[House Hearing, 107 Congress]
[From the U.S. Government Printing Office]



 
PRESIDENT'S PLAN TO BUILD ON THE SUCCESSES OF WELFARE REFORM FEATURING 
                         HHS SECRETARY THOMPSON
=======================================================================


                                HEARING

                               before the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION
                               __________

                             MARCH 12, 2002
                               __________

                           Serial No. 107-53
                               __________

         Printed for the use of the Committee on Ways and Means









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                      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







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

                               __________
                                                                   Page
Advisory of March 5, 2002, announcing the hearing................     2

                               WITNESSES

U.S. Department of Health and Human Services, Hon. Tommy G. 
  Thompson, Secretary............................................    11

                       SUBMISSION FOR THE RECORD

Portman, Hon. Rob, a Representative in Congress from the State of 
  Ohio...........................................................    49










PRESIDENT'S PLAN TO BUILD ON THE SUCCESSES OF WELFARE REFORM FEATURING 
                         HHS SECRETARY THOMPSON

                              ----------                              


                        Tuesday, March 12, 2002

                          House of Representatives,
                               Committee on Ways and Means,
                                                    Washington, DC.

    The Committee met, pursuant to notice, at 2:33 p.m., in 
room 1100 Longworth House Office Building, Hon. Bill Thomas 
(Chairman of the Committee) presiding.
    [The advisory announcing the hearing follows:]

ADVISORY

                  FROM THE COMMITTEE ON WAYS AND MEANS

                                                CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
March 5, 2002
No. FC-17

                    Thomas Announces a Hearing with

             HHS Secretary Thompson on the President's Plan

              to Build on the Successes of Welfare Reform

    Congressman Bill Thomas (R-CA), Chairman of the Committee on Ways 
and Means, today announced that the Committee will hold a hearing on 
the President's plan to strengthen welfare reform. The hearing will 
take place on Tuesday, March 12, 2002, in the main Committee hearing 
room, 1100 Longworth House Office Building, beginning at 2:30 p.m.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from the Honorable Tommy G. Thompson, 
Secretary, U.S. Department of Health and Human Services. 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. It 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. In 
exchange for the broad flexibility and fixed funding granted States, 
the 1996 law imposed certain key program requirements, notably work 
requirements and time limits on Federal benefits.

    The achievements of welfare reform have been dramatic. Caseloads 
have been reduced by 9 million individuals in 3 million families. 
Nearly 3 million children have been lifted from poverty, and work among 
current and former welfare recipients has risen to record highs. Yet 
despite these outstanding results, far too many individuals receiving 
assistance are not making progress toward self-sufficiency. Troubling 
social trends such as out-of-wedlock birthrates, teen pregnancy, and 
divorce remain at or near record levels, exacerbating challenges faced 
by low-income families to achieve self-sufficiency.

    To ensure that the Committee and the Congress review the effects of 
the fundamental changes made in the 1996 law, the authors of the 1996 
law extended the authorization of the TANF program only through fiscal 
year 2002. In early February, the President laid out a framework of his 
proposal to reauthorize TANF and strengthen welfare reform in his 
fiscal year 2003 budget. On February 26, he provided further details of 
his plan. This hearing will provide the Secretary with an opportunity 
to discuss the President's detailed proposals.

    ``The welfare reform law has been a great success,'' said Chairman 
Thomas. ``Expecting and supporting work has made a huge difference in 
the lives of millions of families. Caseloads have plummeted, work and 
incomes are up, and poverty has fallen dramatically. We welcome 
Secretary Thompson, the leader of the welfare reform revolution as 
Governor of Wisconsin in the 1980s and 1990s, to discuss with the 
Committee the President's proposals for strengthening welfare reform 
and helping even more low-income families enjoy the dignity and rewards 
of work and self-support.''
      

FOCUS OF THE HEARING:

      
    The hearing will review the President's welfare reform 
reauthorization proposal.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Due to the change in House mail policy, any person or 
organization wishing to submit a written statement for the printed 
record of the hearing should send it electronically to 
[email protected], along with a fax copy to 
(202) 225-2610 by the close of business, Tuesday, March 26, 2002. Those 
filing written statements who wish to have their statements distributed 
to the press and interested public at the hearing should deliver their 
200 copies to the full Committee in room 1102 Longworth House Office 
Building, in an open and searchable package 48 hours before the 
hearing. The U.S. Capitol Police will refuse unopened and unsearchable 
deliveries to all House Office Buildings.
      

FORMATTING REQUIREMENTS:

      
    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.

    1. Due to the change in House mail policy, all statements and any 
accompanying exhibits for printing must be submitted electronically to 
[email protected], along with a fax copy to 
(202) 225-2610, in Word Perfect or MS Word format and MUST NOT exceed a 
total of 10 pages including attachments. Witnesses are advised that the 
Committee will rely on electronic submissions for printing the official 
hearing record.

    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.

    3. Any statements must include a list of all clients, persons, or 
organizations on whose behalf the witness appears. A supplemental sheet 
must accompany each statement listing the name, company, address, 
telephone and fax numbers of each witness.
      
    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://waysandmeans.house.gov.
      
    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.

                                


    Chairman Thomas. Today, we will examine President Bush's 
proposal to build on the success of welfare reform. Before 
1996, our welfare system measured compassion by how many people 
were on the welfare rolls. Changes to our welfare system were 
fiercely resisted because there were some who rejected the 
notion that handouts were better than a hand up. Some in 1966 
still could not conceive of a world where compassion's new 
measure would be how many people left welfare for work and 
independence.
    Immediately prior to the passage of welfare reform, for 
example, the Urban Institute forecasted that a million new 
children would enter poverty if welfare reform prevailed. 
Others were a bit more apocalyptic. The Children's Defense Fund 
predicted the welfare reform law, ``will hurt and impoverish 
millions of children.'' Of course, these dire predictions never 
materialized. What we have seen instead is a record of 
tremendous success in lifting children from poverty, promoting 
work, and ending dependence.
    Prior to 1996, the average lifetime stay on welfare for 
families receiving benefits was 13 years. Since their peak in 
1994 as reforms got underway in many States, caseloads have 
fallen by 9 million from a record high of 14 million recipients 
in 1994 to just 5 million people today. That is a 60 percent 
drop.
    Welfare reform has lifted nearly 3 million people out of 
poverty. The African American child poverty rate and the 
poverty rate for children living with single mothers are both 
at the lowest points in U.S. history. Between 1995 and 1999, 
the poorest 40 percent of single-mother families increased 
their earnings by about $2,300, on average.
    Welfare reform increased work, boosted income, it has 
improved child poverty, and reduced dependency. It has been a 
success, but we need to build on that success. Our priority is 
to help more people successfully transition to work because 
work is the only real and permanent path out of poverty.
    Observers should note that the grounds have shifted. 
Virtually no one today is suggesting that we go back to the old 
ways of providing checks and expecting little of recipients. We 
largely agree that the new structure of welfare with its 
emphasis on work and self-sufficiency has provided opportunity 
and dignity to people who were once trapped in a failed system.
    Our debate to reauthorize welfare, as heated as it may 
become at times, is truly on the margin. Some of these margins 
are important, such as increasing meaningful education to 
enhance work, such as opportunities for better child care 
assistance.
    Joining us today to review the President's proposal for the 
next round of welfare reform is Secretary Tommy Thompson of the 
U.S. Department of Health and Human Services (HHS). Secretary 
Thompson was a national leader in the welfare reform movement 
as Governor in Wisconsin. Many of our Members worked closely 
with him, in fact, to craft the 1996 law. We look forward to 
working closely with him in his current role to ensure that 
welfare reforms continue to help poor families go to work and 
to achieve self-sufficiency.
    Prior to my recognizing the Chairman of the Human Resources 
Subcommittee, Mr. Herger, the Chair would like to acknowledge 
the loss of a friend of all of us, Dr. John Eisenberg, who had 
helped establish the Physician Payment Review Commission and 
then went on to make sure that, as Director for the Agency for 
Health Care Research and Quality, in fact, turning that 
institution around to make it a success. He passed away this 
last week with very, very short notice. He was a very young, 
bright, energetic, talented individual, and I know that we have 
all worked with him and he will be missed.
    Mr. Herger?
    [The opening statement of Chairman Thomas follows:]
Opening Statement of the Hon. Bill Thomas, a Representative in Congress 
from the State of California, and Chairman, Committee on Ways and Means
    Today, we will examine the President's proposal to build on the 
success of welfare reform.
    Before 1996, our welfare system measured compassion by how many 
people were on the welfare rolls. Changes to our welfare system were 
fiercely resisted because there were some who rejected the notion that 
handouts were better than hand ups.
    Some in 1996 still couldn't conceive of a world where compassion's 
new measure would be how many people left welfare for work and 
independence. Immediately prior to the passage of welfare reform, for 
example, the Urban Institute forecasted that a million more children 
would enter poverty if welfare reform prevailed.
    Others were more apocalyptic. The Children's Defense Fund predicted 
the welfare reform law ``will hurt and impoverish millions of 
children.''
    Fortunately, these dire predictions never materialized.
    What we have seen instead is a record of tremendous success in 
lifting children from poverty, promoting work, and ending dependence.
    Prior to 1996, the average lifetime stay on welfare for families 
receiving benefits was 13 years. Since the peak in 1994 as reforms got 
underway in many states, caseloads have fallen by nine million, from a 
record high of 14 million recipients in 1994 to just five million 
people today--that's a 60 percent drop.
    Welfare reform has lifted nearly three million people out of 
poverty. The African-American child poverty rate and the poverty rate 
for children living with single mothers are both at the lowest points 
in U.S. history.
    Between 1995 and 1999, the poorest 40 percent of single mother 
families increased their earnings by about $2,300 on average.
    Welfare reform increased work, boosted incomes, improved child 
poverty and reduced dependency. It has been a success. But we need to 
build that success.
    Our priority is to help more people successfully transition to 
work, because work is the only real and permanent path out of poverty.
    Observers should note that the ground has shifted. Virtually no one 
today is suggesting that we go back to the old ways of providing checks 
and expecting little of recipients. We largely agree that the new 
structure of welfare, with its emphasis on work and self-sufficiency, 
has provided opportunity and dignity to people who were once trapped in 
a failed system.
    Our debate to reauthorize welfare, as heated as it may become at 
times, is truly on the margins. Some of these margins as important. 
Such as: increasing meaningful education to enhance work. Such as: 
opportunities for better child care assistance.
    Joining us today to review the President's proposal for the next 
round of welfare reform is Secretary Tommy Thompson of the Department 
of Health and Human Services. Secretary Thompson was a national leader 
in the welfare reform movement as Governor of Wisconsin. Many of our 
Members worked closely with him to craft the 1996 law. We look forward 
to working closely with him in his current role to ensure that welfare 
reforms continue to help poor families go to work and achieve self-
sufficiency.
    Prior to my recognizing the Chairman of the Human Resources 
Subcommittee, Mr Herger, the Chair would like to acknowledge the loss 
of a friend of all of us, Dr. John Isenberg, who had helped establish 
the physician payment review commission and then went on to make sure 
that as director for the agency for Healthcare Research and Equality--
in fact turning that institution around to make it a success, passed 
away this last week with very, very short notice. He was a very young, 
bright, energetic, and talented individual and I know we have all 
worked with him and he will be missed.

