
have reached state-imposed time limits in these programs, families will
not begin reaching the 5-year lifetime limit on federal TANF assistance
until the fall of 2001. Evaluations of shorter, state-imposed time
limits thus far provide little evidence that time limits had led
recipients to leave the rolls early or that recipients have seen a
decrease in income after reaching the time limit, when compared to
welfare recipients who were not subject to time limits. However,
results thus far are from programs that include both time limits on
assistance and financial incentives to work, policies that may have
offsetting effects. The time limit may induce some persons to leave
welfare quickly and ``bank'' welfare months for later use in time of
need (although research has not found this effect), but generous
earnings disregards are an incentive to remain on welfare while
working.
MONITORING FORMER WELFARE RECIPIENTS (THE ``LEAVERS'')
Recently, there has been considerable interest in the circumstances
of those who have left welfare, commonly referred to as welfare
``leavers.'' The large decline in the welfare caseload that has
occurred since 1994 has been welfare reform's biggest surprise. States
have initiated and completed studies of welfare leavers to better
understand how those who exit welfare are faring. These leaver studies
have used administrative data or survey data (and in some instances,
both types of data), and the results differ by the type of data used.
The studies also illustrate the difficulty in finding individuals once
they leave welfare. The results presented here are an update to the
work completed in the House Committee on Ways and Means 2000 Green Book
and provide an overview of results from studies of those who have left
welfare in 38 states and the District of Columbia.
Among those who leave welfare, the majority attribute
their exit to employment and are employed for a period of time,
although the data suggests that some employment is not continuous.
Based on wages alone, many former welfare recipients remain poor and
continue to receive Medicaid and food stamps, although participation
rates in these programs have also fallen as the welfare caseload has
declined. Among those who have returned to welfare, loss of employment
is the most common reason.
The majority of those who leave welfare attribute their exit to
employment, as was the case under AFDC. Thus far, a relatively small
share of the national caseload has been removed from the rolls because
of time limits or reported as sanctioned off the rolls. Compared to
those who left welfare for other reasons, individuals whose benefits
were cut off by a state-imposed time limit do not appear to face
increased difficulties or hardships.
Employment rates vary considerably, but the majority of studies
report employment rates between 55% and 64% within three months of exit
or at the time of the survey. However, the percent of leavers never
employed since their exit is much higher (between 63% and 91% of
respondents) and indicates that a number of leavers are not
continuously employed. The average hourly wage reported among welfare
leavers ranged from $5.50 to $8.80 per hour. Among those who leave
welfare and are not employed, the two most common barriers to
employment or reasons for unemployment are health, physical or mental
illness, or the inability to find a job.
Although the majority of welfare leavers are employed, based on
wages alone, welfare leavers in a number of states remain poor. For
example, a Missouri leaver study reported that 2 years after exit, 63%
of single mothers with children under the age of 18 were below poverty,
and 92% were at or below 185% of the federal poverty level. The leaver
studies illustrate that between 58% and 87% of families had at least
one member, either an adult or child, receiving Medicaid since exit or
at the time of the survey. When examined separately, the rates of
participation in Medicaid are higher for children than adults, and
adults are more likely to be uninsured. The studies also report that
between 46% and 78% of leavers are participating in food stamps.
Reasons for not participating in Medicaid and food stamps among leavers
vary. Some welfare leavers did not think they were eligible for these
services, while others indicate that they did not need these services
or that it was too much hassle to receive them. Between 20% and 67% of
eligible welfare leavers were receiving child care subsidies, while a
number of respondents indicate no need for these subsidies. Child
support also appears to be an important source of income among welfare
leavers. While a large number of individuals are leaving welfare for
work, less than half of welfare leavers indicate that they have filed
for or received the Earned Income Tax Credit.
State leaver studies illustrate that less than half of leavers
appear to be experiencing hardships after exit from welfare. Whether
these problems have increased or decreased since exit varies by state
and by the outcome measured. A few states have reported increases in
instances where leavers experienced difficulties paying bills and/or
arranging housing since exit, while other states have reported
decreases in these hardship measures since exit. However, problems
acquiring medical care and, on occasion, food have increased among
leavers since cash welfare exit.
Employment is the reason the majority of recipients leave welfare,
and lack or loss of employment is the most common reason individuals
return to welfare. Among leavers who remained off welfare for at least
2 months, between 18% and 35% had returned for a period of time since
exit. Although lack of employment is the most common reason individuals
return to welfare, there is some evidence that those who leave for
income-related reasons are less likely to return than those who leave
welfare for failing to comply with program requirements.
Mr. Chairman, that concludes my formal statement. I'd be happy to
answer any questions that Members of the Subcommittee may have. Thank
you.
Chairman Herger. Thank you, Miss Devere and Miss Fagnoni.
We will recess for the vote and come back immediately after
voting and continue with questions. Thank you.
[Recess.]
Chairman Herger. If we could have our witnesses again,
please, we will return for questions. Thank you.
Miss Fagnoni, our hearing today is on research on the
effects of welfare reform, and we have seen some very dramatic,
I think, positives. Caseloads are down by more than 50 percent;
work by current and former welfare recipients is higher than
ever before; and at the same time, child poverty is down
significantly. More than two million children have been lifted
out of poverty since the law passed, which is certainly not
what some felt might be the case before, so that is very
positive. These changes are without precedent, I believe, in
the history of welfare reform, which dates back many decades.
But I know there is much left to be done.
Would you agree that the '96 welfare reform law, in
general, so far has been a success on these counts, and maybe
some further thoughts in some areas that we might be
concentrating on as we go into the reauthorization for next
year.
Ms. Fagnoni. Certainly, Mr. Chairman, there is an agreement
on the facts you have stated, that there has been a dramatic
decline in the welfare caseload, much more dramatic than I
think either opponents or proponents might have predicted. As
our research and others has borne out, those who have left
welfare have an attachment to the workforce, not always a
consistent one, but a start at working. So there have certainly
been changes that are consistent with the goals of welfare
reform legislation, particularly as they relate to moving from
welfare to work.
Two areas that we and others have identified as ones that
will need continued attention as welfare reform evolves have to
do with, helping those people who move from welfare to work
stay in the workforce and, while they're in the workforce,
enhance their ability to increase earnings as most of them do
enter into low-paying jobs. We also need to pay more attention
to people who remain on welfare and try to understand what
States need to do to help make sure that those welfare
recipients are employable, particularly as the Federal time
limits start to come into play this fall.
So I think those areas, the whole area of work-based
strategies, both for those who have left welfare as well as
those who remain, need continued attention and focus on
specific strategies that might help people move forward from
here.
Chairman Herger. Thank you.
Miss Devere, would you have any comments on this?
Ms. Devere. I would concur with everything Miss Fagnoni has
said about those who leave, in terms of their employment, in
terms that they appear to have attachment to the workforce. I
would also probably add that, with the impact evaluations,
where we have looked at the policies designed to promote work,
they have shown an increase in earnings and employment. So in
terms of promoting work among welfare recipients as the stated
goal of TANF, these policies appear to be successful in doing
that.
Chairman Herger. Thank you.
Again, Ms. Fagnoni, in your testimony you mentioned that a
majority of TANF recipients in 1999 were not working, and that,
of course, is after a steep decline in the caseload during
which many of the former recipients went to work, while others
never came on to the rolls and instead supported themselves and
their families.
It is useful to note that the percentage of working welfare
recipients rose from 17 to 25 percent between 1997 and 1999, so
the trend is in the right direction. But still, some have
expressed concern that this 25 percent figure seems low. So I
would like to get a little context for that number.
First of all, how does this compare with the percentage of
AFDC and TANF recipients who worked prior to welfare reform,
say, in 1994 and 1995?
Ms. Fagnoni. As you correctly point out, the numbers of
people who are receiving TANF and in unsubsidized work has
increased, and prior work on AFDC indicated that at any point
in time a very small percentage of AFDC recipients were
combining welfare with unsubsidized work, and as you also point
out, part of what has happened is the caseloads have declined
and part of that is people moving from welfare to work.
But at the same time, one of the reasons we were asked to
look at what we know about people who remain on TANF, is to
recognize or understand, what might be some specific issues
that we have to pay attention to as we get closer to the
Federal time limits. So I do think we have seen a trend moving
upward, not just in terms of people combining welfare with
unsubsidized work, but also with States efforts to ensure that
people are in some kind of work activity, even when they are
not employed. I think this is also something that States are
paying increasing attention to, to make sure that people
currently on TANF are receiving the kinds of work activities
they need to help them become employed.
Chairman Herger. Thank you.
Would the gentleman from Texas wish to inquire?
Mr. Doggett. Very much, Mr. Chairman.
Texas, my home State, is one of those that benefits from
the supplemental grant program under TANF. I'm just wondering
what impact you found--I missed the first part of your
testimony--that has had in the States that receive it.
Ms. Devere. In terms of the evaluations, they haven't
specifically looked at the impact of a supplemental grant, what
they have done or what we know. There is a CRS report on this
topic that I would be happy to pass along to you, that
supplemental grants have increased the average rate of payment
in these States, for those families that may have received
lower payments under TANF. So they were designed to increase
the rate of payment to the individuals in these States, and
they have accomplished that.
In terms of what impact they have had, I don't know that we
have any specific evidence that would relate specifically to
the supplemental grants.
Mr. Doggett. What portion of the TANF funds are being spent
to promote employment?
Ms. Fagnoni. I don't think we really have aggregate figures
on that. We do have some specific information that tells us
that States are spending a smaller percentage of their TANF
funds on direct cash assistance to individuals and a greater
percentage of those funds on supportive services, such as child
care, transportation subsidies, other kinds of services that an
individual might need.
Mr. Doggett. What impact have income supports, like child
care and food stamps, had on encouraging people to move from
welfare to work?
Ms. Fagnoni. I think there's pretty widespread agreement
that, particularly those supportive services that are most
closely linked to helping somebody move into the workplace--
particularly in most cases these are mothers with children,
often young children--that the child care subsidy is important
for those who choose to use it, and transportation--not just
subsidies, but also arrangements to help people with their
transportation needs--are very important.
Mr. Doggett. We've had a pretty big backlog in the area
that I represent, with almost as many people on the waiting
list for getting subsidized child care as receiving it. Does
the lack of access to affordable child care remain a barrier to
people moving from welfare to work?
Ms. Fagnoni. We just issued a report where we looked at the
States' child care funding. What we found was that States have,
in fact, increased their funding for child care, both through
TANF funds as well as their own State funds. But at the same
time, States have set priorities in terms of who they will
serve through those child care subsidies.
What States told us was that they are able to meet the
needs of the people for whom they have set the higher
priorities, and those tend to be women receiving TANF, but they
are more concerned that they may not be able to meet the needs
of all those who are eligible for child care subsidies,
including those who may not be receiving TANF but are still low
income mothers in the work force.
I will say, too, that it's very difficult to really know
what the demand for child care is that may be unmet, because
not all States keep waiting lists. I know Texas does, but other
States don't. So it is not easy to get a handle on what might
or might not be unmet needs.
Not all mothers who need child care rely on subsidies. They
may rely on more informal kinds of arrangements that don't
require subsidies.
Mr. Doggett. Thank you very much.
Chairman Herger. Thank you.
Would the gentleman from Michigan, Mr. Camp, like to
inquire?
Mr. Camp. Thank you, Mr. Chairman, and thank you both for
testifying today.
I just wanted to highlight something that I keep hearing a
lot about. Sometimes we have to clear away some of the
misunderstandings because people use information in different
ways. But I just think it is significant that child poverty has
fallen as a result of welfare reform, and that we had a lot who
predicted that one million children would be cast into poverty
as a result of the reform legislation that we passed. What we
have really found is that more than two million children have
been lifted out of poverty since 1996.
I think what happens is that some organizations use
statistics that do not include the government benefit levels
that families receive or that children receive to skew these
numbers.
Could both of you comment on that, on the decline? I think
that's probably----
Ms. Devere. Do you mean in terms of calculating income
that's available to these children in relation to the poverty
rate?
Mr. Camp. Yeah. If you could tell us how much percentage
the rate has fallen, you know, some of the statistics behind
this. For example, I understand it's the lowest level since
1979.
Ms. Devere. Right. In 1996, the poverty rate among all
children in families was 19.8 percent, and it fell to 16.3
percent as 1999. Among children in female-headed households,
the rate was 49 percent in 1996, and it fell to 42 percent in
1999. So it has fallen since the enactment of the welfare
reform law.
Mr. Camp. What do you attribute that to, outside the scope
of----
Ms. Fagnoni. It's not something we have----
Mr. Camp. You have not studied or analyzed?
Ms. Devere. Right. It would be purely speculation.
Mr. Camp. OK. Thank you.
Thank you, Mr. Chairman.
Chairman Herger. Thank you.
Our Ranking Member, Mr. Cardin.
Mr. Cardin. Thank you, Mr. Chairman. Let me thank both of
our witnesses, not only for their testimony but for the
continued help of both of your agencies in the work of our
Committee. We very much appreciate that.
Ms. Fagnoni. Thank you.
Mr. Cardin. It seems to me, as I listen to your testimony,
we have some inconsistencies in the current law; that is, Miss
Devere, you were indicating that families do much better and
they can't get out of poverty unless there is some supplemental
income or incentives--I think you said cash incentives--and
that vocational training helps a person succeed more in the
workplace.
Yet, if I understand the current restrictions in TANF, if a
State wants to provide direct supplemental help, the clock
continues to run. So there is a direct disincentive for a
State, even though we claim to give them maximum flexibility,
there is a direct disincentive for a State to provide cash
incentives for people that are working.
The second point is, vocational training is not considered
an acceptable work activity, so we are again making it
difficult for people to get training that they need. Am I
correct in interpreting your testimony, that in both of those
cases, if we want people to be out of poverty, they need one or
two of those combinations?
Ms. Devere. In terms of what the evaluations have shown
us--when I speak of the cash incentives, what I'm speaking of
are what are also referred to as earnings disregards in the
States, where they disregard a portion of income among those
receiving welfare, to allow them to continue to work at a
higher wage and continue to receive welfare.
Mr. Cardin. Cash assistance.
Ms. Devere. Yes. Exactly, cash assistance. That's what I--
--
Mr. Cardin. Doesn't the 5-year clock run?
Ms. Devere. In terms of Federal TANF funds, yes, it
continues to run. If the State wants to stop the clock--and
there are some States that have stopped the clock, in terms of
continuing to provide assistance----
Mr. Cardin. They use 100 percent State money.
Ms. Devere. They have to use 100 percent State money.
Mr. Cardin. Maryland is one of those States that's looking
at using 100 percent State money. But it seems like you're
really putting a burden on the individual and on the system, if
you believe that cash incentives are appropriate for people who
are working so that they can make it. But some States are doing
it by using the clock or using their own dollars.
Ms. Devere. Yes.
Mr. Cardin. Now, if I understand, when you took a snapshot,
there was 64 percent of the people that were in the workplace
that had left welfare.
Ms. Devere. Yes.
Mr. Cardin. I'm curious as to where the other 36 percent
are. I am also curious as to--You have also indicated that the
average income is between $9,500 and $15,000, I believe.
Ms. Devere. Yes.
Mr. Cardin. Which is below the poverty level for most who
are receiving it. Do we have any indication of how many are
succeeding to move up the economic ladder that are currently in
the workforce? Do we have any information on that? Either
people who are not working, where are they, and what happened
to them? Either one.
Ms. Devere. Among those not working, we have very little
information on the population of people who have left TANF and
are not working. What we do know is that they tend to be in
families where there is income of others that they rely on. So
they tend to perhaps be living with a boy friend or with other
family members and relying on that income.
In terms of what they're doing, we don't have other
information with regards to that.
Ms. Fagnoni. The other thing about that measure is, at a
given point in time, a survey will ask at a given point in
time, ``are you working?'' They will get one statistic. But if
they ask another question, which is, ``have you ever worked
since you left TANF'', let's say, or ``worked within the past
12 months'', the percentages will be a little higher. So what
it shows is a picture of people who have worked at some point
after they left welfare but not necessarily continuously.
Mr. Cardin. Do you have any information about the
promotional ability of people who have left welfare, that are
in the workplace, whether they have been able to move up the
employment ladder, the economic ladder? Do we have any
information on that?
Ms. Fagnoni. I think you cited some that suggested a little
bit of earnings increase; is that correct?
Ms. Devere. In my testimony, as far as wage progression, we
actually don't have any information from the current leaver
studies. The Department of Health and Human Services is
currently doing an evaluation of employment retention and
advancement strategies in a number of sites, to get at this
exact question of what is the wage progression, but we
currently don't have a lot of information.
Mr. Cardin. Lastly, do we have any information about those
States that have provided post-employment services, where there
has been greater success with people in the workplace staying
in the workplace and progressing in the workplace?
Ms. Fagnoni. We have some anecdotal information from our
site visits. We have some specific examples--and I cited one
from Grand Rapids, where they have placed case workers with the
employees, trying to work with them once they've moved into the
workforce. What they have shown is actually a retention rate
higher than those people who work at that same company who were
not on welfare. In other words, when you compare them to other
workers, that kind of assistance--case management-seems to be
helping keep people in the workforce; case management could
involve giving a worker some assistance if they have a problem
that might prevent them from coming to work. But that's pretty
anecdotal at this point.
But like I said, there are some examples from site visits
that suggest there are some strategies that help keep people in
the work force.
Mr. Cardin. Mr. Chairman, I guess the bottom line is that
we really don't have hardcore data. We just know--the gut view
is that it helps--but we don't have anything that would
empirically show----
Ms. Fagnoni. Not that it tells us on a broader basis,
right.
Mr. Cardin. Thank you.
Chairman Herger. Thank you very much.
I was just looking at the testimony of one of our next
witnesses, Mr. Greenberg, and if I can just quote from that, he
mentions the Institute for Research on Poverty's tracking,
where they did some tracking in Wisconsin. Of the families
there that left welfare in 1995, it says the median earnings in
1998 were $8,608 the first year, and then it went up to $9,627
in the second year, and then up to $10,924 in the third year,
which was an increase of at first 12 percent, and then 13
percent. So evidently, in at least one study we know that
earnings went up--and I'm sure we can get into that with our
next witnesses.
The gentleman from Pennsylvania, Mr. English. Do you have
any questions?
Mr. English. Thank you, Mr. Chairman. I appreciate the
opportunity to inquire.
Ms. Fagnoni, it's great to have you back before the panel.
You state in your testimony that while many recipients have one
or more characteristics that are considered barriers to work,
like, for example, substance abuse, poor health, low basic
skills, many, in fact, do find jobs. This was a very important
part of our debate when we were originally passing TANF.
Is there now any evidence from some States that, with the
right supports, most people are able to find work and should be
able to find work?
Ms. Fagnoni. I think what we see right now, based on our
most recent study--we have a report that will be issued within
the next month--we find that States are focusing on the people
who remain on TANF. States are trying to develop some
strategies to help those who remain on the TANF move into the
work force particularly where they have determined that they
failed to get a job initially. I think at this point it's too
early for us to be definitive about which strategies work. But
certainly States are in the process of working through that.
Mr. English. But there seems to be a fair amount of
evidence, though, that some of the State strategies clearly are
overcoming these barriers; isn't that fair to say?
Ms. Fagnoni. What people told us was that it's not so much
a particular, say, barrier or problem that an individual has,
but, rather, what kind of support structure that individual
might have in place to help them overcome that barrier.
For example, two women may have some of the same problems,
with one having more of a support structure, both at home, and
perhaps with some help from case workers. The one with more of
a support structure might be able to make that transition from
welfare to work, while somebody else might not. So I think it's
correct that supports can make a difference.
I think what we don't know is how many people who remain on
welfare really can----
Mr. English. Looking at it from a different perspective,
have you done any assessments, or have there been assessments
done of how many parents, who never went on welfare, have faced
such hurdles and remained actively engaged in the work force on
a year-to-year basis?
For example, we know there are millions of workers with low
basic skills, who work and don't draw welfare. Can we draw any
conclusions from that?
Ms. Fagnoni. Let me say two things. First of all, I don't
think there's been any study that's tried to get at the array
of issues that people face, that include types of problems that
are more difficult to document, such as substance abuse and
domestic violence.
But I do think, if one looks at some of the characteristics
of people that are more easily measured--such as not having a
high school diploma or not having any prior work experience--
that these are challenges for people, whether or not they are
receiving TANF. It is also a challenge if they are a single
parent trying to raise a child.
Quite frankly, a number of the women receiving TANF are
individuals who, at some point, may very well have not been
receiving TANF and working at low-income jobs. So I think what
you have is a population that faces challenges. Certainly you
have variations and patterns in terms of who can work and who
hasn't been able to work. But I think people are sort of
pushing at this notion that, even with some challenges, with
the right kind of supports they can work. People with low
skills are vulnerable.
Mr. English. Let me bring out a specific example. Under the
Thompson administration, Wisconsin cut its caseload by roughly
90 percent. Certainly many of those parents faced these same
sorts of hurdles, as we see among current recipients in the
studies you cite.
I'm wondering, is Wisconsin an anomaly? What did Wisconsin
do to make sure they were able to go to work, and are other
States capable of replicating this record?
Ms. Fagnoni. Wisconsin certainly is an example where they
were one of the early leaders in terms of revamping their
welfare system. They gave strong signals to welfare recipients
and those applying for welfare, that they expected people to
first look for a job, with their assistance. They actually
merged their human services and their work force departments to
send that signal.
In Wisconsin, when one goes to apply for welfare benefits,
one goes to a work force office, where they can get a whole
range of services that are related to jobs. But Wisconsin has
also increased funding on child care, on transportation
subsidies. They have their own State earned income tax. So what
they have done is a combination of more stringent requirements,
sanctions if the requirements aren't met, but also a more
generous set of supports to help move people from welfare to
work.
Mr. English. Thank you for your testimony. Thank you, Mr.
Chairman.
Chairman Herger. Thank you.
Mr. Levin from Michigan.
Mr. Levin. Thank you. I'm sorry I missed your testimony. I
am glad to join you, Mr. Chairman, and Mr. Cardin and Mr.
English.
If I might, let me ask a few questions that I have, and
find out if they have been covered already. I don't think so.
Number one, does your study estimate the number of people
who have moved from welfare to work who remain under the
poverty level?
Ms. Devere. There are a number of studies that have done
that. For example, there is a study in Missouri of people who
have left welfare, and 24 months after exit, 63 percent of
single mothers with children under the age of 18 were in
poverty. That's just an example. The States all do it very
differently, and they include different measures. But the study
in Missouri included a measure of total income to try to come
up with that number.
Mr. Levin. OK. I take it that that should give us some
pause and indicate the work ahead, that there has been
substantial progress in people moving from welfare to work and
less progress in their moving out of poverty, if the Missouri
study is any indicator.
By the way, we're not gathering that data on a rigorous,
systematic basis, State by State? We don't require States to do
that, do we?
Ms. Devere. Not on a rigorous, State-by-State basis. The
State leaver studies primarily, to date, have been initiated by
the States. There is a small core of these that have been
funded by the Department of Health and Human Services. But the
States have been doing them on their own and, therefore, they
have been exploring questions that relate specifically to the
State policies. So whether or not they ask the mother to report
income in order to calculate how it compares to a poverty level
differs and varies among the studies.
Mr. Levin. Mr. Chairman, I would hope we would look at the
whole issue of whether we're collecting adequate data to know
what is really happening in the lives of people. Though, again,
there has been substantial success and people moving into the
work structure.
Secondly, data on health care coverage for those who have
moved from welfare to work, I have seen some from Michigan and
some from other States. Have you already covered that?
Ms. Devere. I haven't covered it. It's in my written
testimony. The percentages that I report in my written
testimony shows that, among those who have left welfare, when
they're asked this question, the range is from 58 percent to
about 87 percent of someone in the family receiving Medicaid.
It is far more likely that an adult would be uninsured when
they leave welfare than it would be for a child. But it varies,
generally, though, indicating that at least half are receiving
Medicaid, or someone in their family is receiving Medicaid at
the time of the study.
Mr. Levin. But that would mean a substantial number, mostly
women, who are moving from welfare to work, especially after
the year in which the transition to Medicaid is supposed to be
in effect, that a substantial number of people who have moved
from welfare to work no longer have health care?
Ms. Devere. They may no longer have health care through
Medicaid. There is a small percentage who are receiving
employer-provided health insurance. Again, it's a very small
percentage.
There is evidence that there's a percentage of those who
have left welfare for work who do not have health insurance.
Mr. Levin. Again, we don't require the States to gather
that data on a systematic basis. I don't think we do.
Ms. Devere. I don't know that information.
Mr. Levin. One last question so we can go on.
I understand that there has been some discussion about the
number of people who remain on TANF and how many of them have
health problems. Is there any evidence as to how many of them
have problems with mental health?
Ms. Fagnoni. There have been some specific studies that
have tried to take a look at that. We don't have anything at a
national level.
Actually, one of the most comprehensive studies comes out
of your State. The University of Michigan has some researchers
who have done very in-depth studies, looking at a range of
disabilities. I think the ranges are anywhere from about--I
think they hover around 60 percent, in terms of one or more
difficulties. I think mental health is an area where there are
problems. It's very difficult to measure. They have developed a
strategy, an assessment tool, to try to help them measure that.
It's probably one of the better sources of information on that.
Mr. Levin. Mr. Chairman, for those who remain on TANF, a
very substantial number, according to that study, anyway, have
some serious--I'm not sure the word ``serious'' was used--have
some substantial health problems. Again, I think that points to
the challenge ahead.
Thank you very much.
Chairman Herger. I want to thank our panelists for your
great testimony.
Ms. Devere. Thank you.
Ms. Fagnoni. Thank you.
[Questions submitted from Chairman Herger to the panel, and
their responses follow:]
U.S. General Accounting Office
Washington, DC 20548
1. It is useful to note that the percentage of working welfare
recipients rose from 17 percent to 25 percent between 1997 and 1999, so
the trend is in the right direction. Still, some have expressed concern
that this 25 percent figure seems low. So I'd like to get a little
context for that number:
A. How does this compare with the percentage of AFDC/TANF
recipients who worked prior to welfare reform, say in 1994 or 1995?
In fiscal year 1995, 8.8 percent of AFDC mothers held part-time or
full-time jobs in an average month, based on data from HHS'
Characteristics and Financial Circumstances of AFDC Recipients, 1996.
Our analysis of HHS data on TANF showed that 17 percent of adult
recipients were engaged in unsubsidized employment in 1997 and 25
percent in 1999. While the data sources and employment measures for the
AFDC and TANF data are somewhat different, it appears that more welfare
recipients than previously are combining welfare and work.
B. How many current recipients were working, but perhaps not enough
hours to satisfy the Federal definition of ``work'' (which is 30 hours
per week)?
As noted above, in fiscal year 1999 about 25 percent of adult TANF
recipients were in unsubsidized employment in an average month.
However, many more recipients--a total of 885,466 adults or 42 percent
of all adults receiving TANF assistance--were participating in
unsubsidized employment or some other PRWORA-specified work activities
for an average of 27.5 hours per week during this time. Information is
not currently available from HHS on TANF recipients whose average
weekly hours of participation in PRWORA-specified activities did not
reach 25 hours per week, which was the minimum weekly average required
in fiscal year 1999. This rose to 30 hours per week for fiscal year
2000.
C. How many were participating in other activities to prepare them
for work, but which do not satisfy the definition of ``work
activities'' in the law?
As allowed under TANF, state TANF programs may include work
activities beyond those specified in PRWORA as counting for the
purposes of calculating Federal participation requirements. According
to the Congressional Research Service in Welfare Reform: Work
Activities and Sanctions in State TANF Programs, Nov. 2000, most states
provide activities in addition to those federally-specified. These
activities range from postsecondary education to rehabilitative
services to substance abuse and mental health treatment. However, HHS
does not require states to report on the participation in these
activities.
D. Isn't there recent data from the Urban Institute's National
Survey of America's Families that show the numbers of people working
while receiving TANF continues to increase?
The Urban Institute's National Survey of America's Families (NSAF)
shows that there was a statistically significant increase in the
percentage of TANF recipients who were working from 1997 to 1999--from
22 percent in 1997 to 32 percent in 1999. The 1999 NSAF data show that
an additional 25 percent of TANF recipients were looking for work and
another 9 percent were in school. This leaves 33 percent who were
identified as having no activity--a statistically significant decrease
from the 43 percent with no activity in 1997. See How Well Does TANF
Fit the Needs of the Most Disadvantaged Families?, Dec. 2000, a report
by Sheila Zedlewski and Pamela Loprest of the Urban Institute.
2. Please describe the range of benefits and work supports outside
of TANF that help recipients find and keep jobs. I'm thinking here of
Federal and state programs like food stamps, Medicaid and other health
coverage, housing, job training and education, child care, child
support, transportation, and cash supplements like the EIC.
In our welfare-related work, we reported that frontline TANF
workers are drawing on other non-TANF Federal and state programs as
state welfare agencies focus on moving needy families toward economic
independence.\1\ These programs, often administered by separate
agencies, provide a wide array of services ranging from those designed
to meet families' basic needs for food and shelter to those that
provide employment and training services and support services, such as
subsidies for child care. While local welfare agencies typically
administer eligibility determination for TANF, food stamps, and
Medicaid, other programs that provide key services to TANF clients may
be administered by separate entities, such as housing authorities or
education agencies. In addition to TANF, the following programs, among
others, can be important in helping low-income adults with children
find and keep jobs:
---------------------------------------------------------------------------
\1\ See Welfare Reform: Improving State Automated Systems Requires
Coordinated Federal Effort (GAO/HEHS-00-48), April 27, 2000.
---------------------------------------------------------------------------
Food Stamps
Medicaid
Child Support Enforcement
Child Care Subsidies
Housing Subsidies
Welfare-to-Work Grant
Workforce Investment Act programs, including employment
services
Earned Income Credit (EIC)
Welfare agencies have increased their focus on employment, bringing
the welfare system and the work force development system closer
together. We reported in Work force Investment Act: Implementation
Status and the Integration of TANF Services (GAO/T-HEHS-00-145 mo.
YEAR, Jun. 2000), that with the passage of the Work force Investment
Act (WIA) in 1998, states and localities are now required to use one-
stop centers to provide most Federally funded employment and training
services. These one-stop centers provide at least 17 major education
and employment and training programs either on-site, through electronic
linkages with partner agencies, or by referral. While services funded
by TANF are not a mandatory part of this one-stop center system, a
majority of states reported at least some relationship between the one-
stop centers and TANF at either the state or local level.
A. Approximately how much do Federal and State taxpayers spend on
these programs? How does that compare with spending prior to welfare
reform?
The Congressional Research Service (CRS) reported that, in fiscal
year 1998, Federal and state governments spent almost $392 billion on
approximately 80 income-tested programs that provide a range of
services and programs to low-income individuals.\2\ These programs'
expenditures are broader than what is actually spent on helping low-
income families move from welfare to work; for example, a substantial
portion of spending on Medicaid is for the elderly and disabled, as
opposed to cash welfare recipients trying to become self-sufficient.
CRS found that in FY1998, medical services represented 50 percent of
total income-tested spending; cash benefits, 24 percent; food and
housing benefits, 17 percent. Services, energy aid, education, and
jobs/training accounted for the remainder. Table I provides an overview
of spending on the larger income-tested programs.
---------------------------------------------------------------------------
\2\ See Vee Burke. Cash and Noncash Benefits for Persons With
Limited Income: Eligibility Rules, Recipient and Expenditure Data,
FY1996-FY1998. Congressional Research Service: Washington D.C.,
December 15, 1999.
TABLE I. PROGRAMS WITH BILLION-DOLLAR TOTAL EXPENDITURES, FY1998
[$ in billions]
----------------------------------------------------------------------------------------------------------------
Program Federal State/local Total
----------------------------------------------------------------------------------------------------------------
1. Medicaid........................................................ $100.177 $77.187 $177.364
2. SSI............................................................. 29.656 3.945 33.601
3. Earned Income Tax Credit (refund)............................... 25.3 0 25.3
4. Food stamps..................................................... 20.397 1.987 22.384
5. TANF \1\........................................................ 11.286 10.227 21.513
6. Section 8 low-income housing assistance......................... 16.114 0 16.114
7. Medical care for veterans (no service-connected disability)..... 9.603 0 9.603
8. Federal Pell grants............................................. 6.274 0 6.274
9. Foster care..................................................... 3.73 3.303 7.033
10. Title XX social services....................................... 2.299 \2\ 3.586 5.885
11. Head Start..................................................... 4.347 1.087 5.434
12. School lunch (free/reduced price).............................. 5.196 ............. 5.196
13. General assistance (medical component)......................... 0 \2\ 4.956 4.956
14. Child care and development block grant......................... 3.123 1.567 4.69
15. HOME (Home investment partnerships)............................ 1.461 2.601 4.062
16. Low-rent public housing........................................ 3.899 ............. 3.899
17. WIC............................................................ 3.896 0 3.896
18. Rural housing loans (Section 502).............................. 3.830 0 3.83
19. Subsidized Federal Stafford and Stafford/Ford loans............ 3.77 0 3.77
20. Veterans' pensions............................................. 3.071 0 3.071
21. General assistance (cash and nonmedical)....................... 0 \2\ 2.625 2.625
22. Indian health services......................................... 2.099 0 2.099
23. Child and adult care food program.............................. 1.404 ............. 1.404
24. Adoption assistance............................................ 0.695 0.59 1.285
25. School breakfast (free/reduced-price).......................... 1.266 ............. 1.266
26. Job Corps...................................................... 1.246 0 1.246
27. LIHEAP (home energy assistance)................................ 1.132 0 1.132
28. Maternal and child health services block grant................. 0.678 .424 1.102
--------------------------------------------
Program total.................................................. 265.949 114.085 380.034
----------------------------------------------------------------------------------------------------------------
\1\ The TANF block grant replaced AFDC, effective July 1, 1997 at latest (P.L. 104-193).
\2\ Estimate.
Source: Vee Burke. Cash and Noncash Benefits for Persons With Limited Income: Eligibility Rules, Recipient and
Expenditure Data, FY1996-FY1998. Congressional Research Service: Washington D.C., December 15, 1999.
Total spending on income-tested benefits has remained fairly
constant from 1995 to 1998; Medicaid and education benefits increased
slightly, while there were more significant decreases in jobs and
training programs, energy aid, and food stamps (See Table II). State
declines in spending on cash aid were approximately 18 percent, but
total spending on cash aid decreased only slightly (3 percent). As a
part of cash aid, the Earned Income Credit (EIC) increased 23
percent.\3\
---------------------------------------------------------------------------
\3\ The difference in EIC spending is based on a comparison 1996
and 1998 spending levels.
TABLE II. FEDERAL AND STATE/LOCAL SPENDING FOR INCOME-TESTED BENEFITS BY FORM OF BENEFIT: COMPARISON 1995 TO
1998 SPENDING
[Millions of constant FY1998 dollars]
----------------------------------------------------------------------------------------------------------------
1995 1998
Fiscal year program Federal state/ Total Federal state/ Total
local local
----------------------------------------------------------------------------------------------------------------
Medical Benefits.............................. 108489 78327 186816 113779 82610 196389
Cash Aid...................................... 72662 25327 97989 73872 20690 94562
Food Benefits................................. 39365 1958 41323 33451 2060 35511
Housing Benefits.............................. 26689 2487 29176 26897 2614 29511
Education Benefits............................ 16193 1022 17215 16989 1137 18126
Jobs/Training................................. 4949 868 5817 3785 71 3856
Services...................................... 6431 5688 12119 7300 5153 12453
Energy Aid.................................... 1713 87 1800 1257 64 1321
-----------------------------------------------------------------
Total..................................... 276491 115764 392255 277330 114399 391729
----------------------------------------------------------------------------------------------------------------
Source: Vee Burke. Cash and Noncash Benefits for Persons With Limited Income: Eligibility Rules, Recipient and
Expenditure Data, FY1996-FY1998. Congressional Research Service: Washington D.C., December 15, 1999.
B. I know there is some concern about families receiving all the
benefits for which they might be eligible, like food stamps, to help
them work. What are States doing on that front? What more should be
done?
Our work on food stamps and Medicaid enrollment since welfare
reform sheds light on these issues. In Food Stamp Program: Various
Factors Have Led to Declining Participation (GAO/RCED-99-185, Jul.
1999), we reported that the number of people who received food stamp
benefits has declined each year from fiscal year 1994 to 1998, dropping
about 28 percent. Food stamp participation declined in each state,
ranging from about a 32-percent decline in Wisconsin to 6 percent in
Hawaii. We also found that the primary reasons for the declines in food
stamp participation include: the U.S. economy; tighter food stamp
eligibility requirements; and welfare reform initiatives. More
specifically, we reported that some households have had problems
obtaining food stamps because some state and local governments, as part
of their welfare reforms, have limited benefits beyond what the law
permits. For example, Michigan denied food stamp benefits to whole
households rather than to individual members of households when these
members had violated welfare requirements--a procedure that a Federal
court ruled was illegal. In addition, the United States Department of
Agriculture (USDA) found that many former welfare recipients do not
receive food stamp benefits because several state and local governments
have not publicized differences in the eligibility requirements for
welfare and food stamps. We recommended that the USDA's Food Stamp
Program work with states to address these issues; the USDA agreed to
publicize eligibility requirements for the Food Stamp Program and to
target issues associated with participants' access to food stamp
benefits.
In November 2000, USDA promulgated regulations that give states an
option to reduce periodic reporting requirements for food stamp
recipients with earnings. In our recent report Food Stamp Program:
States Seek to Reduce Payment Errors and Program Complexity (GAO/01-
272, Jan. 2001), we noted that while frequent reporting of income and
other information allows caseworkers to make appropriate adjustments to
benefit amounts, it can inhibit program participation because it
creates additional reporting burdens for food stamp recipients.
We reported on Medicaid enrollment and welfare reform in our 1999
report entitled Medicaid Enforcement: Amid Declines, State Efforts to
Ensure Coverage After Welfare Reform Vary (GAO/HEHS-99-163, Sept.
1999). Between 1995 and 1997, Medicaid enrollment declined nationwide
among the nonelderly and nondisabled adults and children by about 1.7
million. This decline has been attributed to strong state economies,
low unemployment rates, and new state welfare-to-work initiatives. We
also reported that while most states experienced declines in Medicaid
enrollment, enrollment increased in some states, in part as a result of
individual state program expansions. For example, shifts in individual
states' Medicaid enrollment for these adults and children during this
period ranged from a 19-percent decline in Wisconsin to a 26-percent
increase in Delaware. Moreover, these declines are generally less than
for welfare enrollments. The smaller declines in Medicaid enrollment
may be due to Federal eligibility protections built into welfare reform
and ongoing expansions of Medicaid coverage for low-income children
that predate welfare reform. One eligibility protection that predates
welfare reform--transitional Medicaid assistance--provides an
additional year of Medicaid coverage for individuals who lose Medicaid
eligibility as a result of employment or increased income. We reported
that in at least one state, only 1 in 25 eligible individuals
participated in the transitional program. Moreover, some states did not
even track the program's participation rates. In our research on
automated systems for welfare, local officials told us that automated
systems sometimes close Medicaid cases that should not be closed or
fail to correctly process cases for transitional Medicaid.\4\ As a
result, we recommended that the Health Care Financing Administration
(HCFA) provide states with guidance or other appropriate technical
assistance regarding best approaches for implementing transitional
Medicaid such that eligible beneficiaries could benefit from this
entitlement. Concurring with our recommendation, HCFA has taken steps
to work with each state to review and address states' eligibility and
enrollment policies.
\4\ See Welfare Reform: Improving State Automated Systems Requires
Coordinated Federal Effort (GAO/HEHS-00-48), April 27, 2000.
---------------------------------------------------------------------------
C. Have other benefits been conditioned on work like TANF? I know
this falls outside our jurisdiction, but should those other programs be
similarly conditioned on work?
Work requirements in the nation's key programs for families with
children evolved over time, reflecting demographic and labor force
changes. The Congress created the Aid to Dependent Children program in
1935, adding Federal support to state systems of pensions for widows
with children. As administered in subsequent years (when it became
known as Aid to Families With Dependent Children or AFDC), this program
became a major support for single parents, typically mothers, who
earned little income. Over time, as more women with children joined the
labor force, welfare recipients were expected to look for work. The
Congress first explicitly required mothers receiving AFDC benefits to
register for work and training in 1971. However, this requirement
exempted mothers with a child under age 6. When the Congress created a
new welfare-to-work program in 1988, it narrowed the exemption to
mothers with a child under age 3. Finally, when the Congress created
TANF in 1996, it did not exempt any adults from work requirements
although states may exempt a parent with a child under age 1. The 1996
welfare reform legislation generally conditioned the receipt of cash
benefits on work or work-related activities, such as unsubsidized
employed or subsidized employment, community service, on-the-job
training, and work experience, and other work-related activities.
The Food Stamp and public housing programs are also conditioned on
work. Food Stamp recipients who are also receiving TANF are not subject
to Food Stamp work rules. To receive food stamps, non-TANF unemployed
adults able to work who are not caring for a disabled dependent or a
child under age 6 must fulfill state-established employment
requirements, which can include working in exchange for the benefit
(workfare), training, job search, education, or other activities.
However, states may exempt any category of persons. While receipt of
section 8 low-income housing does not have a work requirement, low-rent
public housing programs require that residents must participate in an
economic self-sufficiency program or contribute 8 hours monthly of
community service unless they are engaged in education or a work-
related activity or are at least 62 years old.
In addition, two other major supports for low-income families--
child care subsidies provided through the Child Care and Development
Block Grant (CCDBG) administered by HHS and the Earned Income Credit--
are generally only available to people who are working or, in the case
of the CCDBG, working or preparing for work through training or study.
For more information on this topic, see Work Provisions in Programs for
Low-Income Families with Children, Congressional Research Service
Testimony Before the House Ways and Means Committee, April 3, 2001.
Several factors would need to be considered in assessing whether a
program should have work requirements, including the program's purpose
and target population, what is known about its effects on participants'
work efforts, an understanding of the infrastructure and capacity needs
associated with implementing and administering such a requirement, and
the costs and benefits of doing so.
Cynthia M. Fagnoni
Director
Library of Congress
Congressional Research Service
Washington, DC 20540-7740
This memorandum is in response to your follow-up questions to my
March 15, 2001 testimony before the Subcommittee on Human Resources.
Question 1. In your testimony, you point out that little is known
about what programs are effective in encouraging marriage. Are you
aware of any programs that have actually tried to address this problem
directly? Is it possible that research can't tell us much because too
few programs have been expressly directed at the problem?
Response. The Family Support Act (FSA) of 1988 authorized a set of
experiments that liberalized AFDC eligibility for two-parent
(unemployed) families by permitting them to work 100 or more hours
monthly without losing the status of being ``unemployed.'' The ``100-
hour'' rule was seen as a potential disincentive to marriage for low-
wage fathers with full-time jobs. By limiting other policy changes,
many hoped that the evaluations of the three approved state
demonstrations--in California, Utah, and Wisconsin--would provide
insight into the impact of changes to the 100-hour rule. Reports on
these demonstrations have been completed, but have not been
released.\5\ Outside these demonstrations, the bulk of research
completed since the FSA has focused on broader efforts to alter
welfare, especially by increasing work, and the impact of these efforts
on earnings and employment. Most states liberalized special two-parent
eligibility requirements in these programs, but this change was part of
a package of policy initiatives, which limits the ability to determine
the effect of one specific policy change. The impact of welfare reform
policy initiatives on marriage rates has received very little
attention.\6\
\5\ The Department of Health and Human Services (HHS) has indicated
that these reports are available upon request.
\6\ For additional information on welfare reform impact
evaluations, see CRS Report RL30724, Welfare Reform Research: What Have
We Learned Since the Family Support Act of 1988?, by Christine Devere,
Gene Falk, and Vee Burke.
---------------------------------------------------------------------------
Question 2. You mention that among those who left welfare because
of work and then later returned to welfare, loss of employment is the
most common reason for the return to welfare.
A. What are some of the most common reasons for the loss of
employment?
B. How many leave work voluntarily versus involuntarily?
C. Is it hard for such individuals to get back on welfare?
Response. Among the state studies that examine former welfare
recipients, information on reason for return to welfare is captured
through state surveys of individuals who have returned to welfare. Some
of the most common reasons given by these individuals for loss of
employment, including both voluntary and involuntary loss of
employment, are as follows:
In New Mexico, 24% of leavers returned to welfare because
they were laid off or fired. Other employment-related reasons for
welfare returns were: 10% could not find a job, 6% quit their job, 6%
experienced a decrease in hours worked or a decrease in their wages,
and 4% had a spouse who was fired or laid-off.\7\
---------------------------------------------------------------------------
\7\ Maximus. (2000). New Mexico TANF Longitudinal Study: Results of
the First-Year Follow-up Surveys. McLean, VA: Author.
---------------------------------------------------------------------------
Among leavers in Washington state, 25% returned to welfare
because they were laid off or fired, 12% returned because they quit
their job for health reasons, and 10% returned due to lost work
hours.\8\
---------------------------------------------------------------------------
\8\ Du, J., D. Fogarty, D. Hopps, and J. Hu, (2000). A Study of
Washington State TANF Leavers and TANF Recipients: Findings from the
April-June 1999 Telephone Survey Final Report. Olympia, WA: Department
of Social and Health Services (hereafter cited as ``Du et al.,
Washington Leaver Study'').
---------------------------------------------------------------------------
A study of Illinois leavers found that 24% reported that
they returned to welfare because they had no job or they couldn't find
a sufficient job; 19% had lost their job, were terminated, or were laid
off. The authors also report that 27% stated that they returned to
welfare because they were ``broke'' and needed money, and it is likely
that many of these individuals who returned to welfare had experienced
employment difficulties.\9\
---------------------------------------------------------------------------
\9\ Julnes, G., A. Halter, S. Anderson, L. Frost-Kumpf, R. Schuldt,
and F. Staskon, (2000). Illinois Study of Former TANF Clients: Final
Report. Springfield, IL: Illinois Department of Human Services
(hereafter cited as ``Julnes et al., Illinois Study of Former TANF
Clients'').
---------------------------------------------------------------------------
Among leavers in Virginia who had reapplied for welfare,
19% said that they were fired or laid off from their job, 9% quit their
job, 7% reported that there were no jobs available, 5% quit their job
because it did not pay enough, and 4% had their hours or pay
decreased.\10\
---------------------------------------------------------------------------
\10\ Kuhns, C., A. Gordon, R. Agodini, and R. Loeffler, (1999). The
Virginia Closed Case Study: Experiences of Virginia Families One Year
After Leaving Temporary Assistance for Needy Families. Richmond, VA:
Department of Social Services (hereafter cited as ``Kuhns et al.,
Virginia Leaver Study'').
---------------------------------------------------------------------------
In terms of whether or not it is hard for leavers to return to
welfare, this would vary by person and by state, depending on the
individual's history on welfare and variations in state policies such
as time limits and sanctions. However, the state leaver studies do not
capture persons who are experiencing difficulties returning to welfare.
They provide information only on reasons for welfare returns among
those who have already returned to welfare.
Question 3. You mention (page 6) that ``less than half of welfare
leavers indicate they have filed for or received the Earned Income Tax
Credit,'' an important benefit to help make work pay. Isn't it possible
that when asked this question the individual might not yet have filed
for the credit, which is normally done in tax season around April 15?
Could there be other reasons for confusion on this? Are states taking
any steps to ensure that leavers know about and file for earned income
credits?
Response. Information on take-up rates for the Earned Income Tax
Credit (EITC) are from surveys administered to welfare leavers. It is
possible that individuals may not realize at the time of the survey
that they are eligible to receive the EITC. The low participation rates
may also be a function of how the question is asked, as individuals may
simply not recognize what they have received as the EITC. Additionally,
a number of leavers in these survey studies indicate that they had
never heard of the EITC, ranging from 24% of leavers in Illinois to 47%
of leavers in three counties in California.\11\ In the three counties
in California, where 47% of the leaver sample indicated that they had
never heard of nor used the EITC, the study reported that 51% of the
single-parent families and 65% of two-parent families in the study
sample estimated to be eligible had never used the EITC.\12\
---------------------------------------------------------------------------
\11\ Julnes et al. Illinois Study of Former TANF Clients.
\12\ Moses, A., D. Mancuso, and C. Lieberman, (2000). Examining
Circumstances of Individuals and Families Who Leave TANF: Assessing the
Validity of Administrative Data. Belmont, CA: County of San Mateo Human
Services Agency. The counties included in the study are San Mateo,
Santa Clara and Santa Cruz.
---------------------------------------------------------------------------
While the state leaver studies report that between 27% and 47% of
former welfare recipients had never heard of the EITC, the Urban
Institute reported that only 17% of former recipients have never heard
of the EITC using data from the 1999 National Survey of America's
Families (NSAF). Compared to the state leaver studies, the NSAF also
illustrated higher receipt of the EITC among former recipients,
reporting that 65% of former welfare recipients in the NSAF had
received the EITC. The take-up rate is even higher when calculated
among those leavers who had ever heard of the EITC (79%).\13\
---------------------------------------------------------------------------
\13\ For more information, see Phillips, Katherin Ross. (2001). Who
knows about the Earned Income Tax Credit? Washington, DC: Urban
Institute.
---------------------------------------------------------------------------
The low take-up rates in the state leaver studies may also be a
function of the study sample, as the majority of state leaver studies
ask this question of all former welfare recipients, regardless of
employment status. A study in Colorado reported that among a subsample
of leavers who were employed at the time of the survey, 82% reported
claiming the EITC on their last federal income tax return.\14\ Among
individuals who are aware of the credit, reasons for not participating
vary. Among leavers in Arizona who were aware of the credit but not
receiving it, 45% reported that they did not believe they were eligible
for the credit, 29% said they did not apply, 2% said it was not worth
the effort, and others indicated that they were not sure why they had
not received the credit.\15\
---------------------------------------------------------------------------
\14\ London, R., and V. Valvano, (1999). Evaluation of the Colorado
Works Program: First Annual Report. Oakland, CA: Berkeley Planning
Associates.