                                


    Mr. Herger. Thank you, Chairman Thomas. I will make my 
remarks short this afternoon and submit my entire statement for 
the record.
    We welcome Secretary Thompson, a longtime expert on welfare 
reform. As Governor of Wisconsin, he acted based on what he 
knew, what we always knew about welfare, that dependence on 
benefits, on receiving a check without working for it, was a 
destructive path. We knew this because we were warned. In a 
1935 message to Congress, President Franklin Roosevelt, the 
author of the former welfare program told us, ``The lessons of 
history show conclusively that continued dependence upon relief 
induces a spiritual and moral disintegration, fundamentally 
destructive to the national fiber. To dole out relief in this 
way is to administer a narcotic, a subtle destroyer of the 
human spirit. It is in violation of the traditions of 
America.''
    Yet, by the early 1990s, that is what welfare had become, a 
destroyer of the human spirit. So Wisconsin first, and then 
other States, set about making common sense changes that 
benefited those once trapped on welfare by showing them the 
path off welfare, the path of work. This became the standard 
for the Nation's welfare reform program in 1996. By any 
measure, that program has been a tremendous success.
    The reason is clear. Work replaced welfare as the 1996 law 
intended. Some said it could not be done. Fortunately, they 
were wrong. But this story is still far from over and we cannot 
stop here. Today, Secretary Thompson will present the 
President's proposal to strengthen welfare reform in the 
future. As we will hear, he is offering a strong foundation for 
us to build on.
    Once again, we welcome Secretary Thompson and look forward 
to working with him to get this critical job done. Thank you, 
Mr. Chairman.
    [The opening statement of Mr. Herger follows:]
    Opening Statement of the Hon. Wally Herger, a Representative in 
                 Congress from the State of California
    We welcome Secretary Thompson, a long-time expert on welfare reform 
dating to his many years as Governor of Wisconsin.
    Then-Governor Thompson acted based on what he knew--what we always 
knew--about welfare. That dependence on benefits, on receiving a check 
without working for it, was a destructive path.
    We knew this because we were warned. President Franklin Roosevelt, 
the author of the former welfare program, told us:

        ``The lessons of history . . . show conclusively that continued 
        dependence upon relief induces a spiritual and moral 
        disintegration fundamentally destructive to the national fiber. 
        To dole out relief in this way is to administer a narcotic, a 
        subtle destroyer of the human spirit. . . . It is in violation 
        of the traditions of America.'' \1\
---------------------------------------------------------------------------
    \1\ Annual message to Congress, January 4, 1935.

    Yet by the early 1990s that is what welfare had become--a destroyer 
of the human spirit. So Wisconsin first and then other states set about 
making common-sense changes that benefited those once trapped on 
welfare by showing them the path off welfare--the path of work. This 
became the standard for the nation's welfare reform program in 1996.
    By any measure, that program has been a tremendous success.
    As Chairman Thomas mentioned, the number of children in poverty is 
down by nearly 3 million, and the poverty rate is at record lows for 
families most likely to fall into long-term dependence.
    The reason is clear. Work replaced welfare, as the 1996 law 
intended. Work by mothers most likely to go on welfare has risen by 40 
percent. And caseloads plummeted by 60 percent. These are unprecedented 
changes we all can be proud of.
    But we should be even prouder of the millions of low-income 
parents--mostly single mothers--whose hard work made a better life for 
their families.
    Some said it couldn't be done. One group called the bill ``reckless 
and wrong'' and predicted it ``will create a social catastrophe by 
cutting off critically needed assistance to millions of our poorest 
children.'' \2\ The New York Times said ``the effect on some cities 
will be devastating'' and charged it was ``simply wrong'' that the bill 
would replace welfare checks with paychecks.\3\ One Member of this 
House said ``The real world will teach everyone in this Congress that 
you are hurting children.'' \4\
---------------------------------------------------------------------------
    \2\ Catholic Charities USA, press release, August 1, 1996.
    \3\ NYT Editorial August 1, 1996.
    \4\ Carrie Meek, floor of U.S. House, July 31, 1996.
---------------------------------------------------------------------------
    Fortunately, they were wrong. But this story is still far from 
over, and we can't stop here.
    Today we welcome Secretary Thompson to present the President's 
proposals to strengthen welfare reform in the future.
    We learned last week in a Human Resources Subcommittee hearing that 
58 percent of current welfare recipients are not working or even 
participating in training. That's not acceptable.
    The President's plan expects more recipients to work and move up 
the economic ladder, not two years after going on welfare but right 
away. He provides funding to make that work. And he expands state 
flexibility to provide drug abuse and mental health services as well as 
education and training to help parents get better jobs.
    His legislation also includes more funds for additional services to 
strengthen families and promote healthy marriage, which we know is the 
best way to raise children.
    This is a strong foundation for us to build on as we renew welfare 
reform. We welcome Secretary Thompson, and look forward to working with 
him to get this critical job done.

                                