\15\ Westra, K. and J. Routley, (2000). Arizona Cash Assistance
Exit Study: First Quarter 1998 Cohort Final Report. Phoeniz, AZ:
Department of Economic Security.
---------------------------------------------------------------------------
Question 4. In your discussion of former welfare recipients--the
leavers-- you note that the majority of welfare leavers are employed
and that, based on wages alone, welfare leavers in a number of states
remain poor.
A. Isn't everyone on welfare ``poor''? How many people who left
welfare had higher disposable incomes than when they were on the rolls?
B. How many are using other federal programs such as job training
and education, food stamps, housing assistance, Medicaid, the Earned
Income Credit, and child care? Do these benefits get counted in
determining who is poor?
C. How about state benefits, including state earned income credits
and other assistance? Are these counted?
Response. Financial eligibility rules for welfare recipients vary
among the states. Under TANF, states decide how much to aid a needy
family, although there are no Federal guidelines for determining
whether a family is financially needy and no requirement that states
aid all financially needy families. The states have differing resource
limits and income eligibility limits. Further, the states treat
earnings among recipients differently through disregards that allow
individuals to work and receive welfare at higher earnings. Attachment
1 shows the maximum monthly combined TANF and food stamp benefit for a
single parent with two children. The figure shows that in all states
combined monthly maximum TANF and food stamp benefits are below the
1999 federal poverty income threshold for such a family of $1,119 per
month.\16\
---------------------------------------------------------------------------
\16\ If the food stamp excess shelter deduction were used in the
calculations, benefits in two states, Alaska and Hawaii (exempt), would
surpass the Federal poverty threshold.
---------------------------------------------------------------------------
The official definition of poverty counts most sources of money
income received by families during the prior year (e.g., earnings,
Social Security, pensions, cash public assistance, interest and
dividends, alimony and child support, among others). For purposes of
officially counting the poor, noncash benefits (such as the value of
Medicare and Medicaid, public housing, or employer provided health
care) and ``near cash'' benefits (e.g., food stamps) are not counted as
income, nor are tax payments subtracted from income, nor are tax
credits added (e.g., Earned Income Tax Credit (EITC)).\17\ The state
leaver studies illustrate that welfare leavers in a number of states
remain poor. However, the number who fall below the poverty level will
vary among the studies based on what types of money income the state
includes when determining the individual's total income. A study of
leavers in New York City reported that 63% of leavers were below
poverty based on earned income.\18\ Among studies that used the
official definition of poverty (as described above), 63% of single
mothers with children under the age of 18 in Missouri and 53% of
families in Washington state were below poverty.\19\ A study of Utah
leavers also included food stamps in total income and reported that 52%
of families were below poverty.\20\
---------------------------------------------------------------------------
\17\ For more information, see CRS Report 95-1041, Poverty in the
United States: 1999, by Thomas Gabe.
\18\ Bush, A., S. Desai, and L. Mead, (1998). Leaving Welfare:
Findings from a Survey of Former New York City Welfare Recipients. New
York, NY: Human Resources Administration Office of Policy and Program
Analysis.
\19\ Midwest Research Institute. (2000). Missouri Leaver Study:
Chapter 2--Household Income and Poverty. Kansas City, MO: Author. Also
see Du et al, Washington Leaver Study.
\20\ Taylor, M., and A. Barusch, (2000). Multiple Impacts of
Welfare Reform in Utah: Experiences of Former Long-Term Welfare
Recipients. Salt Lake City, UT: Department of Workforce Services.
---------------------------------------------------------------------------
There is some information available to compare income among
recipients while they were receiving TANF as well as after their exit.
Among leavers in Virginia, 87% had total household income (excluding
the EITC) below the poverty level while receiving TANF, but 12 months
after exit 72% reported total household income below poverty. This
percentage also varied by employment status, with leavers unemployed at
the time of the survey more likely to report total household income
below the poverty level (87% of unemployed leavers vs. 60% of employed
leavers).\21\
---------------------------------------------------------------------------
\21\ Kuhns et al., Virginia Leaver Study.
---------------------------------------------------------------------------
Although leavers in Virginia reported higher levels of income after
exit, a study of Wisconsin leavers reported lower levels of income. The
Wisconsin study used a definition of income that included respondent
wages (as collected in the unemployment insurance data), estimated
Federal income taxes, estimated payroll taxes, estimated EITC, cash
assistance, and food stamps. Therefore, while this definition of income
includes an estimated EITC, it does not include income from a partner,
child support, or other unearned income (e.g., Supplemental Security
Income). Among a group of leavers who left welfare in 1995, 72%
reported lower or similar levels of income 12 months after their exit.
However, 81% reported earnings that were higher or similar 12 months
after exit. The study concludes that while earnings increase
substantially after exit among leavers, the accompanying increase in
the EITC is offset by other increased taxes, and welfare and food
stamps are much lower. Therefore, the total income among these leavers
is lower.\22\
---------------------------------------------------------------------------
\22\ Cancian, M., R. Haveman, D. Meyer, and B. Wolfe, (2000).
Before and After TANF: The Economic Well-Being of Women Leaving
Welfare. Madison, WI: University of Wisconsin-Madison Institute for
Research on Poverty.
---------------------------------------------------------------------------
As these results show, the percent of leavers who are below poverty
varies among the studies, in some part due to what each state includes
in its definition of income. A number of states have attempted to
gather a comprehensive measure of total income by including the value
of other assistance programs such as housing, Medicaid, and food
stamps, not all of which are included in the official definition of
poverty. In addition, as some states include ``other'' categories, it
is possible that these reported incomes include other programs (e.g.,
fuel assistance). Although the leaver studies vary in what they include
when measuring income, they illustrate that a number of leavers
continue to receive other assistance after exit.\23\ Examples include:
---------------------------------------------------------------------------
\23\ Additional information on leaver studies cited in these
examples can be found in CRS Report RL30882, Welfare Reform Research:
What Do We Know about Those Who Leave Welfare?, by Christine Devere.
---------------------------------------------------------------------------
Medicaid: Among studies that ask if anyone in the
household was receiving Medicaid since exit or at the time of the
survey (adults or children), the responses range from 58% in New Mexico
to 87% in Wisconsin. However, the studies that examine participation
rates among adults and children separately report that adults are more
likely to be uninsured after exit from welfare.
Food Stamps: The majority of studies report food stamp
participation rates between 46% and 78% after exit.
Child Care: Use of government subsidies varies
considerably among leavers, ranging from 3% in the New Orleans
metropolitan area to 55% in Missouri. When examining the percent who
receive child care subsidies among those who are eligible for
subsidies, the percentages increase but still vary considerably from
20% in Illinois to 67% in North Carolina.
Child Support: Among the studies that report the percent
who collected child support, the range varied from 8% of leavers in
metropolitan New Orleans to 41% of leavers in Idaho. In general, the
studies show that less than half of those who have court-ordered child
support arrangements actually receive a payment.
Housing Assistance: The majority of studies report that
between 14% and 34% of leavers received housing assistance such as
Section 8 housing or public housing. Massachusetts reported the highest
rates of housing assistance among welfare leavers; 56% of those who
left for a time limit, and 50% of those who left for reasons other than
a time limit.
Other types of assistance reported by welfare leavers include fuel
assistance, Supplemental Security Income, Unemployment Insurance,
transportation assistance, and participation in the School Lunch
program. However, the extent to which these benefits are included in
income as calculated by the leaver studies is unclear. While some
states explicitly indicated food stamps, child care, and Medicaid as
included in the ``total income'', it is possible that these other forms
of assistance are being captured in ``other'' categories (for which
additional detail is not available). There is no information available
as to whether states are including the receipt of state benefits, such
as state EITCs, in calculating income as individuals may also be
reporting this income when asked to report ``other'' sources of
support.
Question 5. The research shows that most recipients have higher
incomes after welfare reform. However, there is significant concern
about those at the very bottom of the income ladder whose reported
incomes dropped slightly (about 4%) since 1995. What have we seen that
tells us about this group's spending habits, as opposed to income?
Hasn't consumption risen for them like everyone else? What does that
tell us?
Response. Information on consumer expenditures comes from the U.S.
Bureau of Labor Statistics Consumer Expenditure Survey (CEX).\24\ The
CEX has a relatively small sample size of 5,000 households, compared to
the Current Population Survey (CPS) which has a sample of 47,000
households. The CEX data show that consumer expenditures grew 18% over
the period from 1994 to 1997 among single mother families. Some of this
overall increase is attributable to work expenses. Information from the
CEX also shows that, even among the poorest single-mother families,
consumption expenditures have increased over the period from 1994 to
1997. Among the poorest single mothers, the CEX data also show that
consumption expenditures typically exceeded reported incomes. Possible
explanations are that some who have low incomes are temporarily poor or
perhaps some low-income mothers might access credit markets to pay for
spending that exceeds income. It is also possible that income, related
to spending, is underreported on these surveys, as many agree that it
is difficult to capture all sources of support available to a household
when collecting this information.
---------------------------------------------------------------------------
\24\ This response draws from a longer discussion of the CEX
included in the 2000 House Committee on Ways and Means Greenbook. See
``Appendix L. Monitoring the Effects of Pre- and Post-TANF Welfare
Reform Initiatives,'' p. 1427-1430.
---------------------------------------------------------------------------
Christine Devere
Analyst in Social Legislation
Attachment 1. Maximum Monthly Combined TANF and Food Stamp Benefits for
a Family of Three on July 1, 2000a
[GRAPHIC] [TIFF OMITTED] T3533A.003
Source: Figure prepared by the Congressional Research Service (CRS)
based on a survey of the states. For more information, see CRS Report
RL30579, Welfare Reform: Financial Eligibility Rules and Cash
Assistance Amounts under TANF, by Craig W. Abbey.
a Food stamp calculations assume that the family does
not receive an excess shelter cost deduction. In very low TANF benefit
states, combined benefits shown reflect the maximum Food Stamp
allotment for the family size, but in some states the excess shelter
deduction would increase benefits by up to $83 monthly--more in Alaska
and Hawaii.
Chairman Herger. We will now move to our second group of
panelists, Mr. Mark Greenberg, Senior Staff Attorney, Center
for Law and Social Policy, and Mr. Robert Rector, Senior Policy
Analyst, Heritage Foundation.
Mr. Greenberg.
STATEMENT OF MARK GREENBERG, SENIOR STAFF ATTORNEY, CENTER FOR
LAW AND SOCIAL POLICY
Mr. Greenberg. Mr. Chairman, Members of the Subcommittee,
thank you very much for holding this hearing. We think these
issues are extraordinarily important, and that it's enormously
valuable to begin the conversations by focusing on what
research findings can tell us about what the experience has
been since the 1996 law was enacted.
I find myself in substantial agreement with much of what
you have heard from the Congressional Research Service and the
General Accounting Office, in part because we are looking at
many of the very same studies in trying to develop a picture of
what has happened.
There are some important things we can see from those
studies. At the same time, there are some significant gaps
where information isn't available that would help us get a
better picture of what has happened.
Broadly, we know that there has been an enormous caseload
decline, historically unprecedented, and it began in 1994,
although it accelerated after the law was enacted in 1996.
We also know that child poverty has gone down in a very
dramatic way, as other witnesses have already noted. At the
same time, we know that the welfare caseload has fallen more
rapidly than child poverty has fallen, and that raises some
questions.
In trying to get an understanding, I think we are confident
from the leaver studies that most of the families who have left
welfare did enter employment. It's hard to get a precise
picture because every State does its study a little bit
differently, and it makes it difficult to do comparisons
between States. But there is a pretty consistent picture that
tells us roughly that about 60 percent of those who have left
are working at any point, that a higher share have worked at
some point. If you look at those working consistently, four
quarters in a row, it's probably in the range of about 40
percent or so. We see that as a very consistent picture.
The problem of low earnings is a constant feature running
throughout the studies. Typically, the best information comes
from unemployment wage records, and from in the studies funded
by the Federal Government, that try to do things in about the
same way, we see initial earnings of about $2,500 in the first
quarter after leaving, growing over the course of the year to
about $2,800. So there is some evidence of growth in earnings.
We really can't tell if that's growth in wages or whether it's
just that individuals are working more weeks over a quarter. At
the same time, the overall picture is that family earnings
remain low. The Wisconsin data that I cited in my testimony, is
probably the best place to see three-year numbers from a State.
In that data, we do see evidence of earnings increasing over 3
years, but poverty remains very high and doesn't change much
over that period of time.
Broadly, what seems to be happening is that many of the
families are essentially replacing public benefits income with
employment income. They are less likely, of course, to be
receiving TANF assistance, and they are less likely to be
receiving food stamps. So in terms of overall family income,
there is a big replacement effect. At the same time, very
frequently families are incurring additional expenses as they
go into the workforce, such as child care. However, in our
examination of the studies of families that have left welfare,
typically only about 25 to 30 percent of those who were working
were getting child care assistance.
Nevertheless, it's clear that there actually have been
significant improvements in providing child care assistance to
low-income working families since 1996. Partly it's because of
the increases in the child care block grant, but most
strikingly, it's been because of the States' ability to use
TANF funds. As their cash assistance caseloads have fallen, the
single, clearest redirection of funds has been to child care.
In the year 2000, about $3.5 billion from TANF was
redirected to child care. All but two States redirected TANF to
child care. The amount of TANF funds going into child care in
the year 2000 seems to have been about as large as the entire
child care block grant. So there is a very strong expression by
the States of the importance of child care focus.
In addition to understanding the situation of working
leavers, it is important to understand the situation of those
who have left and are not working. There is clear indication
that some of the parents are living with a spouse or partner.
However, my reading of the leaver studies is that it appears
the majority are not. New research from the Urban Institute
suggests there is a group who are not living with a spouse or
partner, are not working, haven't worked, aren't receiving
disability benefits, and many of those families demonstrate the
very same, very serious barriers to employment that we see
among many of the families still receiving assistance. So there
are important questions about why this group of families seems
to have fallen out of the public system, despite the fact that
they are not working and despite having very serious barriers
to employment.
The last point that I would emphasize is that among State
and local administrators, much discussion now focuses on the
issue of multiple barriers among the families that are still
receiving assistance. Administrative data doesn't capture this
in a good way and, frankly, there haven't been nearly as many
studies of families still in the system as of the families that
have left.
I would urge, as the Committee proceeds, that you talk with
the State agencies about this issue. When I do so, I hear
routinely that the families that are left face a whole set of
barriers that States are now trying to determine how to best
address: Barriers concerning health, mental health, domestic
violence, substance abuse, extreme literacy issues. For many
States, these are issues that historically they didn't have a
lot of experience working with. However, they now frame some of
the key challenges ahead for States.
Thank you very much.
[The prepared statement of Mr. Greenberg follows:]
Statement of Mark Greenberg, Senior Staff Attorney, Center for Law and
Social Policy
Mr. Chairman and Members of the Subcommittee: Thank you for
inviting me to testify. I am a Senior Staff Attorney at the Center for
Law and Social Policy (CLASP). CLASP is a nonprofit organization
engaged in research, analysis, technical assistance and advocacy on a
range of issues affecting low income families. Since 1996, we have
closely followed research and data relating to implementation of
Personal Responsibility and Work Opportunity Reconciliation Act. In
addition, we often talk and visit with state officials, administrators,
program providers, and individuals directly affected by the
implementation of welfare reform efforts.
Today's hearing focuses on the experience since 1996 in addressing
the four goals of the Temporary Assistance for Needy Families block
grant structure. These goals are to: (1) provide assistance to needy
families so that the children may be cared for in their homes or in the
homes of relatives; (2) end the dependency of needy parents on
government benefits by promoting job preparation, work, and marriage;
(3) prevent and reduce the incidence of out-of-wedlock pregnancies and
establish annual numerical goals for preventing and reducing the
incidence of these pregnancies; and (4) encourage the formation and
maintenance of two-parent families.
I want to begin with two general observations. Since 1996, there
has been a large research effort funded both by governments and private
organizations, and much is known as a result of this effort. This
research makes it possible to discuss what has happened, i.e., changes
in caseloads, employment, income, family structure, but it is more
difficult to state what role the 1996 law or particular components of
the law played in affecting these changes. Second, the fact that the
law is scheduled for reauthorization next year makes this a logical
time to consider the experience; at the same time, this is still a
relatively early point in a major national policy shift, and to date,
we've only seen the experience in the context of a strong national
economy, and before families have reached the five-year time limit
restricting federally funded assistance. So, while it is important to
look at the story so far, it is also important to recognize that more
time will be needed to know how the new structure will function over
time.
Since the law was enacted, both the TANF assistance caseload and
the nation's child poverty rate have fallen significantly. However,
participation in TANF assistance has fallen much more rapidly than
child poverty has declined.
Since 1994, there has been a historically unprecedented decline in
the number of families receiving assistance. In early 1994, five
million families were receiving AFDC. The number fell to 4.4 million by
the time the 1996 law was enacted, and then dropped to 2.2 million by
June 2000. Since enactment of the law, the caseload has fallen by at
least 50% in twenty-nine states and by at least 20% in all states.
Caseload decline is sometimes cited as evidence of success in
itself, but a state's caseload can fall either because families no
longer need assistance or because families who need assistance are not
receiving it. Part of the caseload decline is clearly due to reduced
need--during this period, child poverty fell, from 21.8% in 1994 to
16.9% in 1999. However, participation in welfare fell much more rapidly
than child poverty. In 1994, 62% of poor children were receiving AFDC
assistance; by 1998, only 43% of poor children were receiving TANF
assistance.
Why did the share of poor children receiving assistance fall? There
are three main possibilities: a) parents got jobs and stopped receiving
TANF, even though family income was still below poverty; b) families
left assistance without finding work; and c) families who were poor and
potentially in need of assistance chose not to apply or applied and
were unable to get assistance. As discussed below, there is evidence
that most families leaving welfare are working, but that many of these
families remain poor; there is also evidence that a significant group
of families have left welfare but are not working. It is less clear
whether there has been a drop in applications or application approval
rates. Under TANF, states are required to report to HHS on the total
number of applications, denials, and approvals, but not the reasons for
denials. In any case, none of this information about application
processing under TANF has been published.
Since 1996, there has been a significant increase in employment
among female-headed families. There's broad agreement that TANF has
played an important role, but is not the only factor, in these
increases in employment.
A set of data sources all point to a significant increase in
employment among TANF recipients, and more generally among female-
headed families. The principal information about why families have left
welfare has come from studies looking at the circumstances of families
who have left assistance. These studies consistently find that about
60% of leavers are working, and that employment is the most common
reason given for why families left assistance. Typically, an even
larger share report having worked at some point since leaving
assistance. The share of adults working while receiving TANF assistance
also increased--from 8% in 1994 to 28% in 1999. Part of the explanation
for this increase in employment among recipients is that under TANF,
most states have liberalized the rules for reducing assistance when a
family has earnings; as a result, a family is more likely to retain
eligibility when a parent enters a low-wage job.
Census Bureau data also point to a large increase in employment
among female-headed families in recent years. In 1994, married mothers
were more likely to be employed than were single mothers. (64.7% vs.
57.1%). By 1999, the employment rate of single mothers (68.4%) was
greater than the rate for married mothers (67.1%). The differences are
more dramatic among low income families. For families with incomes
below 200% of poverty, between 1994 and 1999, employment rates stayed
essentially flat for married mothers but grew by thirteen percentage
points for single mothers. As a result, in 1999, 59% of single mothers
in families with incomes below 200% of poverty were working, versus
43.4% of married mothers.
It is probably impossible to isolate the independent role of TANF
in this increase in employment. The process started before 1996--the
nation's caseload decline began in 1994, and the growth in employment
of low income single mothers with young children began between 1992-93.
And, during the 1990s, a set of factors supported or contributed to
employment growth for single mothers: the strong national economy, the
large expansion of the Earned Income Tax Credit, increased availability
of child care subsidies, expansion of health coverage for children, the
minimum wage increase, improved child support enforcement. There seems
to be a consensus among researchers that welfare reform efforts did
play an important role, with the effects more pronounced in latter
years. At the same time, a set of factors occurring at the same time
all pushed in the same direction, and we don't know how the same
policies would have worked in a different economy, or how one component
would have worked without the others.
When we talk about the effect of ``TANF'' or ``welfare reform,'' it
is important to appreciate that there are a number of components in
what states have done under TANF. In formal rules, states generally
expanded requirements to participate in work-related activities;
increased the penalties for failure to comply with such requirements;
restricted access to education and training; provided increased income
support for families with earnings; liberalized program asset
requirements; broadened eligibility for two-parent families; imposed
time limits on assistance; and expanded the availability of
``transition'' benefits for families leaving assistance. In addition
state agencies often emphasize that there has been a fundamental change
in the basic orientation of their systems, as the principal focus has
shifted from providing income support to an emphasis on requiring and
supporting employment.
TANF implementation also meant an infusion of additional funds for
states. Since funding levels were generally set to reflect welfare
caseloads from the early-mid 1990s, and caseloads began falling in
1994, the effect of TANF from the beginning was to provide increased
federal funding to states. The General Accounting Office estimated that
if all states had participated in TANF throughout 1997 and had met
applicable maintenance of efforts, states would have had an additional
$4.7 billion above the funding level that they would have had under
prior law. And, since block grant funding remained constant as
caseloads declined, the funds potentially available for services
steadily increased over time. This additional funding made it possible
for states to expand employment-related services, child care, and
support services.
In summary, TANF has contributed in important ways to the increase
in employment among female-headed families. However, it is not possible
to precisely state its independent impact; we do not know how the same
policies would operate in different economic circumstances; and we need
to recognize that TANF implementation has been far more than work
requirements and time limits--it has also involved additional resources
and an array of new and expanded supports to help families enter and
maintain employment.
Much of the employment for families receiving or leaving TANF
assistance, at least initially, is in low-wage jobs. There is evidence
of some earnings growth over time, but so far, earnings remain low for
most of the affected families.
Families still receiving assistance tend to have low earnings--
according to administrative data, earnings for working adults receiving
assistance averaged $597.97 per month in FY 99. Leavers studies also
report generally low wages and earnings for those who have left welfare
and entered employment. According to the Urban Institute's Nation
Survey of America's Families, the median wages for leavers in 1997 were
$6.61 an hour; individual state studies typically report wages at or in
that range. In a set of leavers studies funded by HHS, the median
quarterly earnings for the first full quarter after leaving were $2526,
i.e., $842 a month. So, unless these families have additional sources
of income, they are often likely to still be in poverty. In fact,
studies in Missouri and Washington reported poverty rates of 58% for
TANF leavers.
The fact that many families are entering low wage employment was
not unexpected, because a strong focus in TANF implementation was to
encourage parents to enter employment as rapidly as possible, even at
low wages, with the hope that earnings would grow over time. To find
out if this is occurring, one would want to follow the experiences of
families over time. Unfortunately, state reporting to the federal
government provides only limited longitudinal data. To compete for the
federal ``high performance bonus,'' states report earnings data for
families during a quarter and the second subsequent quarter for people
employed in both quarters. From this data, we can see that in 1999,
national average earnings grew from $2114 in a quarter to $2578 in the
second subsequent quarter. However, since the first quarter includes
both individuals continuously employed and those entering employment
during the quarter, we cannot tell the extent of earnings growth from
this data, and we cannot get a longer-term picture from this data.
A limited number of states have reported longitudinal data for
families leaving welfare and entering employment. From that data, it
looks like earnings do increase after leaving assistance, but remain
low. For example, in nine federally-funded leavers studies, median
earnings grew from $2526 in the first to $2821 in the fourth quarter of
employment. Probably the best longitudinal data comes from the
Institute for Research on Poverty's tracking of families that left
welfare in Wisconsin in 1995. In the IRP study, median earnings (in
1998 dollars) were $8608 in the first year after leaving, $9627 in the
second year, and $10,924 in the third year.
Some states have responded to evidence of low earnings for families
leaving assistance by creating new initiatives to help working families
who have left assistance advance to higher earning jobs. Most of these
initiatives are still in the earliest stages, and there isn't yet clear
evidence of their effectiveness. There are also indications that in the
last several years, a number of states have softened some of their
prior restrictions on access to education and training programs, though
participation in such activities by TANF recipients remains low.
The fact that many exiting families have low earnings has focused
attention on the importance of access to Food Stamps, Medicaid, child
care assistance and child support services for families leaving
assistance. Studies consistently report sharp declines in participation
in Food Stamps and Medicaid after families leave assistance. Probably
not more than one-third of working leavers receive child care
assistance. Child support enforcement has improved, though most leavers
still do not receive child support.
Because many leavers have low incomes, continued access to Food
Stamps and Medicaid are important for families leaving TANF. However, a
consistent finding has been a sharp drop in receipt of these benefits
after exiting TANF. In a set of state and county leavers studies funded
by HHS, the share of single parents receiving food stamps in the
quarter after leaving TANF ranged from 33% to 57% (and was 9% in one
county). The share of adults receiving Medicaid in the quarter after
leaving was between 41% and 57% in seven of nine sites. There are
indications that these drops in participation are partly due to
eligibility rules, partly due to lack of awareness of continued
eligibility, partly due to administrative practices that sometimes
resulted in closing Food Stamp and Medicaid cases at the same time TANF
cases were closed.
There are also indications that families who could benefit from
child care assistance after leaving welfare do not consistently receive
such assistance. In state leavers studies with data on this issue, only
about one third or less of working leavers were receiving child care
subsidies. However, the Urban Institute has calculated that 50% of
working low-income single parents (income below 200% of poverty) with
children under age 13 have child care costs, averaging $230/month, and
representing 19% of family income.
Federal administrative data indicate that some child support is
collected for 40% of welfare leavers. This probably reflects
significant improvement in recent years, though a substantial share of
leavers are still not receiving regular child support payments.
(Moreover, about half of support arrears collected on behalf of leavers
are not paid to the family, but instead are retained by government to
recover prior assistance costs.)
Families still receiving assistance are a heterogenous group, but
generally have more serious barriers to employment than those who have
left assistance.
Most families now receiving assistance are either working or do not
include an adult receiving assistance. In FY 99, 28% of adults
receiving assistance were working, and 29% of families receiving
assistance were ``child-only'' cases, i.e., cases in which no adult
received assistance because the child is living with a grandparent or
other non-parent relative; the parent is disabled and receiving
Supplemental Security Income, the parent is an ineligible alien or
under sanction.
State and local agencies often note that many of the families still
receiving assistance are likely to have serious employment barriers. It
is difficult to provide a precise picture, because the types of
problems often identified--health and mental health, domestic violence,
substance abuse, limited or no English proficiency, severe basic skills
deficits--are not the types of information routinely collected or
reported in program administrative data. The Urban Institute reports
that among adults receiving assistance in 1999, 44% had less than a
high school education, 38% either had poor health, a health condition
preventing work, or very poor mental health; and 27% last worked three
or more years ago. Most (56%) of those with no identified barrier to
work were working; in contrast, only 20% of those with two or more
barriers to work were working.
People sometimes ask if the incidence of these problems is more
severe now than was the case in the past. It is difficult to know,
because most states have not had consistent measures of these potential
obstacles over time. The Urban Institute found that the incidence of
barriers in 1999 did not look substantially different from 1997. It is
clear, though, that families still receiving assistance are much more
likely to have multiple barriers to employment than families who have
left. State leavers studies also consistently report that those still
receiving assistance are likely to have less education and less work
history than those who have left. And, for many states, the key
question isn't really whether the prevalence of these problems has
increased, because five years ago, families with multiple barriers were
typically exempt from program requirements. Now, these families are
subject to work and time limit requirements, and states need to develop
appropriate service strategies to work with them, so the issues of how
to structure services for such families have become an increasingly
significant challenge in TANF implementation.
A group of families with serious barriers to employment is no
longer receiving assistance.
About 40% of families who have left assistance are not working.
Generally, there is less information about these families, and it would
be helpful to have a clearer picture of why they left and how they are
managing. On one hand, families have always left assistance for reasons
besides work--for example, the family might move, or children might
turn eighteen. And, nonworking leavers are sometimes living with
spouses, partners, or other adults. However, there are indications
that, as compared to working leavers, the nonworking leavers are likely
to have more serious employment barriers--e.g., less education and work
history, greater likelihood of illness or disability. They are also
likely to be poorer than working leavers.
In a recent analysis, the Urban Institute focused on one group of
nonworking leavers: those adults who had not worked since leaving, were
not receiving disability benefits, and were not residing with a working
spouse or partner. This group of ``at risk'' leavers was estimated to
be 17% of all leavers, and they showed a greater likelihood of having
multiple barriers to employment than current TANF recipients 50% of
this group was in very poor health; 47% had not worked in at least
three years; 38% had less than a high school education; 19% were caring
for a disabled child.
Why are families with such severe barriers leaving assistance
despite not working? There is a clear need for additional research, but
one part of the explanation is likely the increased use of
``sanctions,'' i.e., grant reductions and terminations and other case
closures for noncompliance under TANF. States vary in their extent of
sanctioning; in some leavers studies, only a small share of case
closures are attributable to sanctions and in other studies, 25% or
more of case closures are for such reasons. Studies of sanctioned
families consistently report that such families are likely to have less
education and work history than other leavers, and that they are less
likely to be working and more likely to have lower earnings when they
do work.
The concern, then, is that at the same time that many states
articulate a goal of working with those families with the most severe
employment barriers, state practices are sometimes having the effect of
terminating assistance to those families. Some states have responded to
these concerns by developing ``second look'' procedures before imposing
sanctions or additional efforts to engage in outreach to sanctioned
families. However, at this point, the TANF law does not actively
encourage such efforts, and the federal government does not collect
information on state practices to avoid terminations of assistance to
families with multiple employment barriers.
The large gains in employment have resulted in increased income for
many female-headed families; at the same time, the average incomes of
the bottom 20% have declined since 1994, because losses in public
benefits have been as large or greater than gains in earnings.
Researchers have examined Census data during the 1990s and examined
the circumstances of female-headed families. Typically, this work has
looked at post-tax, post-transfer income, taking into consideration
both the Earned Income Tax Credit and food stamp benefits. The
research, summarized in recent interchanges between Wendell Primus and
Ron Haskins, essentially finds that when one divides female-headed
families into five quintiles, there have been both earnings and income
gains in the second-lowest quintile, though the rate of gain was
stronger from 1993-95 than from 1995-99, and most of the earnings gains
from 1995-99 have been offset by declines in public benefits. However,
for the bottom quintile, average income in 1999 is actually lower than
it was in 1994 and 1995, because losses in means-tested income have
been greater than increases in earnings. (While 1999 income is lower
than 1994 income, it is higher than 1993 income; however, the key point
here is that whatever base year is used, the story is that for the
bottom quintile, gains in earnings have been more than offset by losses
in public benefits.)
Why have the earnings gains not translated to greater economic
gains for families? While the Census data cannot directly answer this
question, the findings seem consistent with those already described
from the leavers' studies: many families entering low wage employment
have lost public assistance despite still being in poverty; Food Stamp
participation has sharply declined for families leaving TANF; and a
group of families has left TANF without finding work.
These findings are particularly striking in light of recent work by
the Manpower Demonstration Research Corporation, looking at
experimental studies to examine the impact of work-welfare initiatives
on children. MDRC found that while many programs raised employment
rates, only some raised income, because gains in employment were often
offset by losses in benefits. In those programs where employment was
associated with increased family income, MDRC found evidence of
positive effects on childrens' school achievement. In addition, two of
three programs that raised incomes found increases in positive
behaviors by children, and one found a decline in problem behaviors. In
contrast, programs in which increased employment did not translate to
increased incomes had mixed effects, and no clear positive impact on
childrens' well-being. The authors conclude: ``[W]e found that programs
that provided earnings supplements had consistently positive impacts on
children's achievement... Raising employment without increasing income
may not be sufficient to boost the healthy development of children in
low-income families.'' Morris, et. Al, How Welfare and Work Policies
Affect Children: A Synthesis of Research (Manpower Demonstration
Research Corp. 2001).
The TANF caseload decline has made it possible for states to make a
major redirection of resources to child care. The freed-up resources
have also allowed for significant program expansions in other areas,
though the existing federal reporting system does not provide a good
picture of how funds are being used.
In 1996, TANF funding was set to reflect historic federal funding
levels, and to remain essentially constant through 2002. The decline in
TANF caseloads meant that federal and state funds became available for
redirection to other services and activities to further the goals of
TANF. Initially, many states were hesitant to redirect TANF funds,
because they understood that federal funding would remain fixed even if
caseloads began rising, they were uncertain whether the caseload
decline would continue, and they were often unclear about when and how
TANF funds could be used for expenditures outside of the traditional
welfare system. A key shift occurred when HHS issued final TANF
regulations in April 1999. These regulations made clear the breadth of
state flexibility in using TANF, explaining that states could use the
funds to benefit ``needy families'' whether or not those families were
receiving traditional welfare assistance and that states could use TANF
to structure supports for working families outside the traditional
welfare system.
In exercising this new flexibility, the clearest response has been
in committing resources to child care. States can transfer up to 30% of
their TANF block grants to their programs under the Child Care and
Development Block Grant, and can also spend TANF funds directly for
child care. Each year, the amount of TANF funding redirected to child
care has grown; in 2000, we calculate that $3.5 billion in TANF funding
was redirected to child care, an amount as large as the entire federal
child care block grant. This additional funding has allowed states to
increase the numbers of families receiving subsidy assistance, raise
eligibility levels, improve payment rates to child care providers, and
expand spending for child care quality initiatives. At the same time,
state administrators often express apprehension about the extent to
which child care expansions have relied upon a source of funding that
is not seen as stable or predictable.
The expanded funding has made an important impact, there are still
significant indicators of unmet needs. As noted above, most working
leavers do not receive child care subsidies. There is no available
national data on the share of TANF children receiving child care
assistance; a study by the National Center for Children and Poverty and
Abt Associates reported that in 1999, the share of TANF children
receiving child care subsidies in ten states ranged from 7% to 26%. (An
eleventh state reported a higher figure, but there appear to be data
problems affecting the reliability of that figure.) And, HHS has
estimated that nationally, 12% of potentially eligible children were
receiving subsidy assistance under the Child Care and Development Block
Grant in 1999. While the numbers receiving assistance would be higher
if all funding sources were considered, the basic picture of unmet need
would remain. Moreover, resource constraints in child care are
expressed in a range of ways: in state eligibility levels, fee scales,
payment rates to providers, limited outreach to eligible families. For
example, state child care payment rates are important in determining
whether families receiving subsidies have equal access to child care
arrangements comparable to families above CCDBG income levels, as
envisioned under federal law. The federal government has said that a
payment rate high enough to encompass 75% of the local market would be
considered sufficient to provide equal access. However, according to
the Childrens' Defense Fund, in 1999, most states were not making
payments that met this standard based on a recent (within two years)
market survey. Moreover, there continue to be concerns about high staff
turnover, compensation and training issues for child care providers;
shortages of care for particular populations and needs (e.g., infant
care, special needs care, sick care, non-traditional hour care); and
about the uneven quality of care in a range of settings.
In other areas, TANF funding has made it possible for states to
undertake initiatives such as creating or expanding refundable Earned
Income Tax Credits, initiating programs of Individual Development
Accounts to promote asset formation, expanding services for victims of
domestic violence and for families in need of substance abuse and
mental health treatment, increasing services for non-custodial fathers,
expanding ``diversion'' assistance for families in need of short-term,
emergency help, and increasing services for family preservation and
reunification. However, there are also accounts of states that have
used some of their TANF funds to ``supplant'' state spending, i.e., to
use TANF funds to replace existing state expenditures for allowable
activities under the TANF law. Unfortunately, the current federal
reporting structure does not provide a clear picture of TANF spending;
state plans often provide only cursory detail about state spending
choices, and the broad categories in federal spending reports are not
very informative. Accordingly, one key challenge for researchers and
for the structuring of federal reporting involves efforts to better
describe the choices states are making in their use of funds.
During the 1990s, teen birth rates declined and the share of
children born out of wedlock appeared to level off, though remaining at
about one-third of all births. These changes began before states
implemented TANF. In advancing the law's family formation goals, there
is a need for both a stronger research agenda and a recognition of a
set of difficult issues about the appropriate role of government.
Between 1991 and 1999, the nation's teen birth rate dropped 20%.
The teen birth rate in 1999 was 49.6 births per 1000 women aged 15-19,
a record low for the nation, though still high in comparison to many
other countries, and still involving nearly 500,000 births to
teenagers. The decline in the rate of teen births is significant, both
because of concerns about outcomes for children born to teenagers and
because nearly 80% of teen births are out of wedlock births.
As in other areas, it is difficult to determine the role of TANF in
contributing to the decline in teen births. On one hand, the trend
began well before implementation of the 1996 law. However, almost all
states are funding teen pregnancy prevention initiatives using TANF
funds, and TANF funding has made it possible for states to create or
expand after-school programs, pregnancy prevention programs, stay-in-
school programs, and an array of youth development initiatives aimed at
reducing teen pregnancies and promoting stronger outcomes for low-
income teens.
During the 1990s, the birth rate for unmarried women declined
slightly, and the share of births to unmarried women appears to have
flattened. At the peak year, 1994, the birth rate for unmarried women
aged 15-44 was 46.9 per 10000; preliminary data indicates that the rate
declined to 43.9 by 1999. After many years of growth, the percentage of
births to unmarried women has hovered around 32-33% since 1994. Again,
the change was evident before enactment of the 1996 law. (The National
Center for Health Statistics reports that because of underreporting in
some states, the actual peak would have been in the early 1990s rather
than 1994 had numbers been fully reported.)
It is possible to characterize the out of wedlock birth numbers in
one of two ways. On the one hand, the upward trajectory of recent
decades clearly slowed and perhaps stopped during the 1990s. At the
same time, it seems to be the case that the dramatic declines in
welfare participation and increases in employment have, at least to
date, not yet been associated with equally dramatic changes in out of
wedlock birth patterns.
In 1996, some observers argued that welfare itself was a principal
factor accounting for the rise of out of wedlock births in the United
States, and that to alter these trends, it was necessary to eliminate
or curtail the availability of assistance for single parent families.
It is possible that reduced welfare participation and increased
employment will eventually result in significant changes in family
formation. However, it is not yet apparent whether that is occurring,
and the other possibility is that the role of welfare benefits in
contributing to out of wedlock births may have been overstated.
A TANF provision provides $100 million a year, to be divided among
up to five states that have demonstrated the largest reductions in the
share of out of wedlock births while also demonstrating a decline in
the number of abortions in the state. Five states were awarded $20
million each under this provision in 1999 and 2000. It remains unclear
whether these states had initiated distinctive programming, or whether
the bonus was principally rewarding demographic changes. Thus, it is
not clear that awarding these bonuses is contributing to our
understanding of effective approaches for reducing out of wedlock
births. Similarly, under HHS rules announced last year, states will be
eligible for a high performance bonus if the share of children residing
in married families in the state increases, although there are
comparable concerns that this type of bonus may also result in
rewarding demographic changes rather than state performance.
In recent months, some observers have argued that states have
failed to actively advance the TANF goals of promoting marriage,
reducing out of wedlock births and encouraging the formation and
maintenance of two parent families. On the one hand, there was only
limited discussion in 1996 of what Congress expected states to do to
advance these goals--for many, it was assumed that reducing welfare
caseloads was the intended strategy toward accomplishing them. However,
as discussions of the family formation goals of TANF have increased, it
seems clear that states face at least three questions in deciding how
to proceed: what would work; what's the appropriate role for
government; and how can the goals be advanced in ways that do not risk
unintended adverse effects for children or parents.
In efforts to promote employment, states have often been able to
rely on an extensive research base developed over many years; there is
not a comparable research base to draw from in efforts to reduce out of
wedlock births or promote family formation. There is a stronger
research base for teen pregnancy prevention efforts, but less to point
to for initiatives affecting adults. Recent evidence suggest that
stronger child support enforcement is correlated with reduced out of
wedlock births and reduced marital break-ups. And, the evaluation of
the Minnesota Family Investment Program found that a welfare reform
effort that expanded eligibility for two-parent families, combined a
work requirement with a modest sanction (10% grant reduction for
noncompliance) and included a substantial earnings supplement for
employed families, was associated with an increased likelihood that
participants would enter or stay in two-parent families. A set of
programs have demonstrated success in increasing engagement of fathers
in the lives of their children. And, it has been suggested that a
strong focus on promoting employment for young men could have an
important impact in increasing their likelihood of marriage. Overall,
though, a federal research agenda could strengthen the knowledge base
in these areas.
Even with additional knowledge, states still face difficult issues
in determining the appropriate role for government and how to advance
these goals without risking unintended consequences. In their efforts
to promote work, states drew on a strong public consensus that, with
limited exceptions, adults of working age ought to be working. There is
not a comparable public consensus that adults of marriageable age ought
to be married. There are strong indications from research findings
that, all else being equal, better outcomes for children in a number of
areas are associated with having been raised in a two-parent family.
Part of the effect is because two-parent families are likely to have
more income, but the research does suggest an independent effect for
family structure. However, all else is not always equal, and it is
difficult for states to determine how to translate these broad research
findings into advice for an adult contemplating marriage or divorce.
While marriage is often the best arrangement for parents and children,
there are some circumstances where marriage or continued marriage may
not be the best arrangement, e.g., in high-conflict marriages or
circumstances of domestic violence. Moreover, because marriage and
divorce involve highly personal decisions in which people must weigh an
array of factors, there are concerns that strong government pressures
or creation of financial incentives to marry could distort decisions in
ways that may not necessarily be best for parents or children. While it
is possible that such policies could increase the number of marriages,
they might also increase martial dissolution rates and high conflict
marriages.
Government can clearly communicate that parents have an obligation
to support their children, and states have done so through strong
emphases on work and child support. Government can also seek to ensure
that its policies are not having the effect of creating barriers to
marriage and family formation. At the same time, the focus on family
formation in TANF draws from a concern about seeking to improve
outcomes for children, and efforts to address these goals need to
proceed in ways that are both sensitive to the appropriate role of
government and that do not present risks of leading to worse outcomes
for children.
conclusion
Thank you for inviting me to testify today. We appreciate the
Subcommittee's interest in seeking to develop a picture of the
experience since 1996, and hope this information can be helpful.
Chairman Herger. Thank you, Mr. Greenberg.
Mr. Rector.
STATEMENT OF ROBERT RECTOR, SENIOR POLICY ANALYST, HERITAGE
FOUNDATION
Mr. Rector. Thank you, Congressman. It's a pleasure to be
here, and I thank you for the invitation.
Let me begin with two points of background which I think
are necessary to frame this issue of the analysis of the
effects of welfare. The first point is that conventional
welfare harms children. It destroys their lives and it reduces
their prospects for success.
In my written testimony I cite, for example, excellent
research by Dr. June O'Neill, the former head of CBO, who shows
that a child who even spends a small amount of time on welfare,
compared to another child who is otherwise identical but not on
welfare, has a significant drop in the child's IQ of up to 20
percent. A huge, huge deficit for that child to overcome.
Other research that I cite shows that children who are
raised on welfare have significantly lower earnings when they
become adults, when compared to similar poor children who spent
less time on welfare. Even if the welfare increases the family
income, it actually harms that child as the child becomes an
adult.
Welfare also increases the rate of drop out, and it
increases the probability that a child will receive welfare as
an adult. All of these comparisons, the effect is due to
welfare, per se, not to poverty. A child who is poor and not on
welfare will do significantly better than a child who is also
poor but is on welfare.
A second point. Being born out of wedlock and raised in a
single-parent house has significant negative effects on
children. About 75 percent of the child poverty that exists in
the United States is to single-parent families. A child born
out of wedlock and raised by a never-married mother is 700
percent more likely to live in poverty than a child in an
intact family.
Being raised in a single-parent family dramatically
increases behavioral and emotional problems. It increases the
probability of physical child abuse, in some cases by 40-fold.
It increases the probability that a girl or a boy will engage
in early sexual activity. It increases the probability of
school failure. If it's a boy, it increases dramatically the
probability that that boy will be involved in crime and end up
in jail. And it increases subsequent out-of-wedlock births by
girls, thereby creating a self-perpetuating problem of social
pathology.
Again, these effects are the result of single parenthood,
per se. A child who is poor and raised by two parents will do
dramatically better than a similar child who is poor but raised
without a father in the home.
Now, if I could go directly to the effects of welfare
reform, the first effect, if I could show this chart coming up
here, this is the dramatic effect of welfare and reducing
welfare dependence. There is some argument about whether the
huge drop in caseload of 50 percent that we see there on the
red line on the chart is due to the economy or due to welfare
reform. The white periods on the chart represent economic booms
from 1950 to the present. As you can see from the chart, no
prior economic boom, since the Korean war, has resulted in any
significant drop in caseload. Yet, somehow this period we have
a huge drop in caseload in the period of economic booms.
What is the difference in the nineties from all those
previous periods of economic boom? The difference is clearly
welfare reform and workfare. Those States that have stronger
workfare programs have much more rapid drops in caseloads, and
also greater drops in child poverty.
The second effect is child poverty. We have to emphasize
again and again that, at the present time, the black child
poverty rate in the United States is the lowest ever in U.S.
history, since this country was formed in 1775. The child
poverty rate among children and single mother families is at
the lowest point ever in U.S. history.
Why did this poverty drop this way? It dropped because we
have had an unprecedented surge in the employment of single-
parent families, of single-mother families, about a 50-percent
increase in the rate of employment in those families,
unprecedented and clearly correlated to the onset of welfare
reform.
These figures are very different than what you heard from
the previous panel because I'm looking at the entire population
of single parents and I am not looking at leaver studies. In
the discussion, we must get into detail about what is wrong
with leaver studies.
Finally, if we could have the next chart, this is the
effect of welfare reform on single parenthood and out-of-
wedlock births. Starting back in 1965, at the beginning of the
war on poverty, about 7 percent of children were born out of
wedlock. That figure, by 1995, had risen to 33 percent. Among
blacks, which is the top line there, the figure had risen from
about 20 percent up to 70 percent.
As you can see in the last 4 years on that chart, clearly
something happened. A line which was consistently going up has
kinked over and is now relatively flat or increasing at a slow
rate.
Is it an amazing coincidence that, after 30 to 40 years of
consistent increases, the out-of-wedlock birth rate dropped at
exactly the time that welfare reform was being discussed, that
President Clinton announced that out-of-wedlock childbearing
was a threat to children in society, that we had a huge
national debate about out-of-wedlock childbearing and we had an
emphasis on personal responsibility and time limits?
Clearly, that kink-over is the result of the symbolic
messages that surrounded welfare reform. It gives us a great
cause for optimism, because as the previous panelists
indicated, there has been really no consistent programs at the
State level to promote marriage. Yet, even by the symbolic
messages that we've seen here alone, we're seeing some
improvement, or at least an arrest of the deterioration.
I think this shows us great prospects for the future, and I
would hope that welfare reform would continue to emphasize work
fair and promote, to a significant new degree, programs to
promote marriage.
[The prepared statement of Mr. Rector follows:]
Statement of Robert Rector, Senior Policy Analyst, Heritage Foundation
SUMMARY
The intention of welfare programs is to benefit low income
Americans, especially children. Yet the evidence indicates that
children and parents are actively harmed rather than helped by welfare.
Nearly all welfare aid for children goes to single parent
households. But current research indicates that both welfare dependence
and single parenthood have significant deleterious effects on
children's development, impeding their ability to become successful
members of mainstream society.
Prolonged welfare dependence reduces children's IQ levels.
Dependence also reduces a child's earnings in future years; the longer
a child remains on AFDC in childhood the lower will be his earnings as
an adult. Being raised on welfare also increases the probability that a
child will drop out of school and will be on welfare as an adult.
Analysis shows that these effects are caused by welfare per se, not
simply poverty; a poor child without welfare will do better than a
similar poor child with welfare.
Out-of-wedlock childbearing and single parenthood are the
principal causes of child poverty and welfare dependence in the U.S.
Children raised in single parent families are more likely to:
experience behavioral and emotional problems; suffer from physical
abuse; engage in early sexual activity, and do poorly in school. Boys
raised in single parent households are more likely to engage in crime;
girls are more likely themselves to give birth outside of marriage.
These effects are the result of the collapse of marriage per se rather
than poverty; a poor child living with a mother and father united in
marriage will do better than a similar poor child living in a single
parent home.
Conventional welfare programs were based on the assumption that
material poverty or low family income is the principal cause of social
and behavioral problems. Thus welfare seeks to artificially boost
household income. But the simple historical record calls into question
this basic assumption. In 1950 around one third of Americans were poor;
back in the 1920's more than half of Americans were poor by today's
standards. If having a low income were the key cause of crime,
illegitimacy, drugs, or child abuse, for example, then earlier periods
should have been simply awash in those problems. Instead the opposite
is the case, most social problems seem to have gotten worse as incomes
rose.
Clearly poverty is not the cause behind the growth of these social
problems. Instead, it is the ethos within families that is critical;
the norms and values imparted to children concerning: marriage, work,
education, and self-control. Conventional welfare, by undermining this
ethos (especially with regard to work and marriage), has increased
rather than diminished most social problems.
The Goals of Welfare Reform. The Personal Responsibility and Work
Opportunity Reconciliation Act (PRWORA) enacted in 1996 set forth three
legislative goals: (1) To reduce dependence; (2) to reduce child
poverty; and (3) to reduce illegitimacy and strengthen marriage. The
reform has been effective in meeting each of these goals.
Reducing Dependence.--Since the enactment of welfare
reform, the AFDC/TANF caseloads have dropped by roughly 50 percent.
Some argue that this decline in welfare dependence is due to a strong
economy; however, in the last 50 years no previous economic boom has
ever resulted in an appreciable decline in AFDC caseload, let alone a
50 percent drop. (See Chart 1.) It is welfare reform, not economic
conditions, that has produced the huge decline in dependence in the
mid-1990's.
This conclusion is borne out by an examination of changes in
dependence between individual states. The fifty states vary enormously
in their rates of caseload decline, but these rates of decline are
uncorrelated to differences in underlying state economic factors such
as unemployment or job growth rates. States with better economies have
not had greater drops in caseload. By contrast, declines in dependence
are directly and strongly linked to the rigor of state workfare
policies.