    Chairman Thomas. I thank the gentleman. Does the gentleman 
from New York, the Ranking Member, wish to make an opening 
statement?
    Mr. Rangel. Thank you, Mr. Chairman.
    Mr. Secretary, you and I debated the question many times 
before you took office as Governor. I did not think that the 
Federal Government should sever its responsibility to the poor 
through entitlements then and I still think that we should not 
have done that. I did not think that the Governors would 
perform as well as they have, and you were right in stating, as 
a Governor, and now, I hope, as Secretary, that they have the 
responsibility and the less the Federal Government could get 
involved, the better these serious and complex problems could 
be handled.
    I would want you to know that it is my belief, especially 
after listening to the Chair and Ranking Member, that the 
Administration might do better in reaching a bipartisan accord 
on this issue by working with us and seeing what we can come up 
with because I am afraid my Republican friends are looking for 
some rhetoric for the campaign and we are just looking for a 
solution to the problem.
    So the main things that I am certain Mr. Cardin would 
direct himself to the Administration, since it is impossible to 
deal with the Members of the other part on this Committee, 
would be the failure to include education as a factor to be 
considered as something in addition to work; the failure to 
allow the States, our Governors, to provide for legal 
immigrants in the spirit of welcoming people to this great 
republic; the fact that there are no funds for additional day 
care costs, which is considered to be an unfunded mandate; and, 
of course, there is no provision for inflation.
    But there is something for us to work with. We look forward 
to working with you and we are not going to allow our 
Republican friends from stopping us to come up with a bill that 
we all can agree on.
    I would like to yield to Mr. Cardin, who has worked so hard 
on this with the support of the Administration.
    Mr. Cardin. Let me thank Mr. Rangel for yielding and thank 
the Chairman for his patience.
    Mr. Secretary, I know you want to work out a bipartisan 
agreement. You have met with us. You have been very open in 
your exchanges. You have worked with our staffs and we look 
forward to continuing to work with you so that we can reach a 
common goal of reauthorizing Temporary Assistance for Needy 
Families (TANF), and I think we can do that in a bipartisan 
way.
    I would ask, though, that you look very carefully, as I 
know you will, on four recommendations that were made by the 
National Governors' Association (Governors') that are not 
included in the proposed legislation that you have talked 
about. As a former Governor, I think you will appreciate each 
of these issues and these are the ones I hope that--I am 
concentrating where I think we have differences rather than a 
lot that we have in common, because there is an awful lot that 
we go into this debate on the same level.
    The Governors' are asking for more flexibility, 
particularly as it relates to determining the mix of training 
services and work and what will best fit the needs of the 
individual recipient. I am afraid that, in some cases, the 
Administration's suggestion actually moves in the opposite 
direction in regards to the flexibility of the States to make 
that judgment.
    Secondly, the Governors' are asking for inflationary 
increase in the basic TANF funds, and I know this is a tough 
year for funds, but if we make no adjustments, then over a 10-
year period, we will actually see a reduction of about 22 
percent in the buying power of the money that the Federal 
Government is making available, and as you know, the States are 
currently spending $2 billion more a year on TANF than they are 
receiving because they squirreled away some of the money from 
the early years.
    Third, the Governors' have suggested repealing the ban on 
the use of Federal funds to deal with legal immigrants within 
the TANF system. This is not really a dollar issue as it 
relates to Federal funds because we make it available in block 
form to the States. It is how the States choose to use their 
money, and if they choose to cover legal immigrants under the 
restrictions that are imposed under general use of funds, why 
should they not be allowed to do that?
    And the fourth issue deals with a program which I know that 
you support and that is wage supplements, getting people who 
are working income that they need in order to survive and 
thrive in our economy, and we should remove the penalties in 
the current law as it relates to wage supplements and our 
Governors' have asked us to do that.
    Let me just ask one additional issue in regards to 
resources and that is child care. You have heard that mentioned 
by many of us, that we are not providing enough help today for 
the necessary child care, and as we put more and more 
requirements on work, the pressure for affordable child care 
will only become greater.
    Finally, I want to make it very clear that there is no 
disagreement that work must be the central goal of welfare 
reform. However, there is a clear difference between short-term 
unpaid work experiences and long-term wage-paying jobs. So as 
we move forward, I know your goal is to make sure that the next 
step of welfare reform is to get people not only off of cash 
assistance, but out of poverty, because you want to add the 
welfare of the child as the principal goal. You know that I 
feel we should add reducing poverty. So we share a common 
vision as to where we want to see us move in the next 5 years.
    Thank you, Mr. Chairman.
    [The opening statement of Messrs. Rangel and Cardin 
follows:]
 Opening Statement of the Hon. Charles B. Rangel, a Representative in 
Congress from the State of New York, and the Hon. Benjamin L. Cardin, a 
         Representative in Congress from the State of Maryland
    Mr. Secretary, you and I have debated the question many times 
before you took office, when you were a governor. I did not think that 
the Federal Government should sever its responsibility to the poor--the 
entitlement--then. And I still think that we should have not done that. 
I didn't think the governors would perform as well as they have. And 
you were right in stating, as a governor and now I hope as Secretary, 
that they have the responsibility and the less that the Federal 
Government can get involved the better these serious and complex 
problems can be handled.
    I would want you to know that it is my belief, especially after 
listening to the Chairman and Subcommittee Chairman that the 
Administration might do better in reaching a bipartisan accord on this 
issue by working with us and seeing what we can come up with. Because I 
am afraid my Republican friends are looking for some rhetoric for the 
campaign and we are just looking for a solution to the problem.
    And so, there are many things that I am certain Mr. Cardin will 
direct himself to if the Administration senses it is impossible to deal 
with the Members of the other party on this Committee. These include 
the failure to include education as a factor to be considered as 
something in addition to work; the failure to allow the states--our 
governors--to provide for legal immigrants in the spirit of welcoming 
people to this great republic; the fact that there are no funds for 
additional daycare costs, which is considered to be an unfunded 
mandate; and, of course, there are no provisions for inflation.
    But there is something for us to work with. We look forward to 
working with you and we are not going to allow our Republican friends 
to stop us from coming up with a bill that we can all agree on.
    I would like to yield to Mr. Cardin, who has worked so hard on this 
with the support of the Administration.
    Mr. Cardin. Let me thank Mr. Rangel for yielding and thank the 
Chairman for his patience.
    Mr. Secretary, I know you want to work out a bipartisan agreement. 
You have met with us. You have been very open in your exchanges and you 
have worked with our staffs and we look forward to continuing to work 
with you so that we can reach a common goal of reauthorizing TANF. And 
I think that we can do that in a bipartisan way.
    I would ask, though, that you look very carefully as I know you 
will at four recommendations that were made by the National Governors' 
Association that are not included in the proposed legislation that you 
have talked about. As a former governor, you will appreciate each of 
these issues.
    I'm concentrating on where we have differences rather than the lots 
we have in common. Because there is an awful lot that with which we go 
into this debate on the same level.
    The governors are asking for more flexibility, particularly as it 
relates to determining the mix of training services and work which will 
best fit the needs of the individual recipient. I am afraid that, in 
some cases, the Administration's suggestion actually moves in the 
opposite direction in regards to the flexibility of the states to make 
that judgement.
    Secondly, the governors are asking for inflationary increases in 
the basic TANF funds. And I know it is a tough year for funds, but if 
we make no adjustment then over a ten year period, we will actually see 
a reduction of about 22% in the buying power of the money that the 
Federal Government is making available. And, as you know, the states 
are currently spending $2 billion dollars more a year on TANF than they 
are receiving because they squirreled away some of the money from the 
earlier years.
    Third, the governors have suggested repealing the ban on the use of 
Federal funds that deal with legal immigrants within the TANF system. 
This is not really a dollar issue as it relates to Federal funds 
because we make it available in block form to the states--it is how the 
states choose to use their money. And if they choose to cover legal 
immigrants under the restrictions that are imposed under general use 
funds, why shouldn't they be allowed to do that?
    And the fourth issue deals with a program which I know that you 
support and that is wage supplements--getting people who are working 
the income that they need in order to survive and strive in our 
economy. And we should remove the penalties in the current law as it 
relates to wage supplements and our governors have asked us to do that.
    Let me just add one additional issue in regards to resources, and 
that is childcare. You have heard that mentioned by many of us, that we 
are not providing enough help today for the necessary childcare. And, 
as we put more and more requirements on work, the pressure for 
affordable childcare will only become greater.
    Finally, I want to make it very clear that there is no disagreement 
that work must be the central goal of welfare reform. However, there is 
a clear difference between short-term unpaid work experiences and long-
term wage paying jobs. So as we move forward, I know that your goal is 
to make sure that the next step of welfare reform is to get people not 
only off of TANF assistance, but out of poverty. Because you know that 
you want to add the welfare of the child as a principal goal. You know 
that I feel you should add reducing poverty. So we share a common 
vision as to where we want to see us move in the next five years. Thank 
you, Mr. Chairman.

                                


    Chairman Thomas. I thank the gentleman.
    Apparently, some folks are more interested in coming in and 
making sure that their vitriolic comments were well memorized 
rather than listening to what other people were saying. In the 
Chair's opening remark, when he said that our debate to 
reauthorize welfare, as heated as it may become, it will be 
truly on the margins, what I said those margins were were 
meaningful education to enhance work, which is an area that I 
think all of us can agree we need to work on, and the second 
one was better child care assistance. That is where we are 
going to work, on the margins of improving the program.
    But, of course, the predetermined disposition of Members of 
this Committee in terms of unwillingness to admit that what 
began has become modestly successful, but that needs 
improvement and that we will work on improvement in those areas 
that need improvement rather than the rejection outright of any 
of the positions is one of the primary reasons it has become 
relatively difficult to work in a bipartisan way. If we are 
simply going to have blanket condemnation without even 
listening to what people are having to say, then the desire to 
try to draw people in to participate becomes less so.
    This is a program we will reauthorize. I hope the minority 
will work with us to have meaningful work experiences tied to 
education, as the Administration has already suggested, and to 
enhance the ability to provide child care for those who need 
it. We will be working on those areas. We look forward to you 
joining us in improving this program.
    With that----
    Mr. Levin. Will the Chairman yield?
    Chairman Thomas. Mr. Secretary, it is a real pleasure to 
have you with us. You are one of the reasons this program 
worked, because we took you at your word and we gave you the 
authority and you ran with it. Thank you very much for your 
willingness to serve in the Bush Administration in your 
capacity. We look forward to your remarks. Your written remarks 
will be made a part of the record and you may address us in any 
way you see fit.