Reducing Poverty.--Opponents of welfare reform charged
that reform would throw millions of children into poverty. In reality,
child poverty has dropped substantially since reform was enacted, from
20.8 percent in 1996 to 16.9 percent in 1999. (See Chart 2.) The black
child poverty rate and the poverty rate of children in single mother
families are now at the lowest points in U.S. history. States with
strong workfare systems have tended to have more rapid declines in
child poverty than have states with lenient work requirements.
Out-of-Wedlock Childbearing.--Starting in the mid-1960's
the out-of-wedlock birth rate began a rapid and relentless climb. This
increase continued without pause for three decades. (See Chart 3.)
Then, in 1993 and 1994, former President Clinton gave a series of
speeches on social harm of illegitimacy; he was the first president to
address this topic in nearly three decades.\1\ He also proposed that
welfare use be limited to two years.\2\ Then, in 1994, Republicans
gained control of both chambers of the U.S. Congress for the first time
in over fifty years. With this political shift came a dramatic change
in the rhetoric concerning welfare. It became clear that future welfare
would indeed be time limited and would place a far heavier emphasis on
self-reliance. Further, both parties now publicly asserted that
illegitimacy was harmful to children and society; the new Speaker of
the House of Representatives suggested that children born out-of-
wedlock might be placed in orphanages.\3\
---------------------------------------------------------------------------
\1\ Former President Clinton gave three major addresses on the
harms of illegitimacy in 1993 and 1994. He was the first president to
address this topic since Lyndon Johnson. These speeches played an
important role in changing public perceptions and in opening subsequent
political discourse on the issue.
\2\ Former President Clinton merely intended that a small
percentage of AFDC recipients would be required to work for benefits
after two years on the AFDC rolls. However, his proposal was generally
represented as ``two years and off.'' Most politicians and the public
thought this meant a termination of cash aid after two years on the
rolls. In addition, a number of state governments were introducing
their own work related reforms with a new emphasis on personal
responsibility from 1993 to 1996; these programs may also have
contributed to the halt in the growth of the illegitimacy rate in the
mid-1990's.
\3\ Former President Clinton gave three major addresses on the
harms of illegitimacy in 1993 and 1994. He was the first president to
address this topic since Lyndon Johnson. These speeches played an
important role in changing public perceptions and in opening subsequent
political discourse on the issue. In addition, a number of state
governments were introducing their own work related reforms with a new
emphasis on personal responsibility from 1993 to 1996; these programs
may also have contributed to the halt in the growth of the illegitimacy
rate in the mid-1990's.
---------------------------------------------------------------------------
The very next year (1995) the out-of-wedlock birth rate dropped for
the first time in nearly a half-century. In each subsequent year, the
rate has remained flat or increased far more slowly than in the pre-
reform period. The black out-of-wedlock birth rate has actually fallen
each year since 1994.
The unique and dramatic slowdown in the growth of illegitimacy
clearly coincided with welfare reform. The slowdown is undoubtedly the
result of changes in the social messages surrounding welfare,
particularly the new emphasis on limited aid and personal
responsibility.
The slowdown is all the more remarkable given the fact that almost
no states have active programs designed to reduce illegitimacy or
increase marriage. The fact that behavior changed in a positive manner
even without specific efforts to promote that change is encouraging; it
offers cause for optimism concerning the potential effects of programs
specifically developed to increase marriage and reduce illegitimacy in
the future.
HOW WELFARE DEPENDENCE HARMS CHILDREN
The traditional welfare system has led to high levels of welfare
dependence. Dependence, in turn, has profound negative effects on the
well being of children. Dr. June O'Neill and Anne Hill, comparing
children who were identical in social and economic factors such as
race, family structure, mothers' IQ and education, family income, and
neighborhood, found that the more years a child spent on welfare, the
lower the child's IQ. The authors make it clear that it is not poverty
but welfare itself which has a damaging effect on the child.
Examining the young children (with an average age of five-and-a-
half), the authors found that those who had spent at least two months
of each year since birth on AFDC had cognitive abilities 20 percent
below those who had received no welfare, even after holding family
income, race, parental IQ, and other variables constant.\4\
---------------------------------------------------------------------------
\4\ M. Anne Hill and June O'Neill, ``Family Endowments and the
Achievement of Young Children With Special Reference to the
Underclass,'' Journal of Human Resources, Fall 1994, pp. 1090-1091.
---------------------------------------------------------------------------
A similar study by Mary Corcoran and Roger Gordon of the University
of Michigan shows that receipt of welfare income has negative effects
on the long-term employment and earnings capacity of young boys.\5\ The
study shows that, holding constant race, parental education, family
structure, and a range of other social variables, higher non-welfare
income obtained by the family during a boy's childhood was associated
with higher earnings when the boy became an adult (over age 25).
However, welfare income had the opposite effect: The more welfare
income received by a family while a boy was growing up, the lower the
boy's earnings as an adult.
---------------------------------------------------------------------------
\5\ Mary Corcoran, Roger Gordon, Deborah Loren and Gary Solon,
``The Association Between Men's Economic Status and Their Family and
Community Origins,'' Journal of Human Resources, Fall, 1992, pp. 575-
601.
---------------------------------------------------------------------------
Typically, liberals would dismiss this finding, arguing that
families which receive a lot of welfare payments have lower total
incomes than other families in society, and that it is the low overall
family income, not welfare, which had a negative effect on the young
boys. But the Corcoran and Gordon study compares families whose average
non-welfare incomes were identical. In such cases, each extra dollar in
welfare represents a net increase in overall financial resources
available to the family. This extra income, according to conventional
liberal welfare theory, should have positive effects on the well being
of the children. But the study shows that the extra welfare income,
even though it produced a net increase in resources available to the
family, had a negative impact on the development of young boys within
the family. The higher the welfare income received by the family, the
lower the earnings obtained by the boys upon reaching adulthood. The
study suggests that an increase of $1,000 per year in welfare received
by a family decreased a boy's future earnings by as much as 10
percent.\6\
---------------------------------------------------------------------------
\6\ Corcoron et al.
---------------------------------------------------------------------------
Other studies have confirmed the negative effects of welfare on the
development of children. For example, young women raised in families
dependent on welfare are two to three times more likely to drop out and
fail to graduate from high school than are young women of similar race
and socioeconomic background not raised on welfare.\7\
---------------------------------------------------------------------------
\7\ R. Forste and M. Tienda, ``Race and Ethnic Variation in the
Schooling Consequences of Female Adolescent Sexual Activity, Social
Science Quarterly, March 1992.
---------------------------------------------------------------------------
Similarly, single mothers raised as children in families receiving
welfare remain on AFDC longer as adult parents than do single mothers
not raised in welfare families, even when all other social and economic
variables are held constant.\8\
---------------------------------------------------------------------------
\8\ Mwangi S. Kimeny, ``Rational Choice, Culture of Poverty, and
the Intergenerational Transmission of Welfare Dependency,'' Southern
Economic Journal, April 1991.
---------------------------------------------------------------------------
HOW ILLEGITIMACY AND SINGLE PARENTHOOD HARM CHILDREN
The most obvious consequence of the rising tide of illegitimacy and
declining marriage has been a dramatic increase in child poverty. Chart
4 shows data from the National Longitudinal Survey of Youth (NLSY)
which contains a national representative sample of young mothers and
their children. The charts divide children into four groups:
1. Out-of-wedlock--Never Married--Children born out of wedlock
whose mother has never married after the birth of the child;
2. Out-of-wedlock--Subsequent Marriage--Children born out of
wedlock whose mother marries subsequent to the child's birth;
3. Within Wedlock--Divorced--Children born to married parents who
later divorce;
4. Within Wedlock--Marriage Intact--Children born to parents who
were married at the time of birth and remained married.
The chart shows the amount of time since birth that a child has
lived in poverty for the four different categories of children.
Children born out-of-wedlock to never married women are poor fifty
percent of the time. By contrast children born within a marriage which
remains intact are poor 7 percent of the time. Thus the absence of
marriage increases the frequency of child poverty 700 percent. However,
marriage after an illegitimate birth is relatively effective, cutting
the child poverty rate in half.
Additional Social Consequences of Rising Illegitimacy.--Children
raised by never-married mothers have significantly more behavior
problems when compared to children raised by both biological parents.
When comparisons are made between families that are identical in race,
income, number of children, and mother's education, the behavioral
differences between illegitimate and legitimate children actually
widen. Compared to children living with both biological parents in
similar socioeconomic circumstances, children of never-married mothers
have three times more behavioral problems than children raised in
comparable intact families.\9\
---------------------------------------------------------------------------
\9\ Deborah A. Dawson, ``Family Structure and Children's Health and
Well-Being: Data from the 1988 National Health Interview Survey on
Child Health,'' paper presented at the annual meeting of the Population
Association of America, Toronto, May 1990.
---------------------------------------------------------------------------
Children born out of wedlock have less ability to delay
gratification and poorer impulse control (control over anger and sexual
gratification). They have a weaker sense of conscience or sense of
right and wrong.\10\ Adding to all this is the sad fact that the
incidence of child abuse and neglect is higher among single-parent
families.\11\
---------------------------------------------------------------------------
\10\ E.M. Hetherington and B. Martin, ``Family Interaction,'' H.C.
Quay and J.S. Werry (eds.), Psychopathological Disorders of Childhood
(New York: John Wiley & Sons, 1979), pp. 247-302.
\11\ A. Walsh, ``Illegitimacy, Child Abuse and Neglect, and
Cognitive Development,'' Journal of Genetic Psychology, Vol. 15 (1990),
pp. 279-285.
---------------------------------------------------------------------------
Being born out of wedlock increases the probability of teen sexual
activity. Boys and girls born out of wedlock and raised by never-
married mothers are two-and-a-half times more likely to be sexually
active as teenagers when compared to legitimate children raised in
intact married-couple families.\12\
---------------------------------------------------------------------------
\12\ Research by the Heritage Foundation based on the National
Longitudinal Survey of Youth.
---------------------------------------------------------------------------
The absence of married parents is related to poor academic
performance during school years. The longer the time spent in a single-
parent family, the lower the education attained by a child. In general,
a boy's educational attainment was cut by one-tenth of a year for each
year spent as a child in a single-parent home. Controlling for family
income does not reduce the magnitude of the effect noticeably.\13\
---------------------------------------------------------------------------
\13\ Sheila F. Krein and Andrea H. Beller, ``Educational Attainment
of Children From Single-Parent Families: Differences by Exposure,
Gender and Race,'' Demography, Vol. 25 (May 1988), p.228.
---------------------------------------------------------------------------
Perhaps the worse feature of illegitimacy is that it is passed,
like a virus, between generations. Being born outside of marriage
significantly reduces the chances the child will grow up to have an
intact marriage.\14\ Daughters of single mothers are twice as likely to
be single mothers themselves if they are black, and only slightly less
so if they are white.\15\ Boys living in a single-parent family are
twice as likely to father a child out of wedlock as are boys from a
two-parent home.\16\ Children born outside of marriage themselves are
three times more likely to be on welfare when they grow up.\17\
---------------------------------------------------------------------------
\14\ Neil Bennet and David Bloom, ``The Influence of Non-marital
Childbearing on the Formation of Marital Unions.'' Paper given at the
NICHD conference on ``Outcomes of Early Childbearing,'' May 1992.
\15\ Sarah S. Mclanahan, ``Family Structure and Dependency: Early
Transitions to Female Household Headship,'' Demography, Vol. 5, No. 1
(1988), pp. 1-16.
\16\ William Marsiglio, ``Adolescent Fathers in the United States:
Their Initial Living Arrangements, Marital Experience and Educational
Outcomes,'' Family Planning Perspectives, Vol.19 (1987), pp. 240-251,
reporting a study of 5,500 young men.
\17\ Kristin Moore, ``Attainment among Youth from Families that
Received Welfare.'' Paper for DHHS/ASPE and NICHD, Grant #HD21537-03.
---------------------------------------------------------------------------
Illegitimacy is a major factor in America's crime problem. Lack of
married parents, rather than race or poverty, is the principal factor
in the crime rate. It has been known for some time that high rates of
welfare dependency correlate with high crime rates among young men in a
neighborhood.\18\ But more important, a major 1988 study of 11,000
individuals found that ``the percentage of single-parent households
with children between the ages of 12 and 20 is significantly associated
with rates of violent crime and burglary.'' The same study makes clear
that the widespread popular assumption that there is an association
between race and crime is false. Illegitimacy is the key factor. The
absence of marriage, and the failure to form and maintain intact
families, explains the incidence of high crime in a neighborhood among
whites as well as blacks. This study also concluded that poverty does
not explain the incidence of crime.\19\
---------------------------------------------------------------------------
\18\ Arthur B. Elsters et al., ``Judicial Involvement and Conduct
Problems of Fathers and Infants Born to Adolescent Mothers,''
Pediatrics, Vol. 79, No. 2 (1987), pp. 230-234.
\19\ Douglas Smith and G. Roger Jajoura, ``Social Structure and
Criminal Victimization,'' Journal of Research in Crime and Delinquency,
February 1988, pp.27-52.
---------------------------------------------------------------------------
Research on underclass behavior by Dr. June O'Neill confirms the
linkage between crime and single-parent families. Using data from the
National Longitudinal Survey of Youth, O'Neill found that young black
men raised in single-parent families were twice as likely to engage in
criminal activities when compared to black men raised in two-parent
families, even after holding constant a wide range of variables such as
family income, urban residence, neighborhood environment, and parents'
education. Growing up in a single-parent family in a neighborhood with
many other single-parent families on welfare triples the probability
that a young black man will engage in criminal activity.\20\
---------------------------------------------------------------------------
\20\ M. Anne Hill and June O'Neill, Underclass Behaviors in the
United States: Measurement and Analysis of Determinants, New York City,
City University of New York, Baruch College, March 1990.
---------------------------------------------------------------------------
the effects of welfare reform on dependence
The War on Poverty created an expensive welfare system that
encouraged dependence and penalized work and marriage. Until very
recently, most liberal welfare experts argued that the flaws of the
welfare system were unavoidable: Employment for most welfare recipients
was seen as impossible; swollen welfare budgets and high levels of
dependence were inevitable. Even the most aggressive reforms, it was
argued, could reduce welfare caseloads by only a few percentage points
and would cost more than the existing system.
In the last few years, these liberal myths about the impossibility
of reducing dependence have been shattered.\21\ In the mid 1990's
states began significant work-related reforms; this process was greatly
accelerated by the passage of national reform in the summer of 1996.
Coinciding with these changes was an unprecedented drop in AFDC/TANF
caseload, which has declined some 60 percent from its peak level in
March 1994.
---------------------------------------------------------------------------
\21\ See Robert Rector, ``Wisconsin's Welfare Miracle,'' Policy
Review, March/April 1997.
---------------------------------------------------------------------------
Once it became indisputable that the AFDC/TANF caseload could drop
enormously without a social catastrophe, liberal welfare experts
retreated to another line of defense, claiming that the declines in
caseload were the result of economic conditions rather than welfare
reform. However there are definite problems with a primarily economic
explanation of caseload changes. Historically, as Chart 1 shows, the
link between periods of economic growth and recession and changes in
AFDC/TANF caseloads is tenuous at best. Modest increases in AFDC
caseloads occurred during some, but not all, recessionary periods. In
contrast, although the chart shows eight previous periods of economic
expansion prior to the 1990's, not one of these growth periods resulted
in a substantial decrease in AFDC caseloads. In fact, previous economic
booms coincided either with relatively flat caseloads or with
substantial caseload growth (during the late 1960s and early 1970s). In
reality, as the chart makes clear, no sustained and significant
declines in AFDC caseload occurred at any point before the mid-1990's.
Thus, claims that the recent unprecedented drop in dependence has been
caused largely by the current economic expansion are clearly refuted by
the historical record.
Another way to disentangle the effects of welfare policies and
economic factors on declining caseloads is to examine the differences
in state performance. The rate of caseload decline varies enormously
among the fifty states. If economic conditions are the main factor
driving caseloads down then the variation in state reduction rates
should be linked to variation in state economic conditions. On the
other hand, if welfare polices are the key factors behind falling
dependence, then the differences in reduction rates should be linked to
specific state welfare policies.
In a 1999 paper, ``The Determinants of Welfare Caseload Decline''
the author examined the impact of economic factors and welfare policies
on falling caseloads between January 1997 and June 1998.\22\ (Useful
data on state welfare policies were not available beyond that period.)
This analysis showed that differences in state welfare policies,
specifically stringency of sanctions and timing of work requirements
were highly successful in explaining rapid rates of caseload decline.
By contrast, the relative vigor of state economies, as measured by
unemployment rates, changes in unemployment, or state job growth had no
statistically significant effect on caseload decline. (See Table 1.)
---------------------------------------------------------------------------
\22\ Robert E. Rector and Sarah E. Youssef, ``The Determinants of
Welfare Caseload Decline'' Report of the Center for Data Analysis, The
Heritage Foundation, May 11, 1999.
---------------------------------------------------------------------------
During the period analyzed, states with immediate work
requirements and strong sanctions for non-compliant behavior had an
average caseload reduction of 50 percent.
By contrast, states with weak sanctions and no immediate
formal work requirement had an average caseload reduction of 14.2
percent during the same period.\23\
---------------------------------------------------------------------------
\23\ Based on a regression analysis holding the rate of
unemployment in the state constant. The values predicted by the
regression model closely conform to the actual observed values in the
states. The mean caseload reduction over the 18 month period among the
states with both a strong full check sanction and a formal immediate
work requirement was 55.2 percent. The mean caseload reduction among
the fourteen states with weak sanctions and no immediate work
requirement was 16 percent.
---------------------------------------------------------------------------
Thus while the overall health of the U.S. economy has been a
positive background factor contributing to the reduction of welfare
dependence, the economy has been neither a sufficient nor a primary
factor in that reduction. The huge state variations in the rate of
caseload decline cannot be attributed to differences in state economic
factors, but can be convincingly explained by differences in the rigor
of work-related welfare reforms. Policy reform, not economics, has been
the principal engine driving the decline in dependence.
Critics may charge that it is easy to cut caseloads simply by
kicking individuals off welfare whenever they commit a minor
infraction. In reality, very little of the present caseload reduction
is the result of states using sanctions simply to remove individuals
from the rolls. Instead, serious work requirements sharply reduce
dependence because they lower the attractiveness of welfare compared to
private sector employment.
EFFECTS OF WELFARE REFORM ON POVERTY
During the debate over welfare reform in 1995 and 1996, reform
opponents shrilly predicted that the reform would produce large
increases in child poverty. In reality, decreases in dependence would
have had beneficial effects on children's long-term development, even
if they were accompanied by decreasing family income. However, as Chart
2 shows, the fall in the national AFDC/TANF caseload has resulted in a
significant decrease in child poverty, not an increase.
Indeed, if the earned income tax credit, Food Stamps, and other
means-tested benefits are counted as income, the child poverty rate now
stands at 12.0 percent, the lowest rate since 1979. The black child
poverty rate and the poverty rate of children living with single
mothers are now at the lowest points in U.S. history.
This positive picture is confirmed at the individual state level.
Wisconsin, for example, which has led the nation in reducing
dependence, is also among the leading states in reducing child poverty.
Wisconsin has cut its child poverty rate almost in half and now has one
of the lowest rates of child poverty in the nation.
In general, those states, which have strong workfare systems and
strict sanctions for non-compliant behavior by recipients, have seen
more rapid drops in child poverty. By contrast, states, which have weak
work requirements and lenient sanctions, on average, have seen the
least decline in child poverty.
EFFECTS OF WELFARE REFORM ON OUT-OF-WEDLOCK BIRTHS
As Chart 3 shows, when the War on Poverty began, 7.7 percent of
American children were born out of wedlock. Today, that figure is 33
percent. The collapse of marriage among blacks has been particularly
disturbing: At the outset of World War II, the black illegitimate birth
rate was slightly less than 19 percent. Beginning in the late 1960s,
however, the rate of black illegitimate births skyrocketed, reaching 49
percent in 1975 and 70 percent in 1995. Rapid increases in illegitimacy
are also occurring among whites. The illegitimate birth rate among
whites is 26 percent; among white high school dropouts, it is 48
percent.
In nearly every year since the mid-1960s, the percentage of births
that were out-of-wedlock increased steadily. However, starting in 1995,
there was an abrupt shift in the growth of illegitimacy. The growth of
the white out-of-wedlock birthrate slowed considerably, and the black
rate actually declined slightly.
It is no accident that this halt or slowdown in the growth of
illegitimacy coincided with the debate and national passage of welfare
reform. Prior to the mid-1990's there had been a 30 year taboo on
discussion of illegitimacy. While marriage disintegrated few
politicians in either party were willing to even mention the topic.
However, in 1993 and 1994, this gag rule was breached; then President
Clinton gave a series of speeches on the social harm of illegitimacy.
In 1994, serious legislation to reduce illegitimacy was introduced in
both the House and the Senate; this legislation opened a vigorous
public discussion on the harmful effects of illegitimacy for the first
time in three decades. Both parties publicly acknowledged that
illegitimacy was harmful to children and society. During this period
press treatment of illegitimacy and its links to welfare expanded
tenfold.
In addition, in 1993, then President Clinton proposed placing a two
year time limit on the receipt of AFDC.\24\ Many states began moderate
self-sufficiency programs placing work-related behavioral requirements
on AFDC recipients. Most critically, in 1994, Republicans gained
control of both chambers of the U.S. Congress for the first time in
over fifty years. Republican control of Congress heralded a dramatic
change in the rhetoric surrounding welfare. Through the ``Contract with
America'' and repeated public announcements, it became clear that
future welfare would indeed be time limited and would place a far
heavier emphasis on self-reliance. The newly elected Speaker of the
House of Representatives suggested that children born out-of-wedlock
might be placed in orphanages.
---------------------------------------------------------------------------
\24\ Former President Clinton merely intended that a small
percentage of AFDC recipients would be required to work for benefits
after two years on the AFDC rolls. However, his proposal was generally
represented as ``two years and off.'' Most politicians and the public
thought this meant a termination of cash aid after two years on the
rolls.
---------------------------------------------------------------------------
It was no mere coincidence that just one year later (in 1995) the
illegitimate birth rate fell for the first time in nearly a half-
century. In subsequent years the rate remained flat or increased only
slightly. This slowdown in the growth of out-of-wedlock childbearing is
undoubtedly the result of changes in the social messages surrounding
welfare, particularly the new emphasis on limited aid and personal
responsibility.
The slowdown is all the more remarkable given the fact that almost
no states have active programs designed to reduce illegitimacy or
increase marriage. The fact that behavior changed in a positive manner
even without specific efforts to promote that change is encouraging; it
offers cause for optimism concerning the potential effects of programs
specifically developed to increase marriage and reduce illegitimacy in
the future.
RECOMMENDED POLICIES
Future welfare reform should be focused on three themes:
encouraging marriage, requiring work, and controlling costs.
Encouraging Marriage. The erosion of marriage is the
principal cause of child poverty, welfare dependence, and a host of
other social problems. The welfare reform act of 1996 established
illegitimacy reduction as a principal goal with the expectation that
state governors would take the lead in developing innovative programs
to restore marriage.\25\ But, today, only a handful of governors even
mention marriage and no state has a significant program to reduce
illegitimacy.\26\ Thus, it should be no surprise that the illegitimacy
rate has not fallen more, and for whites has even begun to creep slowly
up again. A major challenge in welfare reauthorization will be to
create new programs that carry out the original goals of PROWRA to
increase marriage and reduce illegitimacy.
---------------------------------------------------------------------------
\25\ Much of the discussion about illegitimacy has been
deliberately sidetracked into the non-controversial and far less
important topic of ``teen pregnancy.'' Only around 15 percent of out of
wedlock births occur to girls under 18. Illegitimacy is primarily a
problem of young adult men and women. Teen pregnancy could be
eliminated completely without having much effect on the far larger
problem of illegitimacy.
\26\ Governors George W. Bush of Texas, Frank Keating of Oklahoma,
and Mike Leavitt of Utah have been unusual in their willingness to
speak out in defense of marriage.
---------------------------------------------------------------------------
In the future, 5 to 10 percent of federal TANF funds
should be allocated to pro-marriage programs in at risk communities.
These should include: pro-marriage education in high schools, public ad
campaigns, marriage mentoring programs for young couples at risk of
having children out-of-wedlock, pro-marriage counseling and services
for pregnant non-married women participating in Medicaid, and divorce
reduction programs.
Requiring work. Welfare should not be a one way handout.
Yet current data suggest that roughly half of the two million mothers
presently on TANF sit idly on the rolls and are not engaged in any
activity leading toward self-sufficiency. As part of reauthorization,
states should be required to have 90 percent of their adult TANF
recipients engaged in work activities or off the rolls. If this sort of
serious work requirement were established, it would be reasonable to
expect the national TANF caseload to fall to 700,000 or lower by the
year 2010.
Controlling Costs. As the TANF caseload continues to fall,
there is no reason to maintain the high historic levels of federal TANF
spending. Future TANF authorization levels should be cut by 10 percent.
______
*Members of The Heritage Foundation staff testify as individuals
discussing their own independent research. The views expressed are
their own, and do not reflect an institutional position for The
Heritage Foundation or its board of trustees.
______
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Chairman Herger. Thank you. I appreciate your testimony.
Mr. Rector, just as a parent of several children myself, I
know how difficult it is to raise children with two parents,
let alone just one. So I believe the obvious challenges that
you're mentioning are certainly there in spades.
But do you have any comments on this correlation between
when workfare came in and the illegitimacy went down, and also,
do you have any suggestions, as we're looking towards
reauthorization, on perhaps any programs that promote marriage?
Obviously, we can't mandate or legislate marriages--but do you
have any thoughts on what we might do as we look ahead?
Mr. Rector. Yes. If we could put the chart on legitimacy
back up, what you see on that chart is illegitimacy rising at
almost a straight line there since the early fifties on,
greatly accelerating at the beginning of the war on poverty
back in the mid-sixties. Then you have this amazing kink-over
where it drops for the first time in almost 50 years in 1995,
and has increased at a relatively slow rate.
What happened at that period in the mid-nineties--let me
back up. Between roughly 1965 and 1995, no single political
leader in the United States mentioned the topic of growing out-
of-wedlock births. Lyndon Johnson tried it in the mid-sixties,
and he was trashed and attacked. We then had what I call the
``gag rule'' over this issue. We did not talk about it.
In 1993 and 1994, former President Clinton actually began
to talk about the issue and had a series of major speeches
about the huge negative effects of out-of-wedlock childbearing
on children. And then in '94 we also had legislation introduced
here in the Congress for the first time ever that tried to
reduce out-of-wedlock childbearing, and we had about a tenfold
increase in press treatment of the topic.
At the same time we had workfare programs, moving forward
at the States, and when the Contract with America was enacted,
we had very serious talks about time limit. The former Speaker
of the House was talking about putting children born out of
wedlock into orphanages, and there was this huge symbolic
change about how people perceived welfare and what welfare was
going to be like in the future.
As a result of that change in the symbolic messages alone,
you can see that, quite clearly, something happened to
behavior. It's not nearly enough. We need to bring those out-
of-wedlock birth rates back down to where they were in the
1950's. But it's very optimistic that, having no specific
programs, just by rhetoric alone at the political level, we
seem to have had an effect on behavior.
I would look forward in the future to having specific set
asides of money within TANF to go to pro-marriage activities,
communicating the value of marriage, providing skills to help
young people keep their marriages together.
I will just cite one example that I consider very tragic.
Eighty-five percent of the out-of-wedlock births in the United
States are paid for by the Medicaid system. That means that the
mother is on Medicaid at the time she's pregnant. She is
already in contact with the government. And in close to half
those cases, this is generally a young woman in her early
twenties.
In close to half those cases, that woman is going to be
cohabiting with the biological father of the child while she's
pregnant and at the time she gives birth. Yet you could go from
Maine to Alaska, across this country, and you would not find,
in any government jurisdiction, that the government even passes
out a single brochure to that young couple affirming the value
of marriage to them, as far as I'm aware of, let alone offering
them positive suggestions, skills, mentoring and even reducing
some of the penalties that would occur to them if they did get
married.
So that's a clear example of the kind of opportunity that
we must seize in the future. We should go into each of those
couples and, noncoercively, say ``Have you thought about
marriage?'' And the answer is, in most cases, yes, they have.
``What could we do to help?'' We should try to give them
information, kind of consumer information. ``Let us explain to
you what the difference in well-being for this child will be if
you two do get married. Let me explain what the difference will
be to you as a young man, the father, and to you as a young
woman.'' Then I would go on and provide them with skills to
help keep their relationship together, rather than having them
go through one fractured relationship after another.
There are many, many opportunities like that which we can
take to help improve the well-being of the lives of these young
people and their children, and dramatically reduce child
poverty. Because if you're interested in child poverty,
increasing marriage is the way to go after it.
Chairman Herger. Thank you.
Mr. Greenberg, do you have a comment on this?
Mr. Greenberg. Yes, thank you. I would be happy to.
Mr. Chairman, let me distinguish two issues. One is the
research question, about what has happened and when has it
happened, and the other is how do we think about where to go
from here.
At the research level, it does seem that there was a
leveling off of out-of-wedlock births, roughly starting around
1994, 1995. However, the National Center for Health Statistics
indicates that there had been some under reporting of numbers
in some States, and that, if that had been taken into account,
the peak would have been several years earlier.
We also know that teen births were declining throughout the
1990's, that that also began at an earlier stage. So clearly,
something happened in the early 1990's which did change the
trajectory. But it seems very unlikely that changes that began
in the early 1990's could be explained by enactment of the 1996
law or the public discussions in 1994 and 1995.
We see the declines in welfare participation starting in
1994. We see increased labor force participation by female-
headed families starting earlier than that. So a whole set of
changes are occurring in the 1990's. I think at this point
there is not a research base for us to be saying it's because
this set of people started talking about out-of-wedlock births.
I think we should be cautious on that score.
More generally, just emphasizing the changes in the 1990's,
in addition to the changes happening in welfare systems, we
were at the same time seeing a strong national economy, the
expansion of the earned income tax credit, the expansion of the
child care funding, expansions of health care, strong child
support enforcement; a whole set of things happening all at the
same time. It's very difficult, from what we have, to say this
caused that.
More generally, as you look ahead to next year, a starting
point is that for many people in 1996, I think there was an
expectation that, if welfare caseloads came down, it would
translate into a reduction of out-of-wedlock births. So far, we
have seen a leveling out, but we haven't seen a decline. It's
possible that more is going to change over time, that as more
families are in employment over longer periods, we may see
changes. But it is also possible that welfare wasn't as big a
factor in out-of-wedlock births as was suggested by some in
1995 and 1996.
More broadly, as States now face questions about what to do
around family formation, and how they should think about next
steps, my own sense from a lot of conversations, is that, on
the one hand, there is genuine interest in wanting to get a
better sense of what would work. There would be a genuine
interest in seeing a research agenda developed around it.
At the same time, there is a sense of that decisions about
marriage are enormously complicated personal decisions, that
the process of a public agency saying, ``Yes, we think you
ought to get married,'' is a difficult one. One can look at
research about effects of marriage or the effects of raising
children in single-parent families.
But the research doesn't tell you in any individual case
when you would advise somebody ``Yes, I think you should get
married,'' or ``No, I think you should or shouldn't get
divorced.'' Those are difficult personal issues, and I think
there's a real concern on the part of States both about trying
to determine what's the appropriate role of government, and
also wanting to be sure that government doesn't inadvertently
encourage people to get married for the wrong reasons--to get
married because they feel that they're being pressured by
others to do it; to get married because they feel there's a
financial incentive, that they'll make money when they do it;
to enter into marriages which may not be stable marriages and
may not be the best for their children in the long run.
So, I do think it's an important discussion to have. At the
same time, trying to determine what's the appropriate role of
government and what's the role that doesn't have unintended
adverse effects, is an important part of the conversation,
also.
Chairman Herger. Thank you.
Mr. Cardin.
Mr. Cardin. Thank you, Mr. Chairman. Let me just concur
with Mr. Greenberg's response to the questions you asked Mr.
Rector.
Mr. Rector, in listening to your analysis, if the Soviet
Union would have fallen one decade later, I assume you would
have said it was the welfare reform bill that Congress passed.
It seems to me that you're oversimplifying a lot of the
problems we have out there.
Mr. Greenberg pointed out that we reached a peak in births
by teenage parents in 1991. Now, that was prior to any of the
events that you have referred to. I point that out because I
personally believe that a lot of what you said is important.
Many of the policies that Congress has done, many of the
societal changes, have had a very positive impact on reducing
teenage parents. I think that's important.
But I just think it's important that we don't try to
oversell this. I listened to you go through the child of a
family that was receiving cash assistance versus other children
in poverty, and I don't think there's any empirical evidence on
that.
I do know, though, that the quality of a school, or the
quality of health care, the quality of child care, all directly
affect a child's ability to succeed, and that there is a direct
correlation, which is reverse, on the quality of the school
that a child attends, of a family on welfare, or the health
care they receive, the child care they receive, or the
nutrition the child receives. I think all that makes it more
difficult for a child born in poverty to be able to advance.
I want to ask a question, though, because I am very
concerned about part of the Heritage Foundation's budget for
America, in which you would take TANF funds and use some of
that for--and also our child support funds--and divert that to
the Office of Marriage Initiatives.
I mention that because I think in the last Congress we were
able to do some very positive things. For example, the
fatherhood initiative that Mrs. Johnson and I have been working
on. It passed the House, and we hope we will be able to get
that done. The President has put it in his budget. But he has
put it as an addition, not taking away from the dollars that
are otherwise available for poverty programs.
In child support collections, there is evidence that there
is less chance of out-of-wedlock births where child support is
actually received. And yet your organization wants to divert
money from child support collections, which I think is directly
opposite to one of the objectives we're trying to achieve,
namely having less out-of-wedlock births.
I just want to caution you. If you're interested in a
bipartisan effort in this Congress to deal with these issues,
don't take money out of TANF. If you do, you're going to have a
fight on your hands.
Mr. Rector. Congressman, with all due respect, when we
passed the TANF law, we set three goals, as you well recall.
Mr. Cardin. I believe it was four. But go ahead.
Mr. Rector. Four, OK. Even a stronger point. It was
reducing dependency, reducing poverty, reducing illegitimacy,
and increasing strength in marriage, or two-parent families.
Now, as we looked at the last 5 years, it is difficult for
me to find, out of tens of billions of dollars of spending,
even a single million here or a million there that has been
spent on those last two goals.
Mr. Cardin. The States are not spending money on----
Mr. Rector. On reducing out-of-wedlock births and
increasing marriage, absolutely not. The only two States that
I'm aware of that have efforts in that area are Arkansas and
Oklahoma, and they are spending less than $10 million out of
the whole pot.
So the point that I would make is that those two goals have
largely been neglected, and they were largely neglected--I can
only find four Governors that even mention the word
``marriage''--they were largely neglected because we did not
mandate.
What we will be recommending is that we carry out those
goals, which have been universally and almost totally ignored
at the State level. To do that, we will have to earmark a small
portion of the TANF funding to go to those purposes, vis-a-vis
child support. The entire reason that child support exists,
Congressman, is because we have an astronomically large divorce
and out-of-wedlock child caring record. If we could take a
tiny, tiny portion of child support, which is what we're
recommending, and significantly reduce the divorce rate, we
would improve the well-being of children vastly more than we
can do through the child support system, and we would make the
collection of child support less necessary.
I think you believe that we can do that, and I think that
we can agree that that would be a good thing to achieve.
Mr. Cardin. I would just make this final point.
If this Congress believes that we can afford $1.6 trillion
in tax relief, we can afford to put the extra money into these
programs. That's where you're going to be able to get a
bipartisan agreement.
I feel like a good Republican here today, trying to protect
the States on flexibility. I find it interesting that the
Heritage Foundation only wants earmarks of categorical grants
when it suits your purpose, but not on the general philosophy
that we respect the States. I spent more time in the State than
I have the Federal government so far. I spent 20 years in the
State legislature. I do have confidence in our States. It seems
a little strange that you pick your narrow agenda to have the
Federal Government mandate how the States respond to the
overall objectives.
We've had a good run on the welfare changes. We've had some
good results. States have used innovative new programs. We've
had programs in Maryland to deal with teenage pregnancy, and
they've been effective. Yes, we've used different resources,
different pots of funds, in order to accomplish that result. We
haven't relied solely on Federal assistance to do that.
But we wouldn't have been able to do that if we didn't have
the flexibility under TANF. And now you want to take away our
flexibility under TANF. I think you really are violating the
understanding we had between the Federal government and the
State governments on TANF reform.
Now we should build on it. We shouldn't weaken it. There
should be more resources provided because, you're right, the
problems are great problems, so let's agree together to put
more resources into the programs and trust our States to
respond to the issues.
Thank you, Mr. Chairman.
Chairman Herger. Thank you.
The gentleman from Pennsylvania, Mr. English.
Mr. English. Mr. Rector, I won't call on you to comment on
bipartisanship because you're here really to analyze policy in
this particular area, rather than some of those things that are
really more in our jurisdiction. I don't know if Heritage, in
fact, would have established a causal link between the fall of
the Soviet Union and welfare reform, if the timing had been
better. But I do remember----
Mr. Rector. They're two different departments, so we
probably would have----
Mr. English. I do remember some of the predictions and
analyses that Heritage provided when we were doing the original
welfare reform, and some of the predictions and analyses
provided by other groups. Others, as I recall, suggested at the
time that one million children would be cast into poverty
because of welfare reform. The latest figures suggest two
million children have left poverty since 1996. This is a huge
disparity. It seems to me Heritage was a little more accurate
in predicting what happened than some of the other groups.
Can you comment and elaborate on that, and perhaps--I
realize other groups have attributed the success of welfare
reform to the powers and principalities of the year, but how
would you square that circle?
Mr. Rector. One of the things that we have to recognize is
that the bulk of the research that was done in this area before
welfare reform was simply, absolutely incorrect. It was
incorrect then, and the bulk of the research being provided
today is also quite incorrect and very misleading.
If I could just cite one example, which I'm sure you
remember. Back in '95, the conventional wisdom of welfare
experts was that a workfare program, at its maximum intensity--
as in Riverside, CA, which you may remember, that was the big
success--might reduce welfare caseloads by five percent over
two to three years.
At the exact point that that debate was going on here in
Washington, the welfare caseload in many counties in Wisconsin
was dropping at 5 percent per month. I was out there in
Wisconsin watching it go down, and I could see with my own
eyes--and we had known for 10 years why these analyses were
wrong and why they would fail. They are very similar to the
leaver studies today. They are systematically and dramatically
incorrect in their basic structure.
Mr. English. Could you comment on the leaver studies for a
moment?
Mr. Rector. OK. The problem with the leavers studies is
that they start with a population that's already on TANF, and
then they measure them as they exit off.
Perhaps the strongest effect that welfare reform and
workfare has is that mothers never enter the TANF system at
all, so they are never even on the radar scope for these
studies. As welfare reform becomes more and more effective and
the caseload goes down, the people that will be exiting off
TANF are increasingly the bottom of the barrel. You would
expect a declining set of results.
Meanwhile, the most effective mothers, the most employable
ones, never are going anywhere near TANF at all. In Wisconsin,
at least half of the drop in caseload was women who never
entered the front door because they knew, once they came in,
they were going to have to work for benefits.
That's why, if you want to study the overall effect,
particularly of workfare, on employment and poverty, you have
to look at all single mothers, not just those that exit off
TANF, because the ones that never got on are very important.
That's why, when you look at the whole population of single
mothers, in stark contrast to the leaver studies, you show this
dramatic spike up in employment, from about 55 percent employed
to over 75 percent employed today, exactly coinciding with
welfare reform, and a concomitant huge drop in poverty. That's
why the child poverty rate of children in single-parent
families is the lowest point ever in our history, and you won't
get that just by looking at the leavers.
Mr. English. I have a question about the charts you
displayed, which are, granted, impressive looking. But it seems
to me that they deal with aggregate numbers and we are dealing
with nationally, really 50 different experiments and welfare
reform.
Do you see any differences in the approaches in States to
welfare reform with differing levels of welfare dependence and
the decline of welfare dependence? Can you extrapolate from
those differences what kinds of approaches at the State level
work and which ones don't?
Mr. Rector. Absolutely. We did a study a few years ago
looking at the 50 different States, looking at the intensity of
the workfare programs in those States, and looking at the
economic factors in those States, and seeing their explanatory
value in determining welfare caseload decline. The results of
that are actually shown in the final table in my written
testimony.
But what we found was that--as you know, you have huge
differences in the rate of caseload decline between the States,
with Hawaii, where the caseload actually goes up, and Wisconsin
and Wyoming and some of the others, where it is going down
dramatically. If the dependency reduction was largely due to
economics, then you would tend to find that that would be
correlated with economic variables at the State level, the
unemployment rate, the job growth rate. We found absolutely no
correlation whatsoever, zero correlation, between State
economic factors and the rate of caseload decline.
On the other hand, the workfare factors, the strength and
rigor of the workfare system, which is rather complex, but I
think we measured it reasonably well, overwhelmingly explained
this variation in caseload decline. We found that the States
that had rigorous workfare systems over an 18-month period had
a 50 percent drop in caseload; those that had weak workfare
systems had a drop in caseload of about 14 percent.
For the future, this is very important, because the
remaining TANF caseload, because of the ineffectiveness of
their program, is now clustering up in those States that have
very weak workfare programs, specifically New York and
California. As it goes down in the other States, all the
remaining caseload is remaining in the States that really have
not embraced workfare.
We also find, although the correlation is not nearly as
strong, those States that had the stronger workfare programs
had the greatest drops in child poverty. Wisconsin is a
beautiful example. Wisconsin----
Mr. English. I was going to ask that.
Mr. Rector. Yeah. Wisconsin is the only State that really
has a universal workfare requirement. For the caseload where
there are adults present, it has dropped 90 percent, and the
child poverty rate, when you measure it with the addition of
EITC and things like that, which you should, has roughly been
cut in half and is now among the lowest child poverty rates in
the country. It is very difficult to find the dark side of this
picture, although I'm sure the opponents of reform will try.
What we need to do is go on and insist that the other
States that have not fully embraced work requirements have the
sort of system that Wisconsin has on work.
Mr. English. I'm out of time, but I have a lot more
questions. Thank you, Mr. Chairman.
Chairman Herger. Thank you very much, Mr. English.
The gentleman from Michigan, Mr. Levin, will inquire.
Mr. Levin. First of all, Mr. Rector, I'm not sure it's very
useful to fight last decades' battles. I mean, we had differing
views in our institution about welfare reform. The President,
who favored it, vetoed a couple of bills because they did not
have adequate child care and health care. And he was right. It
had some other problems with it, but despite that, he signed it
and a number of us voted for it.
What bothers me is those who either are fighting the
battles of the past, for reasons I don't always understand, or
I think are trying to draw lessons for the future that aren't
based in reality, that's why I think it's useful to get your
testimony and Mr. Greenberg's. I have read Mr. Greenberg's
material and I congratulate you on trying to paint both the
pluses and the minuses and acknowledging the pluses.
There is no doubt that the caseload has gone down. There is
no doubt that welfare reform played a substantial role. If we
hadn't had economic prosperity, I don't think anybody would
deny those caseloads would not be where they are today. I think
to endlessly argue as to which is the major factor may not be
very productive, especially today, when we face the
possibility, according to the President, of economic
difficulties.
But, you know, Mr. Rector, I was glad you kept going,
because I think, in the end, you tipped off where you're going.
We don't have a verbatim record, but I did write it down, I
think accurately. You said, ``If one's interested in child
poverty, marriage is the way to go after it.''
Now, I'm all in favor of promoting marriage. I'm all in
favor of governors speaking out. But the notion that we're
going to get at child poverty, we're going to get at the
problems of people moving from welfare to work and still being
in poverty by the single symbol or flag of marriage, is
unsustainable. You said, if you're interested in child poverty,
marriage is the way to go after it.
I think there are lots of ways to go after it, including
getting health care for kids, including making sure they are
not hungry, making sure they have a decent education
opportunity, so when they go to a high school like the one I
went to many decades ago, the roof doesn't leak and there
aren't any clocks in the hallways and the holders which once
held clocks which tell kids we don't care about you, the
lessons you draw for the future--I mean, is marriage the way to
go after child poverty? The way? Nothing else matters?
Mr. Rector. Marriage is the most important thing, as I
think, maybe in a less contentious atmosphere, we would
actually agree with that. Basically, about 75 to 85 percent of
the child poverty that exists in the United States today is in
some form of never married or broken type of family. That's----
Mr. Levin. Look, I agree with that. I agree. But we are not
going to force people to marry.
Mr. Rector. I didn't mean to say it's the exclusive way. I
do think it's the most important way.
Mr. Levin. You said it's ``the'' way. I mean, we don't have
programs to force people to marry.
Mr. Rector. We have programs that severely penalize them
when they do through the welfare system. I think those should
be corrected.
Mr. Levin. What are the programs today that penalize
people?
Mr. Rector. All means-tested benefit programs penalize
marriage in the following way, Congressman. If you have a young
woman, for example, who is on welfare and she has the father of
the child that is making, say, $14,000 or $15,000 a year; as
long as the two of them are not married, then his income is not
counted toward her welfare eligibility. If they do get married,
his income is counted toward her eligibility and her benefits,
in a whole range of programs--public housing, food stamps,
Medicaid, TANF, WIC--and everything will be significantly
reduced. That is a huge marriage penalty. It's much more
significant than the marriage penalty of the Tax Code.
Mr. Levin. Mr. Greenberg, do you want to--I mean, when you
say that, I wonder what the policy implications are and whether
we're willing to act on what you call a policy detriment.
Mr. Greenberg.
Mr. Greenberg. Thank you.
Under the TANF structure, it is up to each State to decide
how it wants to count income, and who should be included in the
family when there's an application for assistance. So when a
mother and father are living together, in the TANF structure,
whether they are married or not, the State is free to treat
their income exactly the same, whether the family is co-
habiting or married. That's left up to each State.
In the Food Stamp Program, the question that matters in
determining eligibility and benefits isn't whether they're
married or not; it's whether they're purchasing and preparing
food together. So for people who are living together, there is
not a penalty for getting married.
I do agree that it's important to be sure that benefits
programs don't have the effect of penalizing families for
getting married and don't have the effect of penalizing two-
parent families.
One of the things that the great majority of States have
done as they implemented TANF is they got rid of the old
restrictions that used to exist in the old welfare program that
made it difficult or sometimes impossible for two-parent
families to receive assistance. They have been able to do that
because of the flexibility they've had in the structure.
Mr. Levin. I think, Mr. Rector, we can reach agreement on
that. If we're willing to provide adequate Medicaid and
adequate food stamps and have adequate realistic levels of
poverty, we'll reach agreement on that. But all I'm suggesting
is we have to do those things.
I'm in favor of encouraging marriage, but to assume that
the way out of child poverty is marriage--I understand getting
kids health care, food stamps, decent education. We can do
those things in this country. We haven't yet found a magic way
to bring about marriage. That is true across this country,
across all kinds of lines, if you look in my district, any
district. So don't put your chips on an approach that I think
will continue to leave millions and millions of kids in poverty
in this country.
My time is up.
Chairman Herger. Thank you very much, Mr. Levin.
I want to thank each of those who serve on our
Subcommittee. I particularly want to thank our panelists for
your testimony today.
Also, we may have several more questions that we may want
to submit to you for the record that we would appreciate your
cooperation with.
Again, thank you very much, each of you, who have
participated. Beginning this year and leading into next year,
we want to examine a program just about all of us believe is a
good program, to see how we can make it even better. So, again,
I thank each of you for your time and cooperation.
This hearing will stand adjourned.
[Questions submitted from Chairman Herger to the panel, and
their responses follow:]
Center for Law and Social Policy
Washington, DC 20036
April 9, 2001.
Rep. Wally Herger
Chairman, Subcommittee on Human Resources
House Ways and Means Committee
Rayburn House Office Building
B-317, Rayburn
Washington, DC 20515
Dear Rep. Herger:
Thank you again for inviting me to testify at the March 15
Subcommittee hearing. I am writing to respond to the additional
questions provided to me after the hearing. I would be happy to
supplement any of these responses if you would like to receive
additional detail. My responses follow the sequence of your questions.
1. Many critics of welfare reform feared that there would be a
``race to the bottom'' as States, given fixed funding and more
flexibility, would shred their programs in the interest of saving
money. Has this occurred?
In 1996, much of the concern about a race to the bottom flowed from
apprehensions about how states would respond to a funding shortfall.
States have never faced a funding shortfall in the current structure,
and state responses could be very different if states had less funding.
I do not think there has been a ``race to the bottom'' in the sense of
sharp cuts in benefits and eligibility; however, states have sometimes
competed to reduce their caseloads, and have sometimes used practices
that have denied, terminated or restricted assistance to needy families
in efforts to do so.
When the 1996 law was pending before Congress, many people feared
how states would respond if they faced a situation in which federal
funds were insufficient to provide assistance to eligible families.
Caseloads had been rising rapidly during the early 1990s, and the law
proposed to fix Federal funding through 2002 at approximately 1994-95
spending levels, while permitting states to reduce state spending to
75% or 80% of their 1994 spending levels. Thus, the concern was that if
the law simultaneously froze Federal funding, allowed states to
withdraw state funds, and eliminated the duty to provide assistance to
eligible families, it seemed very foreseeable that if caseloads began
to approach or exceed available funding, states would cut back
eligibility rather than increase unmatched state spending.
The actual experience has been quite different, possibly because we
have never faced a time in which block grant funding levels have been
insufficient to provide assistance to eligible families. Although this
was not generally recognized at the time the law passed, the nation's
caseload had begun declining in early 1994. Therefore, for most states,
the provision of block grants in 1996 based on earlier-year funding
resulted in an increase in Federal funding. As noted in my testimony,
the GAO calculated that if all states had participated in TANF for the
full year in 1997 and had met applicable maintenance of effort
requirements, they would have had an additional $4.7 billion in Federal
funds above what they would have received under the prior funding
formula. This margin continued to grow in subsequent years as caseloads
continued to fall. As a result, we have never seen how states would
respond if they were faced with a situation in which funding was
insufficient to provide assistance to eligible families. I think this
is an important cautionary note for next year when Congress considers
future block grant funding levels.