   STATEMENT OF THE HON. TOMMY G. THOMPSON, SECRETARY, U.S. 
            DEPARTMENT OF HEALTH AND HUMAN SERVICES

    Mr. Thompson. Thank you very much, Mr. Chairman. First, let 
me thank you for mentioning Dr. John Eisenberg. That was very 
nice and I appreciate it, as his family will, as well. He was a 
great man.
    I thank you, Congressman Rangel and Congressman Herger and 
Congressman Cardin, all of you for working so closely with my 
Department in trying to come up with a bipartisan bill. I 
applaud all of you for that.
    I am honored to appear before you today to discuss the next 
phase of welfare reform. Chairman Thomas, your leadership in 
this historic effort to reform welfare has been tremendous and 
our country truly is in your debt for it. Congressman Rangel, 
we differ on some of the issues before us, but we are united in 
our concern for families and I look forward to working with you 
on this very important subject.
    Over the past 5 years, welfare reform has exceeded our most 
optimistic expectations. The 1996 law dramatically shifted 
national welfare policy by promoting work, encouraging personal 
responsibility, discouraging out-of-wedlock pregnancies and 
supporting marriages. States were given unprecedented 
flexibility in the design as well as the implementation of 
their welfare programs. Families were given the help they need 
to transition from welfare to work. And underlying all of these 
changes, we restored an essential principle that had long been 
lost, that welfare assistance was designed to be temporary, to 
help families in crisis, and that dependence and poverty were 
not permanent conditions.
    Welfare was fundamentally reformed. As a result, nearly 7 
million fewer individuals are on welfare today than in 1996. 
Two-point-eight million fewer children are in poverty. Poverty 
rates for minority children have decreased dramatically. These 
things have occurred in large part because welfare has been 
transformed and is transforming.
    But even with these profound and positive changes, there 
are still too many of our fellow citizens who have not begun to 
realize a future of hope, too many children who lack essential 
opportunities for growth and a good life, too many men and 
women who remain trapped in a web of dependency and despair. So 
now it is time for us to take the next bold step in reforming 
welfare, and the President's proposals show us the way.
    The President's priorities include strengthening work 
requirements, promoting strong families, and giving States more 
flexibility in showing compassion to those in need. These goals 
have been central to the Administration's proposals for TANF, 
child care, and child support.
    Before outlining how we are addressing these issues, let me 
make clear that the news reports last week about a plan to 
change the minimum wage law were absolutely incorrect. 
President Bush and I will insist that welfare recipients 
receive at least the minimum wage for the hours that they work, 
including community service jobs. This is an important 
principle that I have fought for as Governor of Wisconsin and 
one that the President and I remain committed to today as we 
continue to reform welfare.
    Now let me move on to discuss the TANF program. TANF has 
moved millions of individuals from welfare to work. Employment 
among single mothers has grown to unprecedented levels. Child 
poverty rates are at their lowest level since 1979. Overall 
child poverty rates declined from 20.5 percent in 1996 to 16.2 
percent in 2000. Yet, much remains to be done and States still 
face many challenges.
    Our proposals seek $16.5 billion for block grants to States 
and tribes, and an additional $319 million each year for 
supplemental grants to States that have experienced high 
population growth and had historically low funding levels. At 
the same time, we will continue the current maintenance of 
effort requirement to retain State contributions to assistance 
for children and families. We will reauthorize and improve the 
$2 billion contingency fund, and we will restore over 5 years 
the policy permitting the transfer of up to 10 percent of the 
TANF funds to the Social Services Block Grant.
    We will also seek to maximize self-sufficiency through 
work. First and foremost, States will be required to engage all 
TANF families headed by an adult in activities leading to self-
sufficiency.
    In addition to the requirement for universal engagement, we 
will increase the direct work requirement. Our proposal 
requires welfare recipients to engage in a 40-hour work week, 
at least 24 hours of which must be in direct work, including 
employment, on-the-job training, and/or supervised work 
experience. We will allow substance abuse treatment, 
rehabilitation, or work-related training for up to 3 months 
within any 24-month period, and we will also gradually increase 
the minimum participation rate requirements by 5 percentage 
points each year.
    Also recognizing the significant barriers to self-
sufficiency that tribes face, HHS will undertake a major new 
technical assistance effort for tribal organizations to help 
them build and administer effective tribal TANF programs.
    Our proposal embraces the needs of families by promoting 
child well-being and healthy marriages. To this end, we 
establish improving the well-being of children as the 
overarching purpose of TANF.
    We will target $100 million from the discontinued out-of-
wedlock birth reduction bonus for broad research, evaluation, 
demonstration, and technical assistance focused primarily on 
healthy marriages and family formation activities. Our new 
marriage initiative implies no criticism of single parents, who 
deserve high praise for their dedication to their children. But 
the data clearly demonstrates better outcomes for children 
whose parents enjoy a healthy marriage. The negative 
consequences of out-of-wedlock birth on the mother, the child, 
the family, and society are well documented.
    Children living in single-parent households are, on 
average, five times more likely to be poor and two to three 
times more likely to use drugs, experience educational, health, 
and emotional problems, and be victims of abuse. Thus, it is 
simply good sense to redirect our policies to encourage the 
formation and the maintenance of healthy marriages, especially 
when children are involved.
    We will also redirect $100 million from the current law's 
high-performance bonus to establish a competitive matching 
grant program for the States and tribes to develop innovative 
approaches to promoting healthy marriages and reducing out-of-
wedlock births. Funds will be matched dollar for dollar and 
TANF funds may be used to meet this matching requirement.
    Child support is an equally critical component of the 
Federal and State effort to promote family self-sufficiency. 
For the low-income families who receive child support, it makes 
up more than a quarter of the family budget. Welfare reform has 
made a dramatic difference in child support collections, as 
well. The number of paternities that have been established or 
acknowledged has reached almost 1.6 million. In fiscal year 
2001, a record of nearly $19 billion in child support was 
collected, serving an estimated 17.5 million child support 
cases.
    But as with other areas of welfare reform, more can and 
more must be done. Our proposals are targeted to increase 
collection to families by nearly $810 million over 5 years, 
beginning in fiscal year 2005. And under a similar proposal to 
increase support reaching families, States would be given the 
option to adopt simplified distribution rules under which all 
support collected would be sent to families that have 
transitioned from welfare.
    We will also seek to increase the amount of support 
collected by adding to our existing cadre of enforcement tools. 
We would expand our successful program for denying passports to 
parents who owe $2,500 in past-due support, and we would ensure 
that child support orders are fair to both the custodial parent 
and family as well as the noncustodial parent by requiring the 
States to review and adjust child support orders in TANF cases 
every 3 years, reinstating a pre-welfare reform policy.
    I can tell you from my experience as Governor of Wisconsin, 
access to child care assistance can make a critical difference 
in helping low-income families to find and be able to retain 
jobs. Our proposal includes a total of $4.8 billion for the 
Child Care and Development Fund. When combined with TANF and 
other Federal funding sources, over $9 billion is available for 
child care and related services for children.
    Under the President's plan, States have significant 
flexibility to decide how child care funds will be used and 
what will be emphasized in achieving the overall goals of 
improving access to care and the quality of care. Along with 
State flexibility, parental choice is a key element of a 
successful child care program. Families must be allowed to 
choose the care that best meets their needs, whether with a 
relative, a neighbor, child care center, faith-based program, 
or after-school program.
    Mr. Chairman, the proposals that I bring before you today 
contain several essential principles and proposals that flow 
from them. What binds them together is a desire to improve the 
lives of the families protected by America's social service 
net.
    I look forward to working with you, Mr. Chairman, and the 
Members of this Committee to that end. I would be happy to 
answer any questions you have.
    [The prepared statement of Secretary Thompson follows:]
Statement of the Hon. Tommy G. Thompson, Secretary, U.S. Department of 
                       Health and Human Services
    Mr. Chairman, Mr. Rangel, and Members of the Committee, I am 
honored to appear before you today to discuss the next phase of welfare 
reform. Together our work has had a profound impact on our nation's 
most vulnerable families. We have exceeded the most optimistic 
expectations by assisting millions of families in moving from 
dependence on welfare to the independence of work; we have provided a 
strong commitment to child care to ensure parents can go to work 
without worrying about the safety and well-being of their children; and 
we have succeeded in collecting record amounts of child support on 
behalf of children with a parent absent from the home. I am confident 
that together our work in reauthorizing the Temporary Assistance for 
Needy Families (TANF) program and the Child Care and Development Block 
Grant and Child Care Entitlement Programs, coupled with several 
critical changes to Child Support Enforcement, will lead to even 
greater achievements in the future.
    President Bush has laid out a clear path for reviewing all of the 
programs impacted by the historic, comprehensive Personal 
Responsibility and Work Opportunity Reconciliation Act (PRWORA). The 
President made a commitment to pursue four important goals to continue 
transforming welfare in the lives of those that it helped: strengthen 
work, promote strong families, give States more flexibility and show 
compassion to those in need. These goals formed the guideposts in 
shaping the Administration's proposals for TANF, child care and child 
support.
    When I appeared before this Committee last month to discuss the 
Department's FY 2003 budget, I presented the Administration's framework 
for building on our past successes for our nation's families. I would 
like to spend my time today sharing more information with you on the 
important progress we have made in strengthening families under these 
three critical programs and highlighting the specific areas the 
President has targeted for improvement. I will begin with TANF, the 
cornerstone of our welfare reform efforts.
Temporary Assistance for Needy Families
    As a former governor, I can tell you that the Temporary Assistance 
for Needy Families program--or TANF--has been a remarkable example of a 
successful Federal-State partnership. States were given tremendous 
flexibility to reform their welfare programs and as a result, millions 
of families have been able to end their dependency on welfare and 
achieve self-sufficiency.
    Since 1996, welfare dependence has plummeted. As of September 2001, 
the number of families receiving assistance, which represents the 
welfare caseload, was 2,103,000 and the number of individuals receiving 
assistance was 5,343,000. This means the welfare caseload and the 
number of individuals receiving cash assistance declined 52 percent and 
56 percent, respectively, since the enactment of TANF. Between January 
and September of last year national caseloads actually declined about 
two percent, and while the July to September statistics indicate a 
slight increase, the figures are still well below the previous year's 
caseload levels. The general trend suggests the national caseloads are 
not rising but, instead, have stabilized.
    In New York City, where we are understandably most concerned about 
job opportunities, the city achieved more than 53,000 job placements 
for welfare recipients from September through December 2001. While the 
number of TANF recipients increased briefly as a direct result of the 
tragedy of September 11, by January there were about 18,000 fewer TANF 
recipients on the rolls than there were in August. Indeed, in December 
New York City had its lowest number of persons on welfare since 1965.
    Some other positive outcomes we have seen since the law's passage 
include:

     LEmployment among single mothers has grown to 
unprecedented levels.
     LChild poverty rates are at their lowest level since 1979. 
Overall child poverty rates declined from 20.5 percent in 1996 to 16.2 
percent in 2000. The poverty rate among African American children 
declined from 39.9 percent to 30.9 percent--the lowest level on record. 
The poverty rate among Hispanic children declined from 40.3 percent to 
28.0 percent--the largest four-year drop on record.
     LThe rate of births to unwed mothers has stabilized.

    But even with this notable progress, much remains to be done, and 
States still face many challenges. Last year, my Department held eight 
listening sessions throughout the country to discuss the TANF program 
and understand the new challenges ahead. The States overwhelmingly 
support this program. States, administrators, recipients, employers, 
and advocates have provided valuable insight into how we could make the 
program even more responsive to the needs of families, while keeping 
the basic structure and purpose of the program.
    The Administration's proposal to reauthorize TANF would build upon 
our stunning success by:

     Lstrengthening the Federal-State partnership;
     Lasking States to help every family they serve achieve the 
greatest degree of self-sufficiency possible through a creative mix of 
work and additional constructive activities;
     Lhelping States find effective ways to promote healthy 
marriages and reduce out-of-wedlock childbearing;
     Limproving the management and, therefore, the quality of 
programs and services made available to families; and
     Lallowing States to integrate the various welfare and 
workforce assistance programs operating in their States.

    I would like to offer some detail on each of these elements.
                Strengthen the Federal-State Partnership
    Our proposal seeks to strengthen the Federal-State partnership by 
maintaining the Federal financial commitment to the program and by 
making some key policy changes to increase State flexibility. We 
provide $16.5 billion each year for block grants to States and Tribes 
and an additional $319 million for annual Supplemental Grants to States 
that have experienced high population growth and had historically low 
funding levels. We will also reauthorize and improve the $2 billion 
Contingency Fund. Authorization for both the Supplemental Grant program 
and the Contingency Fund expired in 2001, but one year extensions for 
both were recently enacted into law as part of the economic stimulus 
package signed by President Bush this past Saturday. We continue the 
current maintenance of effort (MOE) requirement to retain States' 
contribution to assistance for children and families. Finally, we will 
restore over five years the policy permitting the transfer of up to 10 
percent of TANF funds to the Social Services Block Grant.
    In addition to these basic funding provisions, we propose a number 
of policy changes on the use of funds that will provide States 
increased flexibility in managing their programs.