More generally, it is certainly true that most states have not
reduced basic benefit levels (though most state benefit levels have not
kept pace with inflation despite states having much smaller caseloads,
a strongly work-focused system, and additional available resources.) It
is also true that the principal new eligibility restrictions that
states have imposed have been ones expressly required or encouraged in
the Federal law, e.g., time limits, restrictions on assistance to legal
immigrants.
At the same time, the concern about a ``race to the bottom,'' was
not just about formal eligibility rules; rather, it was a fear that
states seeking to manage within block grant funding levels would deny
or terminate assistance for needy families in efforts to reduce
caseloads as rapidly as possible. As discussed in my testimony, much of
the caseload decline is clearly attributable to employment, but a
substantial share is also attributable to sanctions and other practices
that deny or terminate assistance for failing to meet program and
administrative requirements. The frequency of such practices increased
dramatically after enactment of TANF. I continue to be concerned that
the strong Federal signal encouraging caseload reduction has not been
accompanied by a comparably strong signal emphasizing the need to
actively work with all families to promote employment, and that in the
current structure, states are rewarded for caseload reduction whether
or not it is attributable to employment or to decreased need.
2. I note your concerns about the poverty rates for families
leaving welfare, especially for those who are sanctioned for failing to
work. That is an important point to consider, but we also need to look
at the importance of sending a strong message about work. Can we send
that strong message without imposing sanctions on families who fail or
refuse to work?
I agree that it is important to send a strong message about work.
However, there is evidence that current sanction practices often result
in termination of assistance to families with serious barriers to
employment. In TANF reauthorization, I hope the Subcommittee will
consider modifying the law governing sanctions to emphasize the
importance of states actively working to promote participation among
families with serious employment barriers.
First, the problem of poverty rates for families leaving welfare is
not just or even principally a problem of sanctioned families. It is
certainly the case, though, that poverty rates are much higher for
families in which the parent or parents are not employed.\25\ However,
in the state studies in Washington and Missouri, most families (58%)
were poor after leaving assistance, even though most families were
working.\26\ And, in a longitudinal study of families leaving welfare
in Wisconsin, the researchers compared the combination of earnings,
cash assistance, Food Stamps, and Earned Income Tax Credit to the
Federal poverty line, and reported poverty rates of 63% in the first
year, 61% in the second year, and 59% in the third year for 1995
leavers.\27\ These high and persistent poverty rates underscore the
need to help ensure that families entering employment are linked with
work supports--child care, health care, Food Stamps, child support, and
the EITC. In addition, they suggest the importance of continued
attention to employment retention and advancement initiatives and the
need to address job quality in employment placements.
---------------------------------------------------------------------------
\25\ For example, a study examining circumstances of New Jersey
leavers reported poverty rates of 29% for leavers who were off TANF and
employed and 82% for leavers who had left TANF and were not employed.
Rangarajan and Wood, How WFNJ Clients Are Fairing Under Welfare Reform:
An Early Look (Mathematica Policy Research, 1999), available at http://
www.mathematica-mpr.com/PDFs/wfnj.pdf. A Utah study found that 32% of
those who left assistance due to increased income were poor, compared
to 73% of those who left due to time limits and 58% of those who left
for ``other'' reasons. Vogel, Taylor and Barusch, Multiple Impacts of
Welfare Reform in Utah: Experiences of Former Long-Term Welfare
Recipients, (Graduate School of Social Work, University of Utah, June
2000) available at http://www.socwk.utah.edu/
\26\ Du, Fogarty, Hops, and Hu, A Study of Washington State Leavers
and TANF Recipients--Findings from the April-June 1999 Telephone Survey
Final Report, (Office of Planning and Research, Economic Services
Administration & Department of Social and Health Services, March 2000);
available at http://www.wa.gov/WORKFIRST/about/Exit3Report.pdf. The
relevant portion of Missouri's study, by the Midwest Research
Institute, is available at http://www2.kclinc.org/downloads/
MRIChapter2.pdf.
\27\ Cancian, Haveman, Meyer, and Wolfe, Before and After TANF: The
Economic Well-Being of Women Leaving Welfare (Institute for Research on
Poverty, May 2000) available at http://www.ssc.wisc.edu/irp/sr/
sr77.pdf.
---------------------------------------------------------------------------
Looking specifically at sanctioned families, only a limited number
of state studies examine their circumstances. The consistent finding
from those studies is that sanctioned families are less likely to have
graduated high school, less likely to have recent work history, more
likely to report health or mental health problems. Families terminated
due to sanction consistently display poorer outcomes than families
terminated for other reasons. They are less likely to be employed after
leaving assistance, and if employed, likely to have lower earnings than
other leavers.\28\ And, a recent study finds that most sanctions and
case reductions or closures for noncompliance are due to missing
appointments or not filing paperwork, rather than for refusing to work
or not showing up for work.\29\
---------------------------------------------------------------------------
\28\ A number of these studies are summarized in Goldberg and
Schott, A Compliance-Oriented Approach to Sanctions in State and County
TANF Programs (Center on Budget and Policy Priorities, October 2000),
available at http://www.cbpp.org/10-1-00sliip.pdf.
\29\ Cherlin, et al., Sanctions and Case Closings for
Noncompliance: Who is Affected and Why (Policy Brief 01-1, Welfare,
Children and Families Study, Johns Hopkins University), available at
http://www.jhu.edu/\welfare/18058____Welfare____Policy____Brief.pdf.
According to respondents, the most common reasons for reduction or
termination of assistance were missing an appointment (32%) and not
filing paperwork (21%). In 12% of cases, the basis was not complying
with work-related rules.
---------------------------------------------------------------------------
I appreciate that the goal of sanction policy is often to
communicate the importance of work and ``get the attention'' of
families. However, these findings suggest that for families with very
severe barriers to employment, merely imposing sanctions for
noncompliance is not a sufficient strategy. Rather, if the hope is to
actively engage these families and to link them with appropriate
services, states need to make stronger efforts to assess circumstances,
identify the reasons for nonparticipation before imposing sanctions and
make active efforts to reach out to families after they have been
sanctioned. Such practices would not diminish the importance of a focus
on work, and could result in greater participation in work-related
activities by those families with the most serious barriers to
employment.
3. What do recipients themselves say about welfare reform,
including those who have left welfare?
While there has been much research concerning the 1996 law, I think
that too little of it has directly sought to gather information about
the perspectives of the families seeking or receiving assistance. I
would urge the Subcommittee to consider using field hearings and other
approaches to gain further insight into the perspectives of affected
families during the course of this year.
A number of studies have asked questions about well-being and
hardship since leaving welfare. However, typically, these studies have
not asked families which services they received while receiving
assistance or their opinions about which services were or could have
been most helpful. Generally, the picture that emerges from these
studies is that most leavers state they are ``better off'' since
leaving assistance, with employed leavers more likely to agree they are
better off. However, a group of leavers indicate that their situations
are worse since leaving assistance. Moreover, leavers often report a
range of hardships that is disturbingly high.
As to overall well-being, in a recent South Carolina leavers'
study, 20% agreed with the statement ``Life was better when you were
getting welfare;'' 80% disagreed. Among those working, only 11% agreed;
34.5% of those not working agreed.\30\ In an Arizona study, 68% of
leavers reported being better off; 15% reported being worse off.\31\
---------------------------------------------------------------------------
\30\ Richardson, Schoenfield, LaFever, Larsh, Tecco, & Reniero,
Welfare Leavers and Diverters Research Study--One-Year Follow-Up of
Welfare Leavers--Final Report (Maximus, March 2001).
\31\ Westra & Routley, Arizona Cash Assistant Exit Study--First
Quarter 1998 Cohort Final Report. ( Arizona Department of Economic
Security Office of Evaluation, January 2000).
---------------------------------------------------------------------------
In a Florida study, 51% reported being better off; 18% reported
being worse off; 32% said they would go back on WAGES [the state's TANF
Program] if they could.\32\ In Utah, 52% of those who left due to
increased income said life was better since cash assistance closed (18%
saying worse), while only 21% of those who left due to time limits said
life was better (49% worse) and 35% of those who left due to other
reasons said life was better (38% worse.) \33\
---------------------------------------------------------------------------
\32\ Crew & Eyerman, After Leaving WAGES (Florida State University,
1999).
\33\ Vogel, Taylor and Barusch, supra.
---------------------------------------------------------------------------
While leavers often indicate that life is generally better, they
also report significant levels of continuing hardships. Studies tend to
ask these questions in different ways, making it somewhat difficult to
combine responses. Nevertheless, in the tables below, we present the
extent of certain hardships reported in some of the recent leavers'
studies. (We have combined responses to similarly-phrased questions for
the sake of brevity.) The first table presents housing-related
hardships leavers experienced after exiting welfare programs. The
numbers seem to indicate that around one-tenth of all leavers have been
evicted since departing the rolls, more have suffered a loss of
utilities, and still more--up to one-third--have lost their telephone
service. And, these figures may under-report the true prevalence of
these hardships, since those who have been evicted or had their phone
service terminated are presumably harder to contact.
----------------------------------------------------------------------------------------------------------------
Utilities
Evicted/forced (heat/gas/ Telephone
to move (in electric) turned off (in
percent) turned off (in percent)
percent)
----------------------------------------------------------------------------------------------------------------
Arizona......................................................... 17.0 12.0 --
Colorado........................................................ 10.5 14.4 27.5
District of Columbia............................................ 5.7 5.8 --
Florida......................................................... 20.2 26.8 38.3
Minnesota (working leavers only)................................ .............. 13.0 17.0
New Mexico...................................................... 10.9 10.0 --
Cuyahoga County, Ohio........................................... 5.0 15.0 --
South Carolina.................................................. 12.1 11.4 34.9
Utah............................................................ 7.0 10.0 23.0
Washington...................................................... 7.0 12.0 --
Wisconsin....................................................... 12.0 10.0 27.0
----------------------------------------------------------------------------------------------------------------
The second table presents food- and medical-related hardships.
Although prevalence varies most of the studies indicate a rather high
occurrence of difficulty in obtaining or having enough food or medical
care.
----------------------------------------------------------------------------------------------------------------
Difficulty
Received food Hungry/not affording food/ Went without
from shelter enough to eat/ no way to buy medical care
or food bank skipped meals food (in (in percent)
(in percent) (in percent) percent)
----------------------------------------------------------------------------------------------------------------
Arizona......................................... 21.0 24.0 -- 24.0
Connecticut..................................... 11.5 14.8 -- --
Colorado........................................ 30.8 -- 58.5 --
Florida......................................... -- -- 42.6 --
Minnesota (working leavers only)................ -- 11.0 -- 28.0
New Mexico...................................... -- -- 25.2 18.5
Cuyahoga County, Ohio........................... -- 28.0 -- --
South Carolina.................................. -- -- 12.6 9.5
----------------------------------------------------------------------------------------------------------------
Fewer studies seek direct information about families' opinions
concerning the assistance they received while participating in TANF. In
studies that have sought this information, opinions among families seem
divided. In Wisconsin, 60% of leavers agreed with the statement
``Welfare more about rules and red tape than helping'' (38% disagreed);
49% agreed that ``Welfare wants to get rid of people, not help (46%
disagreed); 67% agreed that they had been ``treated with perfect
fairness by caseworker (32% disagreed) \34\ In South Carolina, 46%
agreed that the welfare program was more about rules and red tape than
about helping people (54% disagreed); 32% agreed the welfare program
wants to get rid of people, not help them (68% disagreed); 83% agreed
that their caseworker treated them with perfect fairness (17%
disagreed).\35\ In Mississippi, 55-60% reported that the agency had
treated them fairly and attempted to help them; the remaining 40-45%
did not feel they had been treated fairly.\36\
---------------------------------------------------------------------------
\34\ Survey of Those Leaving AFDC or W-2. January to March 1998
Preliminary Report (State of Wisconsin, Department of Work force
Development, January 13, 1999).
\35\ Survey of Former Family Independence Program Clients: Cases
Closed During January through March 1998 (South Carolina Department of
Social Services, Division of Program Quality Assurance, June 1999).
\36\ Beeler, Brister, Chambry and McDonald, Tracking of TANF
Clients: First Report of a Longitudinal Study. Mississippi's Temporary
Assistance for Needy Families Program (Center for Applied Research,
Else School of Management, Millsaps College under contract with the
Mississippi Department of Human Services. (December 15, 1998--revised
January 28, 1999).
---------------------------------------------------------------------------
A new report, based on telephone surveys with single mothers in
Milwaukee, reported that most (59%) considered W-2 an improvement on
AFDC, but that most (62.5%) thought there were problems with the
present system. The most commonly identified problems were ``don't
provide adequate training; money received is not adequate for support;
program is unorganized/hassle to go through; staff is rude/uncaring;
services are too slow; staff is unorganized/not helpful.'' The most
frequent recommendations were to provide more/better training and to be
more individualized to each case.\37\
---------------------------------------------------------------------------
\37\ S & R Piper Family Foundation, Single Mother Needs Assessment
Study Phase II Telephone Interviews (Dieringer Research Group, Inc.,
October 2000), available at http://www.pieperline.com/pf/Surveys/smnas/
SMNAS.PDF.
---------------------------------------------------------------------------
One recent report provides information about the opinions of
families who had applied for assistance. The report was based on 1512
surveys of current and former recipients conducted by community groups
in fourteen sites. While there were substantial variations between
sites, some of the findings included: 53% of applicants stated that
they had experienced rudeness during the application process; 42%
reported needing to make three or more visits to get their application
approved; 49% reported waiting 30 or more days before starting to
receive benefits; and only 39% reported having been told of fair
hearing rights.\38\
---------------------------------------------------------------------------
\38\ Gordon, Cruel and Unusual: How Welfare ``Reform'' Punishes
Poor People, (Applied Research Center, 2001), available at http://
www.arc.org/downloads/arc010201.pdf.
---------------------------------------------------------------------------
In short, families who have left assistance are likely to report
that they are better off, particularly if they are working, though
hardship levels are significant for many welfare leavers. In studies
that seek information about the experience of receiving assistance,
there are indications of difficulties, and I hope the Subcommittee can
look more closely at these concerns.
4. In your testimony, you note that TANF implementation has been
far more than work requirements and time limits--it has also involved
additional resources and an array of new and expanded supports to help
families enter and maintain employment. Do you think this would have
happened if TANF had not been enacted? Why or why not?
I think that because of the block grant structure and the decline
in welfare caseloads, state spending on a set of supports has probably
been higher than it would have been had there been no change in federal
law. However, there was broad agreement in the mid-1990s about the need
to change Federal law to move to a work-based welfare system, and many
(though not all) of those advocating change were urging an increase in
federal funding to support the shift. It certainly would have been
possible to increase the availability of Federal funds for states
without implementing a block grant structure or eliminating many of the
protections and safeguards for families that existed in prior law. I do
think, though that the fact that Federal and state funding has remained
essentially constant as state caseloads have declined has played an
important role in increasing the resources available for state efforts
to promote work and support low income working families.
5. Taking a look at some of the figures in your testimony, you
state that earnings for working adults receiving assistance averaged
$597.97 per month in FY 99. You also reference a study funded by HHS
that found the median earnings for the first full quarter after leaving
welfare were $842 a month. Although these are low, they are still
higher than the U.S. average amount of TANF cash assistance in FY 99,
which was $357.27 per month. Please comment.
The clear picture emerging from data about current recipients and
families leaving welfare is that they are most frequently entering into
jobs with low earnings. The earnings are typically higher than the
basic TANF grant. So, if families were simply entering employment and
losing a cash assistance grant, they would usually have higher cash
income (particularly if they began to receive the EITC.) There are
three factors, though, that complicate the picture: loss of Food
Stamps, loss of Medicaid, and uneven receipt of child care.
First, families leaving assistance often stop receiving food
stamps. The National Survey of America's Families, the nationally
representative study conducted by the Urban Institute, has reported
that in 1997, only 47% of those families who had left assistance in the
last six months were receiving food stamps,\39\ even though about \2/3\
of leavers seemed to still meet income eligibility guidelines for the
Food Stamp Program.\40\
---------------------------------------------------------------------------
\39\ Loprest, Families Who Left Welfare: Who Are They and How Are
They Doing?, Assessing the New Federalism Discussion Paper 99-02
(1999), available at http://newfederalism.urban.org/pdf/discussion99-
02.pdf.
\40\ See Zedlewski and Brauner, Declines in Food Stamp and Welfare
Participation: Is there a Connection?, Assessing the New Federalism
Discussion Paper 99-13 (October 1999), available at http://
newfederalism.urban.org/pdf/discussion99-13.pdf.
---------------------------------------------------------------------------
Second, families leaving assistance often stop receiving Medicaid.
According to the NSAF's data, only 55% of children and 52% of adults
who had left assistance within the last 6 months were continuing to
receive Medicaid in 1997.\41\ In more recent data, the picture for
children looks somewhat better, but there is still a drop in children's
receipt of Medicaid and a larger drop in adult receipt. This drop in
receipt is particularly troubling because typically, employed leavers
are not receiving employer-provided health care coverage at their jobs.
Thus, leaving assistance results in a decline in heath care coverage.
---------------------------------------------------------------------------
\41\ Loprest, supra.
---------------------------------------------------------------------------
Third, whether a family has more disposable income after going to
work also depends on the family's work expenses. One of the most
significant work expenses can be child care. Not all working families
have child care expenses, but for those with expenses, the cost of
child care can represent a substantial part of family income. Thus, it
is troubling to see that only about 25-30% of working leavers are
receiving child care assistance.\42\
---------------------------------------------------------------------------
\42\ Schumacher and Greenberg, Child Care After Leaving Welfare:
Early Evidence from State Studies (Center for Law and Social Policy,
October 1999), available at http://www.clasp.org/pubs/childcare/
Child%20Care%20after%20Leaving%20Welfare.PDF.
---------------------------------------------------------------------------
In pointing to these concerns, I want to emphasize that (as noted
above) there is much reason to believe that most of the families that
have entered employment are glad that they have done so and much prefer
to be working. At the same time, if a national policy goal is to ensure
that entering employment translates to improved economic well-being, it
is important to find ways to improve the operation of the system of
work supports.
Further, the problems described above are not unique to welfare
leavers. Participation in Medicaid, Food Stamps, and child care by low-
income working families who have not recently left welfare appears to
be even lower than the participation by welfare leavers. Thus, this
suggests a broader issue about the need to improve the accessibility of
benefits for low-income working families.
6. You describe (page 9) how ``almost all states are funding teen
pregnancy prevention initiatives using TANF funds, and TANF funding has
made it possible for States to create or expand after-school programs,
pregnancy prevention programs, stay-in-school programs, and an array of
youth development initiatives aimed at reducing teen pregnancies and
promoting stronger outcomes for low-income teens.''
a. What are the effects of the teen pregnancy prevention
initiatives States are running?
While it is possible that some teen pregnancy prevention
initiatives funded through TANF are being evaluated, the law has no
general requirement that these initiatives be evaluated. According to a
survey by the American Public Human Services Association, ``State Teen
Pregnancy Prevention and Abstinence Education Efforts: Survey Results
on the Use of TANF and Title V Funds'' published in July 1999,
available at http://www.aphsa.org/publicat/teenpreg.pdf, thirteen
states reported that they were using funds to develop and implement
evaluation methods for statewide and local abstinence and/or teen
pregnancy prevention/out-of-wedlock birth programs.
While initiatives that are supported by TANF may or may not have
been evaluated, a number of teen pregnancy prevention interventions
(not necessarily TANF funded) have been subject to evaluation in recent
years. A synthesis of key findings was published by The National
Campaign to Prevent Teen Pregnancy, entitled ``No Easy Answers:
Research Findings on Programs to Reduce Teen Pregnancy'' in March 1997;
the summary is available at http://www.teenpregnancy.org/fmnoeasy.htm.
An updated review, ``Emerging Answers'' will be published shortly.
b. While it is possible for States to run all sorts of teen
pregnancy prevention programs using TANF money, how many actually are
doing so?
According to the APHSA survey, ``State Teen Pregnancy Prevention
and Abstinence Efforts'' published in July 1999, forty-six states
responded that they fund teen pregnancy/out of wedlock initiatives
using TANF or MOE (some of these efforts may reach non-teens). Brief
descriptions of some of these pregnancy prevention initiatives are
available from APHSA. In addition, CLASP's ``Tapping TANF: When and How
Welfare Funds Can Support Reproductive Health or Teen Parent
Initiatives,'' available at http://www.clasp.org/pubs/TANF/6-
517tappingtanf.PDF, also describes a number of state initiatives.
c. What have been some of the results of the Minnesota Family
Investment Program in promoting two-parent families?
The evaluation of the Minnesota Family Investment Program (MFIP)
found that a welfare reform initiative that broadened eligibility for
two parent families and provided increased assistance when families
entered employment was associated with an increased likelihood that
single parents would marry and that two parent families would stay
together.\43\
---------------------------------------------------------------------------
\43\ Knox, Miller, and Gennetian, Reforming Welfare and Rewarding
Work: A Summary of the Final Report on the Minnesota Family Investment
Program (Manpower Demonstration Research Corporation, September 2000),
http://www.mdrc.org/Reports2000/MFIP/MFIP-ExSum-Final.htm.
---------------------------------------------------------------------------
MFIP had a number of notable features: the program eliminated
restrictions on eligibility for two parent families; offered an
enhanced earnings disregard for families entering employment; imposed
work-related requirements after 24 months for single-parent families
and after 6 months for two parent families, with a 10% grant reduction
for noncompliance; did not impose a time limit on benefits;
consolidated cash assistance, family general assistance and food stamps
into a single program. The program was evaluated using a random
assignment design, with a control group subject to the old AFDC rules.
Over a 3-year period, for long-term single parent family
recipients, the program was associated with increased employment and
earnings, increased receipt of assistance; increased total earnings,
and an increase in the share of families with income above the poverty
line. At the end of 3 years, the share of single-parent long-term
recipients who were married and living with a spouse was 10.6%, versus
7% for the control group, reflecting a 51.4% increase. The evaluation
also found a decrease in the likelihood that the mother had been a
victim of domestic abuse over the three-year period.\44\
---------------------------------------------------------------------------
\44\ The evaluation also reported a set of positive child outcomes.
For children, the evaluation reported an increase in the likelihood
that children had continuous health care coverage, an increase in use
of formal child care arrangements, a reduction in reported problem
behaviors, an increase in the level of school engagement and
improvement in school performance.
---------------------------------------------------------------------------
Often, when a program is evaluated using a random assignment
design, it is difficult to determine which components of the program
structure were most significant in affecting the program. In this case,
the program design allowed evaluators to determine the independent
effect of the incentive rules apart from the program's work mandate.
The evaluators concluded that ``MFIP's incentives and benefit rules
rather than the participation mandates were largely responsible for the
increase in marriage rates.''
For two-parent families, there was no increase in employment, and
family earnings actually declined; evaluators concluded that the
program's primary effect was to cause one parent in some families to
cut back on work, either by reducing hours or leaving work entirely.
However, because two-parent MFIP families were more likely to receive
assistance, their total income from earnings and assistance was
somewhat higher than that of the control group, and the share with
income above the poverty line was higher.
At the end of 3 years, the share of the original MFIP two-parent
family group in which parents were married and living together was
67.3%, as compared to 48.3% for the AFDC group, which translates to a
39.5% increase in the likelihood of being married and living with a
spouse. The share cohabiting was less in the MFIP group (13.5% for MFIP
versus 22.8% for AFDC) and the share divorced or separated was also
less (8.9% for MFIP versus 21.5% for AFDC). The evaluators suggest that
the program's less restrictive eligibility criteria for two parent
families, increased benefits for working families, and greater family
discretion in how to spend their resources may have all played a role
in affecting the result.
The MFIP results are strikingly encouraging. At minimum, they
suggest the need for active dissemination of the findings, further
follow-up research, and for Congress to ensure that Federal law does
not discourage states from implementing similar approaches. Under
current law, states are not required to impose more stringent
eligibility rules on two-parent families, though it is sometimes
suggested that the very high two-parent participation rates have the
effect of discouraging states from providing assistance to two-parent
families in state TANF programs. Similarly, states are free to
implement generous earnings disregard and work supplements for employed
families, but if Federal TANF funds are used, such support counts
against the Federal 5-year limit on use of Federal TANF funds to
provide assistance. Accordingly, if Congress wants to make it easier
for states to implement MFIP-like approaches, then it will be important
to consider whether the higher participation rate for two-parent
families is appropriate or desirable, and to consider whether states
should be free to use Federal TANF funds to provide supports for
working families without having those supports count against the
Federal time limit.
conclusion
Thank you for your consideration. I hope these responses are
helpful to the Subcommittee.
Sincerely,
Mark Greenberg
Senior Staff Attorney
Heritage Foundation
Washington, DC 20002-4999
Question 1. I noted your suggestion that the TANF block grant
should be cut by 10 percent, owing to the steep caseload decline since
1996 and even before then. It is worth noting that the TANF block grant
has been fixed at $16.5 billion per year since 1996, without adjusting
for inflation. That amounts to a real reduction of about 13 percent
since 1996. So you are talking about an additional reduction compared
with what we have already achieved in this program, correct?
The goal of welfare reform should not be to have an ever-greater
number of persons on welfare. Nor should the goal be to give an ever
greater array of benefits to those on welfare. Unfortunately, this has
too often been the pattern in the past. After adjusting for inflation,
the U.S. now spends 10 times as much on means-tested welfare as it did
when the war on poverty began.
Since the onset of welfare reform the AFDC/TANF caseload has been
cut in half. Given this decline in caseload, a cut in constant dollar
spending of 13 percent seems modest. If work requirements are
strengthened, the TANF caseload will continue to fall dramatically over
the next 5 years. As caseload declines, a further reduction in TANF
funding would be completely appropriate.
Question 1.A. Are you at all concerned that if TANF is reduced and
States encounter problems with a slowing economy we might end up where
we were on unemployment compensation in the 1980s and early 1990s, that
is, in something of a bidding war to provide additional ``emergency''
benefits whenever the economy falters?
Many have expressed concern that the current or a reduced level of
TANF funding will prove inadequate if TANF caseloads rise during a
recession. There are six reasons why current or reduced TANF funding
will be sufficient during a recession.
First, the present level of Federal TANF funding sustained over 5
million families during the AFDC caseload peak in 1994. Caseloads have
now fallen nearly 60 percent from those peak levels. States are now
spending roughly twice as much per family as they were a few years ago.
If, during a recession, the current caseloads rose by a quarter, the
nation would still have roughly half as many families on TANF as it did
in 1994. But Federal funding remains about the same as in 1994, some
$16.5 billion. Thus TANF funding will be more than adequate to cover
costs even during a recessionary period, and can be reasonably reduced
in future years.
Second, evidence from the last 50 years shows that, in general,
economic conditions result in only modest changes in AFDC caseloads. In
many instances, caseloads have risen during recessions, but these
increases have generally been modest, 10 percent or less. Thus the
expectation that a recession will produce huge increases in caseload is
unsupported by the record.
Third, evidence suggests that work requirements have not only been
effective in reducing caseloads since the mid-1990's, but they can also
limit the growth of caseload during a recessionary period. For example,
during the recession of the early 1990's the national AFDC caseload
grew by 30 percent. However, in Wisconsin (an early pioneer of
workfare) the caseload did not rise at all. The Wisconsin experience
suggests that states with strong workfare programs will not experience
substantial growth in caseload, even during a recession.
Fourth, many states have unspent and unobligated TANF surpluses,
which can be expended if caseloads rise during a recession.
Fifth, nearly all states have reduced their state contributions to
TANF to 80 or 75 percent of historic levels. If welfare costs rise
during a recession, states should be required to raise their own
spending back to historic levels before asking for added Federal funds.
Sixth, during the last 5 years, TANF caseload has fallen and the
employment of single mothers increased. As this change occurred, states
reduced spending on cash benefits and increased TANF funding for
daycare. If, during a recession, this pattern is reversed (employment
falling and caseload rising) states will be able to reverse the flow of
TANF funds: reducing subsidies to daycare as employment drops and
increasing funding for basic cash benefits. Just as the drop in TANF
caseload automatically freed up funds which could be used for daycare,
a drop in employment of single mothers will automatically reduce the
need for daycare subsidies and free up funds to be used to pay for the
benefit costs of rising caseloads.
Question 2. Please expand on some of your suggestions to promote
marriage and reduce illegitimacy. Specifically, are there any programs
that have been successful in these areas? What new efforts should be
undertaken? What evidence is there that these new efforts would be
successful?
Efforts to promote marriage and reduce illegitimacy should be
preventative: they should seek to reduce out-of-wedlock births, to
increase marriage before the birth of a child, and to reduce divorce.
These programs should be pro-active; they should seek to keep Humpty
Dumpty from falling off the wall rather than trying to glue him
together after the fall. While current welfare and social service
programs seek to deal with the consequences of single parenthood, pro-
marriage programs would address the core problem by reducing the level
of single-parent families and increased the number of married families.
Pro-marriage reforms must endeavor to restore the culture of
marriage in at risk communities. They must seek: to instill an
understanding of the value of marriage; to provide skills needed to
sustain successful long term marital relations; and to reduce the
disincentives to marriage implicit in most government welfare programs.
Such pro-marriage efforts should include the following.
Marriage education programs--Marriage education programs should be
provided in junior high and high schools in at risk communities. Such
programs should teach the value of marriage to men, women, children and
society at large. The programs could operate as adjuncts to existing
abstinence education programs.
Public education ad campaigns--Public advertising campaigns should
disseminate pro-marriage messages throughout the popular culture.
Celebrities should be used to affirm: the linkage between marriage and
personal happiness; the centrality of marriage in becoming a mature man
or woman; and the harm which comes to children through the
deterioration of marriage.
Marriage mentoring programs--A wide range of marriage mentoring
programs should be established to provide non-married and married
couples with the information and tools necessary to build and maintain
strong marriages, including an understanding of the major reasons why
relationships and marriages fall apart. The programs should seek to
develop skills for handling conflict, dealing with change, and
enhancing enjoyment and intimacy in the marital relationship. Such pro-
marriage services should be offered in a variety of venues, such as
churches, community centers, courts, maternity and childbirth clinics,
health centers, welfare offices, and military bases. Particular
emphasis should be placed on offering pro-marriage mentoring to low
income couples who are at risk of bearing children out-of-wedlock. The
programs should teach these vulnerable couples how to reduce conflict
and to develop skills leading to long term marital commitment; they
should also stress the importance of marriage to the well-being of
children.
Pro-marriage counseling during pregnancy--The government currently
pays for the medical costs of 85 percent of all out-of-wedlock births
through the Medicaid program. Medicaid's role means that the government
is in contact and involved with most unwed mothers-to-be during their
pregnancy. In nearly half these cases, the expectant mother will
actually be cohabiting with the father during pregnancy. Yet despite
this obvious opportunity, the government never affirms the value of
marriage to these fragile young couples, let alone facilitates their
marital union. Such indifference to marriage must be overturned, pro-
marriage counseling should be offered to all pregnant women and
unmarried mothers receiving Medicaid services. Couples expressing an
interest in marriage should be channeled to community-based mentoring
groups.
Community-wide marriage policies programs--The centerpiece of this
policy is the establishment of Community Marriage Covenants in which
all--or most--churches within a community agree to move beyond offering
pro-forma wedding ceremonies and begin to offer services which will
allow couples to flourish in lifelong marital commitment. The churches
agree to conduct mandatory marriage preparation programs for couples
seeking to marry; such preparation programs can identify and resolve
potential problems in relationships before the marriage begins. The
churches also assist couples in troubled marriages to avoid divorce
through the support of other couples who have faced and overcome
similar marital difficulties. A well-executed Community Marriage
Covenant project appears to save up to 80 percent of marriages headed
toward divorce, and to reconcile more than half of separated couples.
Divorce education--Many couples have an illusory view of divorce as
a cost-free escape from their current problems. Divorce education can
help couples resolve problems and save their marriage. In particular,
requiring a co-partnering plan as part of divorce education enables the
couple to develop a more realistic picture of what life will be like
after divorce and can serve as an impetus for the couple to make
renewed efforts to save their current marriage.
The welfare reform act 1996 set the national goal of reducing
illegitimacy and increasing marriage. The last 5 years should have been
a period of experimentation in the types of marriage programs outlined
above. Unfortunately, this experimentation has not occurred. Therefore
no evidence on the effectiveness or limitations of such programs is
available. On the other, there is a growing body of evidence on the
effectiveness of abstinence education and divorce reduction programs.
It is fairly certain that pro-marriage programs when they begin to be
implemented they will also show similar strong levels of effectiveness.
Question 3. Please describe for us the range of benefits and work
supports outside of TANF that help recipients find and keep jobs. I'm
thinking here of Federal and State programs like Food Stamps, Medicaid
and other health coverage, housing, job training and education, child
care, child support, transportation, and cash supplements like the
Earned Income Credit (EIC).
The Federal government operates over seventy major means-tested
welfare programs aiding poor and low income individuals. These programs
include cash aid, food, housing, medical care, training, education,
social services, and community development. While daycare subsidies do
help single mothers maintain employment, most other welfare programs
reward and encourage non-work.
For nearly three decades the government tinkered with various
incentives and services to encourage (but not require) employment of
welfare mothers. These ``work support'' programs were a complete
failure. For example, job training is intended to raise the hourly wage
rates of trainees but has proved largely ineffectual. If the goal is to
reduce dependence and increase employment then one principle is key:
welfare recipients must be required to take jobs, perform community
service or undertake other constructive activity as a condition of
getting aid. This rule alone is effective in limiting dependence and
increasing employment.
Question 3.A. Approximately how much do Federal and State taxpayers
spend on these programs? How does that compare with spending prior to
welfare reform?
Total means-tested welfare spending by Federal and State
governments was $434 billion in FY 2000. This was a record high. Total
welfare spending has grown from $375 billion in 1996 to present levels,
an increase of 16 percent. Overall cash, food, and housing aid has
grown at a rate equal to inflation since 1996, while medical aid has
grown more rapidly than inflation.
Greater detail in means-tested welfare spending is shown in the
table below.
TOTAL WELFARE SPENDING FY 2000
[In billions of dollars]
----------------------------------------------------------------------------------------------------------------
Federal Percent of
spending State spending Total spending total spending
----------------------------------------------------------------------------------------------------------------
Cash............................................ 77.8 22.78 100.58 23.2
Food............................................ 34.71 1.34 36.05 8.3
Housing and Energy.............................. 28.26 2.12 30.38 7
Medical......................................... 130.81 90.79 221.6 51
Education....................................... 22.46 1.34 23.8 5.5
Training........................................ 5.79 0.07 5.85 1.3
Services........................................ 7.74 2.93 10.67 2.5
Community Aid................................... 5.41 0 5.41 1.2
---------------------------------------------------------------
Total....................................... 312.95 121.38 434.34 100
----------------------------------------------------------------------------------------------------------------
Note: Some Numbers may not add due to rounding.
Source: Office of Management and Budget, Budget of the U.S. Government, Fiscal Year 2000, appendix. State outlay
calculated based on legally required and historic ratios from Congressional Research Service publications.
Question 3.B. Have other benefits been conditioned on work like
TANF? I know this falls outside our jurisdiction, but should all or
some of those other programs be similarly conditioned on work?
Modest work requirements currently exist for able-bodied parents on
food stamps. An important next step in reform would be to establish
strong work requirements for all able-bodied non-elderly adults
receiving food stamps or housing aid.
Question 4. Mark Greenberg talks in his testimony (page 8) about
``a basic picture of unmet need'' when it comes to funding for child
care for those who leave welfare. Do you agree? How much are we
spending on child care today compared with before 1996?
For nearly three decades liberal experts have claimed that welfare
dependence could not be reduced because of ``barriers to employment'':
lack of daycare, lack of jobs, lack of skills, and lack of
transportation. The experience of welfare reform shows these claims to
be utterly incorrect. Similarly, it has long been shown that employed
mothers use a wide variety of informal child care, both paid and
unpaid. Liberal experts use informal care as evidence of ``unmet need''
but there is no real evidence to back their claim. The present level of
daycare funding seems more than sufficient. Moreover, as TANF caseloads
fall in the future, more TANF funds will become available for daycare.
Robert Rector
Senior Policy Analyst
[Whereupon, at 12:50 p.m., the hearing was adjourned.]
[Submissions for the record follow:]
Statement of Geraldine Jensen, President, Association for Children for
Enforcement of Support, Inc. (ACES), Sacramento, California
ACES has 45,000 members and 400 chapters located in 48
states. We are representative of the families whose 20 million
children are owed $71 billion in unpaid child support. We have
banded together to work for effective and fair child support
enforcement. Most families affected by welfare reform are
entitled to child support payments. ACES has been monitoring
State IV-D Child Support Agencies to determine if they are
assisting families who leave the welfare rolls in collecting
child support.
states are failing to distribute child support payments to families
leaving welfare rolls
State government's new central payment systems are
failing to properly distribute payments to families leaving the
welfare rolls.
States had $440 million \1\ in undistributed child
support payments at the end of 1999 (see Chart 1).
ACES has been monitoring the current child support
enforcement system since 1984. In addition to obtaining
information about the child support enforcement system for our
members, ACES operates a national toll-free Hot Line for
families with child support problems, issues, and questions. We
receive up to 100,000 calls per year from parents throughout
the U.S. From these calls and our members, we gather statistics
and data on the status of the current child support enforcement
system.
The average ACES member is a single-parent, and she has two
children. About 50% of ACES members are divorced, and the other
half were never married. Members average income is $14,000 per
year as of the end of 1999, and 85% have, in the past, received
some form of public assistance. At present, about 33% of our
membership receives public assistance. ACES members report that
collection of child support, when joined with available earned
income, allows 88% to get off public assistance. Collection of
child support enables our low-income working-poor members to
stay in the job force long enough to gain promotions and better
pay so that they can move their family out of poverty, and onto
self-sufficiency. The collection of child support, when joined
with earned income, means our members can pay their rent and
utilities, buy food, pay for healthcare, and provide for their
children's educational opportunities. Lack of child support
most often means poverty and welfare dependency. At the very
least, it means having to work two or three jobs to survive.
This leaves our children with literally no parent who spends
time providing their children adequate nurturing, supervision,
and the attention they need and deserve.
About 33% of our nation's children have a parent living
outside the household. They are four times more likely to be
poor and five times more likely to receive food stamps than
children who live with two biological parents. Child support,
when received, accounts for 16% of the family's income, and
averages $3,795 per year. Child support is even more important
for poor children where it represents 26% of the family's
income.
FAMILIES REPORT PRWORA HAS NOT HELPED AND HAS HURT
ACES members have seen neither the synergy nor improvement
in collections that is being touted by federal and state
government. In fact, in some states, the situation is even
worse than it was pre-PRWORA. These states are having problems
setting up State Disbursement Units. States have more
undistributed funds on hand than ever before, $440 million.
Undistributed funds are payments collected not sent to families
due to problems identifying payee or payor, location of payee,
or problems determining how to distribute it if the family was
or is on public assistance. This means thousands of families
leaving the welfare rolls are not receiving child support
collected by the state. This undermines their self sufficiency
efforts.
In February, 2001, ACES filed a Writ of Mandamus in State
Appeals Court against the Ohio Department of Jobs and Family
Services (ODJFS). ODJFS knowingly brought online a computer
system in October 2000 that miscalculates distribution of child
support payments owed families in order to avoid further late
penalties from being assessed against the State under Federal
Law. The net effect is to reduce monthly payments to families
under terms mandated by the 1996 welfare reform law. In doing
so, ODJFS put the interests of the State ahead of those of
affected children. Legal action was taken only after
negotiations with ODJFS failed to produce an acceptable plan
for fixing the problem.
Our members in North Carolina report delayed and missing
payments when the new State Disbursement Unit went into
operation. Many have been unable to buy needed food, pay rent,
or take care of their families because payments that had been
processed by local Clerks of Courts are now lost in the state's
new distribution computer system. North Carolina reports having
more than $10 million in undistributed funds on hand. Reasons
cited are that Clerk of Courts bundled checks, money orders,
and cash brought in by non-resident parents and mailed it to
Raleigh without identifying information attached, and employers
did not use the new case numbers assigned to them for income-
withholding cases. Each case was given a new number in the
distribution unit system. The number was neither parent's
social security number nor the court docket number. Rather than
obtaining a list of names and addresses from employers for whom
the payments have been sent, the money was returned to the
employers.
In Illinois, ACES members report the same type of problem
as in North Carolina. County Clerks of Courts mailed checks and
money orders paid to them by non-resident parents to the state
with no identifying social security numbers. Illinois has more
than $6 million in unidentified funds on hand. Tennessee,
Nevada, part of Pennsylvania, and Missouri are reporting
similar problems. States chose to set up systems where all
payments are sent to a central intake and then disbursed. This
process has made it more difficult for parents to pay. The lack
of adequate planning and testing has led to missing payments,
long delays, and other problems for some of the poorest
families in our nation. North Carolina made families pay back
emergency aid checks out of the first child support check
issued, after months of not receiving payments. This newest
bureaucratic glitch has caused thousands of children to go to
bed hungry.
In Florida, ACES members have received letters from the
state telling them the computer is unable to calculate the
correct amount of support due to them and due to the state for
welfare. It is taking one year for the state to audit cases to
make sure the correct amount of support due to families is
distributed. Families report that the state continues to seize
and keep IRS offset checks for much more money than the family
ever received in welfare benefits. Florida is reporting $33
million in undistributed funds as of the end of the 2000 fiscal
year.
In Georgia, there is legal action pending against the state
for failure to release child support payments collected when a
family leaves the welfare rolls, and for incorrect calculation
of the amount due to the family and due the state.
California is reporting that is has $127 million in
undistributed funds. The state plans to set up a public
awareness campaign to notify families that they may be holding
their child support payment within the next few months.
California's current system of four separate computer systems
is causing a variety of problems distributing payments,
especially in cases which involve more than one county.
In a survey done by the Inspector General, the percentage
of states that report the following problems with
implementation of SDU's are:
100%--distributing payments for interstate cases;
86%--identifying poorly labeled payment;
86%--identifying payments with no case in the
system;
60%--redirecting payments mailed to wrong place;
71%--meeting customer serve demands;
60%--securing, training and retaining staff;
31%--disbursing support payments within two days;
40%--predicting volume for staffing purposes; and
34%--monitoring SDU performance.
The Office of Inspector General recent report, Child
Support Enforcement State Disbursement Units, August 2000,
reported that 38 states have fully implemented the federal law
to centralize payment processing of most child support
payments. Indiana, Wyoming, and South Carolina asked for
waivers to link local disbursement units. Arkansas, Georgia,
Kentucky and Oklahoma report they have central payment
processing but are not yet using it for the federally required
caseload. Michigan and Nevada were granted extensions to
implement their SDUs until October 1, 2000 and October 1, 2001,
respectively. Alabama, California, Kansas, Nebraska, Ohio, and
Texas report they have not yet begun central payment
processing.
Payment distribution reform is needed. ACES supports
measures such as those in the bill passed in the U.S. House
last session which allowed states to pass-through $400-$600/
month in child support to families receiving TANF. States have
incentive to pass-through child support collections to TANF
families because they do not have to repay the federal share of
TANF to the federal government, as in the past. They can use
TANF funds to pay the state's share of the losses they incur
from passing-through the money rather than by recouping it for
TANF benefits. Also, families receive all back-support due to
them before the state receives any back-support due it.
Complicated distribution regulations which allowed states to
require families to assign all support due to them, even
support accumulated before they went onto public assistance, is
clarified to ensure that the state recoups the lessor of the
amount they gave family in benefits or the amount of unpaid
child support which was due while they were on TANF.
SDU's federal policies should be immediately reviewed and
revised. Payments should be able to be made at many places,
such as ATMs, utility payment sites, banks, and the central
payment collection site. This would ensure employers one place
to send payments while, at the same time, make it easy for
parents to pay. Payments received off-site could be sent via
Electronic Funds Transfer (EFT) to the central payment site.
The Federal Office of Child Support should immediately audit
states with undistributed funds to ensure that an adequate plan
is being put in place to provide for emergency and long term
needs.
States have $440 million undistributed funds on hand, more
than ever before. For example, ACES found $30 million
undistributed funds in Florida, $2 million in Georgia, and $10
million in Los Angeles, CA. The Federal Office of Child Support
has listed distribution of unidentified funds as one of their
major priorities for the year 2000, due to the growing total
reported by states in 1999.
Please act today to reform child support distribution laws.
Our children need support now--the rent is due and we need to
buy them food.
CHART 1--TOTAL UNDISTRIBUTED FUNDS AT THE END OF 1999
------------------------------------------------------------------------
Amount
State undistributed (in
$)
------------------------------------------------------------------------
Alabama............................................ 3,264,610
Alaska............................................. 1,747,989
Arizona............................................ 9,506,700
Arkansas........................................... 3,990,073
California......................................... 127,951,700
Colorado........................................... 629,475
Connecticut........................................ 1,381,554
Delaware........................................... 3,509,654
District of Columbia............................... 1,361,607
Florida............................................ 45,637,093
Georgia............................................ 2,518,115
Guam............................................... 1,721,121
Hawaii............................................. 1,220,932
Idaho.............................................. 16,940
Illinois........................................... 261,935
Indiana............................................ 14,909,881
Iowa............................................... 989,989
Kansas............................................. 327,474
Kentucky........................................... 11,072,597
Louisiana.......................................... 387,290
Maine.............................................. 4,464,573
Maryland........................................... 7,828,829
Massachusetts...................................... 7,220,855
Michigan........................................... 28,818,050
Minnesota.......................................... 0
Mississippi........................................ 2,800,100
Missouri........................................... 4,273,822
Montana............................................ 262,725
Nebraska........................................... 98,217
Nevada............................................. 1,555,070
New Hampshire...................................... 1,401,060
New Jersey......................................... 4,058,470
New Mexico......................................... 123,011
New York........................................... 52,860,921
North Carolina..................................... 10,097,638
North Dakota....................................... 1,288,608
Ohio............................................... 19,070,984
Oklahoma........................................... 2,277,525
Oregon............................................. 1,796,673
Pennsylvania....................................... 18,971,240
Puerto Rico........................................ 5,534,273
Rhode Island....................................... 1,488,480
South Carolina..................................... 5,013,990
South Dakota....................................... 715,738
Tennessee.......................................... 72,480,009
Texas.............................................. 4,935,212
Utah............................................... 926,179
Vermont............................................ 1,622,436
Virgin Islands..................................... 254,396
Virginia........................................... 4,714,466
Washington......................................... 3,099,927
West Virginia...................................... 4,278,930
Wisconsin.......................................... 7,179,526
Wyoming............................................ 1,000,698
--------------------
Total United States............................ \2\ 560,713,864
------------------------------------------------------------------------
\1\ Chart 1 shows $560 million in undistributed funds. This needs to be
reduced by $120 million to account for the 2-day delay in distribution
of funds ($15.8 billion in 260 workdays/year).
\2\ This needs to be reduced by $120 million to $440 million to account
for the 2-day delay in distribution of funds ($15.8 billion in 260
workdays/year).
Statement of the Coalition on Women and Job Training
The Coalition on Women and Job Training is comprised of more than
30 members from national women's, civil rights, religious, and labor
organizations. Since its inception in 1992, the Coalition has been at
the forefront of the federal debate on job training reform and has
worked to increase low-income women's options for achieving economic
self-sufficiency through an improved job training system. In the past,
the Coalition has successfully outlined a progressive vision and made
recommendations for achieving real gender equity in federal education
and job training policies. For example, during the Workforce Investment
Act debate and Welfare-to-Work legislation's implementation, the
Coalition worked to ensure the provisions for nontraditional employment
training, services for displaced homemakers, and other services for
low-income women were included.
Our role in the upcoming welfare reform debate is to see that the
needs of low-income women and mothers are addressed in the
reauthorization of TANF. Toward this end, the Coalition is developing
The Working Mother's Agenda. Taking into consideration some of the main
goals of the 1996 welfare reform law, such as providing assistance to
needy families and ending dependence on the federal government by
promoting work, The Working Mother's Agenda will focus on five key
issues:
CHILD CARE
While we appreciate the recent funding increases for child care
services, the Coalition believes that child care provisions require
more than just dollars. We recognize the need for resources that
provide greater access to quality, affordable, and dependable child
care for women making the transition from welfare to work.
TRANSPORTATION
In order to better assist families to make the transition to work,
TANF reauthorization must include provisions for greater access to
reliable, affordable and alternative means of transportation.
Transportation for welfare mothers is particularly challenging because
often, they do not own reliable cars, they work nontraditional shift
hours, and they must make more trips each day to accommodate their
child care and domestic responsibilities.
EDUCATION AND JOB TRAINING
Preliminary TANF regulations were particularly restrictive in terms
of work participation and time limits, and although the final
regulations were more open to flexibility in those areas, many states
continue to implement welfare-to-work programs that are focused on job
placement and provide limited access to training. The Coalition
believes that TANF reauthorization needs to encourage training and
education activities, including post-secondary education, in order to
move welfare participants into higher skilled jobs. Participants need
jobs that provide better wages and benefits, and opportunities for
advancement to adequately provide for their families and to become
economically self-sufficient.
EMPLOYMENT READINESS
As Cynthia Fagnoni of the GAO has testified, follow-up research
shows that many participants who remain on the welfare rolls are not
employed in any real capacity. Many participants have characteristics
which make it difficult for them to work, such as poor mental and
physical health or disability, lack of high school education, limited
work experience, a history of domestic violence and substance abuse, or
a limited proficiency in English. The Coalition believes that TANF
reauthorization needs to provide work preparation activities and life
skills development services that are tailored to these participants'
needs.
RESEARCH COMPONENT
The Coalition believes that TANF reauthorization should include, at
the national level, a research component to evaluate the impact of the
legislation on individuals who leave welfare.
The Coalition on Women and Job Training looks forward to working
with the Committee on the reauthorization of welfare reform so that
more women may achieve economic self-sufficiency.