     LWe ease limitations on services for the unemployed by 
clarifying the definition of ``assistance'' so that rules tied to such 
spending would not apply to child care and other non-cash support 
services.
     LWe allow States to designate ``rainy day funds'' and 
clarify that such funds would be reserved by States for future TANF 
use.
     LFurther, we revise current restrictions on carried-over 
funds by allowing such funds to be spent on any service or benefit that 
achieves a TANF purpose.
                 Maximize Self-Sufficiency Through Work
    The second element of our reauthorization proposal is to maximize 
self-sufficiency through work. First and foremost, States would be 
required to engage all TANF families with an adult in self-sufficiency 
activities. States must approve activities as part of self-sufficiency 
plans and regularly review case progress.
    And in addition to the requirement for universal engagement, we 
will increase the direct work requirement. In order for a case to be 
counted as participating, our proposal requires a full 40 hours per 
week participation in monitored, simulated work activities by welfare 
recipients. Cases counted as participating would be required to average 
at least 24 hours per week (of their total required 40 hours) in direct 
work, including employment, on the job training, and/or supervised work 
experience. States will have the flexibility to decide which activities 
should make up the remaining 16 hours. These could include a variety of 
services the States determine are needed by the family.
    On a temporary basis, certain cases could be counted as 
participating even if they did not average 24 hours per week in direct 
work. These cases would still be fully participating--defined as 40 
hours per week--but could be in work-related training, short term 
substance abuse treatment, or rehabilitation for up to three months 
within any 24-month period. When calculating participation rates States 
will be allowed to exclude parents with children under 12 months of 
age. As in current law, teen parents who are heads of households and 
maintain satisfactory school attendance will be deemed as meeting all 
participation requirements.
    We will also gradually increase minimum participation rate 
requirements. In FY 2003, at least 50 percent of all TANF cases headed 
by a parent will be required to participate in combined work and other 
activities designed to help them achieve self-sufficiency. This 
percentage will increase five percent each year until reaching 70 
percent in 2007. Calculation methods will be improved to recognize 
practical challenges States face in keeping recipients involved and 
participating in the program. There will be no separate standard for 
work participation for two-parent cases.
    The current penalty structure will apply when a State fails to meet 
either, or both, of the universal engagement or participation rate 
requirements. Potential penalties will be limited to a maximum of five 
percent of a State's TANF grant, as under current law. States subject 
to a penalty will have the opportunity to develop a corrective 
compliance plan and no penalty will be assessed as long as they are 
making progress toward meeting the requirements. The current caseload 
reduction credit will be phased out so that States still receive full 
credit against participation targets in the first year, 50 percent of 
credit in the second year and no credit thereafter. The five-year 
cumulative lifetime limit for TANF cash assistance will be retained. 
States may also continue to exempt up to 20 percent of their cases from 
this limit.
    Finally, understanding the significant barriers that tribes face to 
self-sufficiency, HHS will undertake a major new technical assistance 
effort for tribal organizations to help them build and administer 
effective Tribal TANF programs.
             Promote Child Well-Being and Healthy Marriages
    Our proposal embraces the needs of families by promoting child 
well-being and healthy marriages. To this end, we establish improving 
the well-being of children as the overarching purpose of TANF. This 
meaningful change recognizes that the four current goals of TANF are 
important strategies for achieving this purpose. Similarly, we clarify 
and underscore that the fourth goal of TANF is to encourage the 
formation and maintenance of healthy, two-parent, married families and 
responsible fatherhood.
    In addition, we will target $100 million from the discontinued 
Illegitimacy Reduction Bonus for broad research, evaluation, 
demonstration and technical assistance, focused primarily on healthy 
marriage and family formation activities. Funds previously used for the 
Illegitimacy Reduction Bonus could be spent far more effectively on 
developing innovative approaches to support family formation and 
healthy marriages. Strong and stable families are good for children and 
must be a central goal of our next steps in welfare reform.
    Research shows that both adults and children are better off in two-
parent families. It is no criticism of single parents to acknowledge 
the better outcomes for children of married-couple families. Rather it 
supports the underlying principles to redirect our policies to 
encourage healthy marriage especially when children are involved. Our 
approach to promoting healthy marriage is to provide financial 
incentives for States, often working together with private and faith-
based organizations, to develop and implement innovative programs to 
support family formation and healthy marriages. Those demonstration 
programs will be carefully evaluated and information about successful 
programs will be broadly disseminated.
    Along those lines, we also redirect $100 million from the current-
law High Performance Bonus to establish a competitive matching grant 
program for States and Tribes to develop innovative approaches to 
promoting healthy marriages and reducing out-of-wedlock births. State 
expenditures will be matched dollar for dollar and TANF funds may be 
used by States to meet their matching requirement.
    We require States to discuss in their State plans the efforts they 
will make to accomplish the family formation goals of the TANF program, 
including the promotion of healthy marriages, and their efforts to 
provide equitable treatment for two-parent married families.
    And finally within the context of our goals to strengthen family 
formation and reduce illegitimacy, we will reauthorize the Abstinence 
Education grant program to States and territories at $50 million per 
year.
                      Improve Program Performance
    Our fourth reauthorization element focuses on improving program 
performance. We will replace the current High Performance Bonus with a 
$100 million Bonus to Reward Employment Achievement for meeting the 
employment goals of TANF. We also will require States to establish and 
report on performance goals related to each of the four major goals of 
TANF and to describe in their State plans how they are addressing each. 
Likewise, States will be required to describe particular strategies and 
programs they are employing to address critical TANF challenges. We 
will research the best ways to construct performance measures that 
relate to the TANF goals, collaborate with States to identify key 
performance measures, and build uniform data support and reporting 
methodologies.
                          Program Integration
    For any organization to succeed, it must never stop asking how it 
can do things better. Using the flexibility under programs such as TANF 
and the One-Stop Career Center system, States have made great strides 
towards transforming and integrating their public assistance programs 
into innovative and comprehensive workforce assistance programs. But, 
with greater flexibility even more can be accomplished. The final key 
element of our TANF proposal seeks to enable far broader State welfare 
and workforce program integration.
    In our proposal, we establish new State program integration waivers 
to permit States to further integrate welfare and workforce development 
programs in order to improve the effectiveness of these programs. Broad 
flexibility to design new strategies and approaches will be provided. 
The proposed waivers could apply to all aspects of selected Federal 
programs, including funding and program eligibility and reporting 
rules, enabling States to design fully integrated welfare and workforce 
development systems that could revolutionize service delivery.
    I would like to turn now to another program that offers a vital 
connection to a family's ability to achieve self-sufficiency: child 
support enforcement.
Child Support Enforcement
    Child support is a critical component of Federal and State efforts 
to promote family self-sufficiency. For the low-income families who 
receive child support, it makes up a significant portion of the family 
budget (26 percent).
    PRWORA instituted a number of important child support enforcement 
measures. Tools such as increased automation, the National Directory of 
New Hires and Federal Case Registry, the passport denial program, the 
financial institution data match, and license revocation have made a 
tremendous difference in improving State performance and strengthening 
child support collection efforts. Equally important, PRWORA streamlined 
paternity establishment, particularly voluntary paternity 
establishment, to encourage fathers to take the first step toward 
providing their children with financial and emotional support. The 
impact of these changes has been dramatic. The number of paternities 
established or acknowledged has reached almost 1.6 million. Of these, 
nearly 700,000 paternities were established through in-hospital 
acknowledgement programs. In FY 2001, with a caseload of 17.4 million 
cases, a record of nearly $19 billion in child support was collected.
    Like TANF, our proposals for child support enforcement build on our 
success under PRWORA. These proposals will increase child support 
collections and direct more of the support collected to families, 
moving the child support program toward a focus on families and away 
from the historic purpose of recoupment of Federal and State outlays.
                   Directing More Support to Families
    Under current law, States and the Federal Government can keep some 
of the child support collected on behalf of current or former TANF 
recipients to defray costs of welfare. We are proposing to change that 
law and give States an incentive to give more of the child support 
directly to the family. Families and children will benefit financially 
and, equally important, the children will see that their parents 
support and care for them.
    Today, more families receiving assistance are working and the 
assistance they receive is more temporary. The Wisconsin W-2 waiver 
demonstration has shown that when TANF families receive the child 
support paid on their behalf, fathers are more likely to pay child 
support and to pay more child support.
    Currently, half the States pass through a portion of child support 
collections to TANF families, entirely out of State funds. Under our 
proposal, the Federal Government would share in the cost of amounts 
above a State's current passthrough up to the greater of $100 per month 
or $50 over current State efforts. Federal contributions to passthrough 
of collections to TANF families will provide a strong incentive to 
States to begin to pass through additional support to these families, 
or increase the amount of the current passthrough. Effective October 1, 
2004, this proposal would increase collections going to families by 
$280 million over five years.
    Under a similar proposal to increase support reaching families, 
States would be given the option to adopt simplified distribution rules 
under which all support collected would be sent to families that have 
transitioned from welfare. This proposal would increase collections 
going to families by $810 million over five years and eliminate the 
need for States to explain and support complex distribution decisions. 
This provision would also be effective October 1, 2004.
            Increasing the Amount of Child Support Collected
    The second prong of our strategy for child support enforcement is 
to increase the amount of support collected by adding to our existing 
cadre of enforcement tools.
    First, we would expand our successful program for denying passports 
to parents owing $2,500 in past-due support. The passport denial 
program, run jointly by HHS and the Department of State, currently 
works to deny passports to delinquent parents owing more than $5,000 in 
past due support. In FY 2000 alone, individuals with child support 
arrearages paid $3.6 million in lump sum child support payments to 
avoid losing their passports. An additional number of these individuals 
have entered into payment agreements under which support payments are 
made regularly to children. Currently, passports are being denied to 60 
delinquent parents per day.
    We know of many examples of payments by parents who could pay but 
don't until threatened with the loss of their passport. One parent who 
had never made a voluntary payment paid $67,000 in order to travel for 
work. Another parent paid over $10,000 to obtain his passport to go to 
a family reunion. And a parent in New York paid his account in full--
$27,328--in order to go on a vacation. Under our proposal, 
approximately one million cases could be added to the passport denial 
program.
    We also are proposing to expand the Federal administrative offset 
program by allowing certain Social Security benefits to be offset to 
collect unpaid child support in appropriate cases selected by the 
States. Currently under the Federal Debt Collection Act, Old Age, 
Survivors and Disability (Social Security) benefits can only be offset 
for Federal debt recovery. Our proposal would provide a limited 
expansion to include child support debts and would be subject to the 
same offset thresholds, or safeguards, as current law.
    Our final enforcement proposal would ensure that child support 
orders are fair to both custodial parents and children as well as the 
noncustodial parents by requiring States to review and adjust child 
support orders in TANF cases every three years, reinstating a pre-
PRWORA policy.
    Typically, the ability of obligors to pay child support increases 
over time. Periodically reviewing and adjusting child support awards to 
reflect current income can result in increases in the amount of the 
support provided and the economic security of single parent families. 
The five-year limit on receipt of TANF creates a substantially 
different environment than that which existed prior to PRWORA. At least 
one review of a support order during a family's receipt of TANF will 
help ensure that families leave the welfare rolls knowing that they 
will continue to receive child support at an appropriate level.
    There also are legitimate reasons to reduce an existing award, for 
instance, if the obligor has lost his job or suffered a major decline 
in income. In those cases, periodic review and adjustment means that 
the award amount is fair and that the child support agency is assisting 
a low-income father who does not have the current ability to pay 
support, by helping the father avoid building up a large and 
unmanageable arrearage.
                             Processing Fee
    In addition to our proposals for increasing support and directing 
more of the support collected to families, we will require States to 
impose a $25 annual processing fee on families that have never used 
public assistance in cases where the State has been successful in 
collecting support on their behalf. Because the fee is collected only 
when the State is successful in collecting support and represents a 
fraction of the cost of the services families receive, we are confident 
it will not pose a barrier to families seeking child support 
enforcement services.
    As States and the Federal Government struggle to serve all the 
needs of its citizens, it is imperative that we find innovative ways to 
finance the program. This minimal step toward contributing to the costs 
of the program is reasonable and represents a firm step toward changing 
the perception that the purpose of the child support program is to 
recoup welfare benefits, building on the positive message of our child 
support distribution proposals. While it will raise expectations of 
customer service, I am confident that these expectations will be met.
    I would like to turn now to child care, a key support service.
Child Care
    In 1999, 20 million families in the United States had one or more 
children under the age of 13 with an employed mother. Thirty-two 
percent of these families were low-income. For a number of reasons, 
including the high cost of child care, many of these families have 
difficulty finding care arrangements that they can afford. I can tell 
you from my experience as Governor of Wisconsin, access to child care 
assistance can make a critical difference in helping low income 
families find and retain jobs.
    Further, studies measuring the impact of child care subsidies on 
employment in several communities and States across the country show 
that receipt of subsidies substantially increases the likelihood of 
employment. Eighty-three percent of all families who received child 
care subsidies in 1999 did so because the parents were employed (with 
most of the other parents receiving subsidies while in training or 
education).
    As we approach reauthorization of our child care authorities, the 
Administration is committed to preserving the key aspects of the 
program: parental choice; administrative flexibility for States and 
Tribes; support for work and job training; inclusion of faith-based and 
community-based organizations; and healthy development and literacy 
skills for children in care. The major restructuring of the federally 
funded child care programs under PRWORA remains an effective and 
efficient method for distributing child care funds to States. States 
were given flexibility to determine the best use of those funds to meet 
the varying needs of their low-income populations. Therefore, our 
proposed reauthorization of the discretionary Child Care and 
Development Block Grant (CCDBG) and mandatory Child Care Entitlement 
programs, does not seek any changes to the underlying structure and 
financing of these essential programs. Rather, we enthusiastically 
support maintaining the historically high level of funding for child 
care.
    Our proposal includes $2.1 billion for the Child Care and 
Development Block Grant and $2.7 billion for Child Care Entitlement--a 
total of $4.8 billion for what is referred to as the Child Care and 
Development Fund or CCDF. When combined with TANF and other Federal 
funding sources, over $17 billion is available for child care and 
related services for children.
    Under our proposal, States continue to have flexibility to use 
Temporary Assistance for Needy Families (TANF) funds for child care 
both by transferring up to 30 percent of TANF funds to CCDF and by 
spending additional TANF money directly for child care. In recent 
years, States have used significant amounts of TANF funds for child 
care, including $2.3 billion for transfers to CCDF and $1.4 billion in 
direct spending in FY 2000. In addition to CCDF and TANF, other 
programs in my Department also fund early childhood care and education, 
including the Social Services Block Grant and Head Start. And the 
Administration's education bill, recently passed by the Congress and 
signed by President Bush, includes additional flexibility and funding 
for school age care and literacy programs. Taken together, all of these 
funding opportunities have substantially increased the amount of 
resources available for quality child care and related programs.
    Funding available through our child care programs and TANF 
transfers alone will provide child care assistance to an estimated 2.2 
million children in FY 2003. This is a significant increase over the 
number served just a few years ago; in 1998 about 1.5 million children 
received subsidized care.
    The overall goal of TANF reauthorization is child well-being. Child 
care supports this goal as well as being a vital work support. Our 
child care reauthorization proposals complement our expectation that 
all families will be fully engaged in work and other meaningful 
activities by ensuring that resources are available to support safe, 
affordable child care when necessary.
      Promoting Child Development and Literacy through Child Care
    In addition to supporting working parents, quality child care 
promotes early childhood development and literacy skills. To improve 
quality and support the child development component of child care, 
States support a range of strategies and the Department manages a broad 
portfolio of training and technical assistance activities to support 
their efforts. According to the latest plans submitted by States, the 
most common approaches include grants and loans to providers for 
specific quality improvements, training and technical assistance for 
providers and staff, monitoring of compliance with regulatory 
requirements, strategies to improve retention and compensation of child 
care providers, and a special focus on improving the quality of care 
for infants and toddlers.
    The President's budget maintains funding for quality child care. A 
minimum of four percent of the CCDF must be spent on activities to 
promote quality. In addition, the budget proposes to retain set-asides 
for infant and toddler care, school-age care and resource and referral 
services, additional quality expenditures, and ongoing research to 
identify and promote effective child care practices. My Department is 
providing technical assistance to equip States to make the best use of 
their quality funds, including activities that promote literacy. At the 
same time, we are promoting systemic partnerships between child care, 
Head Start, family literacy, and other school readiness and reading 
programs.
                           State Flexibility
    States have significant flexibility to decide how child care funds 
will be used and what will be emphasized in achieving the overall goals 
of improving access to care and the quality of care. For example, 
within basic Federal requirements, States determine eligibility 
criteria and co-payments for families as well as provider reimbursement 
rates.
    The Department convenes State child care officials and other 
experts to assess needs within the child care system and to plan 
remedies where they are needed and improvements where they are 
possible. Further, to add to this dialog, this year we are funding the 
first federally sponsored child care policy demonstrations that will be 
rigorously evaluated.
                       Promoting Parental Choice
    Along with State flexibility, parental choice is a key element of a 
successful child care program. Families must be allowed to choose the 
care that best meets their needs, whether with a relative, neighbor, 
child care center, faith-based program, or after-school program. In FY 
2000, over 78 percent of CCDF subsidy payments were made using 
certificates or vouchers. Using these vouchers and other child care 
payments, 56 percent of children were cared for in a child care center, 
while 31 percent were in family child care homes, four percent were in 
group homes, and nine percent were in the child's home.
    To help parents make these critical child care decisions, CCDF 
funds parent education and outreach. Nationally, my Department funds 
the Child Care Aware web-site and toll-free hotline to link parents to 
information about child care in their local communities.
    We are on the right track with CCDF and we must maintain a high 
level of Federal funding commitment to ensure our child care resources 
continue to meet the needs of working families.
Conclusion
    Mr. Chairman, the proposal I bring before you today contains many 
different elements. What binds these fundamental elements together is 
the desire to improve the lives of the people and families protected by 
America's social safety net. As noted by the President, ``We've made 
progress, there's no question the doors of opportunity that were shut 
and sealed have now been opened. . . . Yet there is no acceptable level 
of despair and hopelessness in America. We will not leave people in 
need to their own struggle, and we will not leave them to their own 
fate.'' The President has publicly stated his commitment to the next 
phase of welfare reform; and this committee demonstrated its desire to 
succeed when you made the hard choices on the original precedent-
setting PRWORA legislation and in your on-going interest in the impact 
of these changes. It is time to take the next steps in welfare reform 
and the President and I stand ready to work with you to achieve even 
greater successes for America's neediest families.
    I would be happy to answer any questions you have.

                                


    Mr. Herger. [Presiding.] Thank you very much, Mr. 
Secretary. Now we will turn to questions, and first, the 
gentleman from Illinois, Mr. Crane, to inquire.
    Mr. Crane. Thank you, Mr. Chairman.
    Mr. Secretary, thank you for coming to testify before us 
today. It is appropriate that you are here on behalf of the 
Administration since many of the tremendously successful TANF 
programs and reforms that we enacted in 1996 are directly 
attributable to you and your hard work and vision. You are 
truly a pioneer in this field and I would like to thank you for 
that.
    Mr. Thompson. Thank you.
    Mr. Crane. My question to you is this. Do you envision a 
time in the future when we will be able to begin reducing the 
amount of money we send to the States? In other words, do you 
anticipate that we will reach a point in time when, given our 
successes in reforming the program, we will be able to keep the 
program strong and yet reduce the block grant by a substantial 
amount instead of level-funding it?
    Mr. Thompson. Congressman, I believe it is very necessary 
for us to continue the level funding for the next 5 years. I am 
hopeful that at the end of this 5 years we will be able to use 
this money for increased child care, education programs, job 
training programs, and the like. I do not know if you will ever 
see a reduction in the amount of money. I do not think it will 
be going into cash assistance. It will be going to help low-
income parents with children improve their quality of life, 
Congressman.
    Mr. Crane. Thank you.
    Mr. Herger. Thank you. Now, the gentleman from New York, 
the Ranking Member, Mr. Rangel, to inquire.
    Mr. Rangel. Thank you, Mr. Chairman. First, let me 
apologize. I am sorry that my Chairman had something more 
important to do than to listen to your testimony this morning, 
but he is a very busy man.
    Two questions I had and referred to earlier. As a Governor, 
you always promoted giving maximum flexibility to the 
Governors'. It seemed like this time, you are increasing the 
requirements for work and not increasing the funds for child 
care. It seemed like if we are satisfied that the program has 
worked, why would you want to mandate that Governors' do what 
you had always thought that Governors, that one size does not 
fit all?
    Mr. Thompson. Congressman, when I was debating with you 
many times on this subject and when I was debating Congress on 
this particular subject, I said, set the standards high, set 
the principles high, but allow us, as Governors, the 
flexibility to work out the details. I believe that is what 
this program is all about. We are saying, develop a case file 
on each individual. Be able to monitor that individual or 
individuals and see how that person is doing.
    You can have all the flexibility in how you set that 
program up at the State level. We also are doing another thing 
to give States tremendous flexibility and that is the caseload 
reduction credit that was in 1996 TANF law that would be 
carried over for the first year at 100 percent and in the 
second year at 50 percent. So a lot of States will not have 
very much heavy lifting to do in order to meet the requirements 
of this particular law. Most States, like New York and 
Wisconsin, will not have any requirements, because they have 
reduced their caseloads by at least 50 percent. Therefore, they 
will have complete flexibility to set up the program and will 
not have any further requirements under this particular 
proposal.
    Mr. Rangel. Why is it that you believe that the States 
should not give assistance to people who come into this country 
legally and are pursuing their dreams here? As a former 
Governor, why would you think that we would--it is not a 
question of additional money--that we would restrict Governors 
from doing what they would think is in the best interests of 
the people in their State?
    Mr. Thompson. Because under the immigration law, as you 
fully know, there was a decision made by this Congress that any 
legal immigrant coming into this country had to have a sponsor 
that would take care of that individual for 5 years. The 
Administration felt that that principle should be upheld in 
TANF, and, therefore, for 5 years, that individual should not 
be eligible for TANF. If that person needs assistance, he or 
she should have his or her sponsor take care of the person, 
because that was the contractual relationship under which the 
individual came into this country.
    Mr. Rangel. With your permission, Mr. Chairman, I yield the 
balance of my time to Mr. Cardin.
    Mr. Cardin. Thank you, Mr. Rangel.
    Let me follow through in the time that remains on the 
flexibility issue. I very much appreciate your leadership in 
Wisconsin and your leadership in the Administration to get the 
States the power and the discretion they need in order to get 
the job done.
    Let me talk about education for a moment.
    Mr. Thompson. Sure.
    Mr. Cardin. I agree with you, we have got to strengthen the 
work requirement from the 1996 Act because the credit for 
caseload reduction really makes the work requirement 
nonexistent, and as you know, the legislation that I filed on 
behalf of the Democrats includes a change there.
    But if a State determines that an individual needs 40 hours 
or 30 hours of vocational education for 5 weeks or 8 weeks or 
26 weeks, if I understand the Administration's proposal, that 
would not count under the work participation rules because of 
the requirement to work 24 hours before you can get into the 16 
hours of vocational education. That might be all right for many 
of the people in the program, but maybe others, it does not 
work. Is that not just reducing the discretion of a State to 
try to get people off of welfare?
    Mr. Thompson. I think you are reading the Administration 
policy wrong, Congressman. First off, I want to thank you for 
your bipartisan support and your willingness to work with me 
and willingness to discuss this, as we have on several 
occasions already.
    But the Administration's proposal, allow under that case 
that you just enunciated, allows an individual to have 3 months 
before he or she started working to make sure that he or she 
got the necessary extra training or education. That person 
would qualify under the job training requirements set forth in 
the Administration's policy.
    And then after that, he or she would have to go to work for 
at least 24 hours each week. He could work Monday, Wednesday, 
and Friday, and then on Tuesday and Thursday go to school, or 
work Monday, Tuesday, and Wednesday, and could go to school on 
Thursday and Friday.
    Mr. Cardin. But that is more restrictive than the current 
rule.
    Mr. Thompson. It is more restrictive in this regard. Under 
the current law, it is 20/10. This one goes to 24 and 16, and 
it is more restrictive in that we require every State to 
monitor each case. But we give the States complete flexibility 
in how they meet those requirements. They have complete 
flexibility in how to set up that monitoring. They have 
complete flexibility on how they can set up the work and the 
education and the training set forth in the proposal if it is 
passed.
    Mr. Cardin. So under current law, vocational education can 
count toward the first 20 hours, and under your proposal, it can
not?
    Mr. Thompson. That is correct.
    Mr. Cardin. Thank you.
    Mr. Herger. The gentleman's time is expired. Next, the 
gentleman from Florida, Mr. Shaw, to inquire.
    Mr. Shaw. I thank the Chairman for yielding to me. I cannot 
help but notice, Mr. Secretary, behind you are sitting a couple 
of great heroes of welfare reform, Wade Horn, who is just 
absolutely incredible on recognizing and assisting in putting 
into legislation the importance of a family and particularly of 
the father being a member of that family; Andy Bush, who you 
stole from my staff when we were struggling to put together a 
welfare reform bill--of course, I understand New York stole him 
from you, so that is the way it happens when you hire good 
people; Matt Weidinger, who is behind me and who was working 
under Ron Haskins, who is now at the White House.
    I want to congratulate you. I was just sitting here 
listening to you testify as to the success of this bill and 
where we are going to go as to the next stage of welfare 
reform. It is interesting to note that we turned this from Aid 
to Families with Dependent Children into TANF, which says 
Temporary Aid to Needy Families, which is a very important 
distinction which has taken millions and millions of people out 
of welfare and let them take control of their families.
    Mrs. Thurman and I were down in Tallahassee yesterday and 
the two of us were part of a panel which was reviewing welfare 
reform and how it affected in Florida. Florida has had some 
tremendous success, as has Wisconsin, having reduced their 
caseload by 83 percent, an incredible, incredible feat, and I 
know that your story in Wisconsin is over 80 percent and also 
you have told me about various counties in Wisconsin where 
there is no welfare anymore as there is no need for it. I think 
this is just a remarkable transformation that we have brought 
this country through.
    But it is important, as you realize and as the President 
realizes in the legislation that you were reviewing with us, it 
is tremendously important that we recognize that now we are 
down to the hardcore unemployed and we cannot give up on them 
and we have to maintain these programs.
    But what it has done to the children of this country and 
what it has done in giving the mothers, particularly, self-
respect and becoming role models for their kids is just an 
incredible transformation and it shows that if you have high 
expectations and you believe in the human spirit, you can work 
people out of welfare. Welfare was a barrier to the family. 
Now, it is encouraging people to get together and make 
something of themselves, and it is just a wonderful, wonderful 
program.
    I congratulate you. I reviewed the bill that we are going 
to be determining. I imagine Mr. Herger will be filing shortly, 
if he has not already filed it. I have also taken a close look 
at Mr. Cardin's bill, and I think that unlike the confrontation 
that we had years ago, that we will be working together this 
time and I think that really shows the success of this Congress 
when we do things right, and also when we quit micro-managing 
things and do give the States flexibility.
    I think that is tremendously important because they can 
work wonders. They sit there and they work with the people who 
are actually making the day-to-day decisions, the people that 
we have, such as Judge Carney, which is one down in Tallahassee 
who has testified before several of our committees of Congress 
in showing the success that we have and the quality of people 
that we have at the State level as well as the Federal level to 
administer their programs.
    My hat is off to you. I know when we were writing this 
thing, in the final days, I would be running in the back room 
answering telephone calls from you, continuing to put your 
input in right until the very last moment. Those are great 
memories and I think that was a great moment for this Congress.
    Mr. Thompson. Thank you so very much, Congressman, and I 
would just like to return the compliments to you. It would not 
have happened without you. You took a chance and I salute you 
for taking that chance and for leading the effort. I remember 
those days well and I look back on those days as some of the 
fondest memories I have of public policy and what we are able 
to accomplish together and I thank you for it.
    I did recognize that you had some great staff. That is why 
I tried to hire them away from you, and I am glad you 
recognized both Dr. Horn and Andy Bush, and I thank you so very 
much for your support, friend.
    Mr. Shaw. Thank you, Mr. Secretary.
    Mr. Herger. Thank you. I thank the gentleman from Florida, 
again, the former Chairman of the Human Resources Committee 
during the time that this historic welfare reform, TANF, was 
written back in 1996. Thank you very much for all your work and 
continued work, Mr. Shaw.
    Now to inquire, the gentleman from California, Mr. Stark.
    Mr. Stark. Thank you, Mr. Chairman.
    Mr. Secretary, I just cannot thank you enough for the 
walleye pike, but that is a little inside Wisconsin story, but 
I hope it presages the idea. I was told by friends who have not 
heard this that these walleye pike really did not come from 
Wisconsin, where both the Governor and I come from, but they 
came from Canada. Now, Governor----
    Mr. Thompson. You are not supposed to say that.
    Mr. Stark. We can make a deal. If we could bring our health 
care plan down from Canada along with those walleye pike, we 
would really make some progress around here.
    [Laughter.]
    Mr. Stark. I think maybe there is something to be said for 
that, Governor.
    I wanted to talk just for a minute, and you can help me, 
there are two issues. I tried to get a poverty bonus in this 
bill, and I thus far have not been successful, not money for 
poverty reduction but some kind of a reward to States that not 
only put people to work, but then we would begin to measure how 
much they advance. I will recall a little bit of your testimony 
when you were confirmed that you said, we have a duty to those 
families who have successfully moved into the workforce. We 
must do everything in our power to help them to continue to 
move up the ladder of economic success.
    Having said that, then I introduced you to some students 
here from Minnesota who were here with Senator Durenberger, 
with whom many of us on this Committee used to work on issues 
of health and welfare, and he brought his graduate students 
here. It is interesting to note that, and my notes say 
``academic research.'' Governor, do not ask me where it came 
from. But tell me if it makes sense to you. It says, ``academic 
research clearly indicates''--that even makes it more 
questionable----
    [Laughter.]
    Mr. Stark. That poverty is the strongest cause of problems 
with our children, including both school performance, child 
abuse, juvenile crime, teenage smoking, this research points at 
poverty. I note Wade Horn nodding his head. It does not say 
anything about marriage in there, Wade, but it does say 
poverty. But it also says that the higher out of the poverty 
level you are, the better marriage candidate it makes you, so 
maybe there is something in here for everybody.
    In Minnesota, they call it the Family Investment Program 
and it allows, under their program, recipients to keep more of 
their TANF check while earning income through work. They have 
shown that raising the income of their caseload leads to better 
child well-being outcomes, increased employment and increased 
earnings and an increased marriage rate among the welfare 
recipients.
    Now, I guess, and there is only $532 for a family of three 
welfare benefit in Minnesota, so they are not laying a lot of 
money extra, but on the margins, as our Chairman spoke, a 
couple hundred dollars a month in a family of three can make a 
lot of difference, whether it is extra books for kids or 
whether it is a babysitter occasionally so the other child can 
take in a cultural event.
    I just wonder if we could work together--I will let Mr. 
Cardin beat up on you for more money in the aggregate----
    Mr. Thompson. Okay.
    Mr. Stark. But you are going to increase $200 million to 
promote marriage. Could we take half of that and promote 
poverty reduction? It is not much, but if we offered some 
prizes and allowed some flexibility, I just want to see if it 
works. I mean, if it does not, we have got a couple years here 
to find out, see what the States come up with. They may not all 
do as well as Minnesota did or as Wisconsin would do, I know, 
but I think it would be a noble experiment.
    The evidence, and I get the same evidence you do. I do not 
think the researchers are cooking the books here. This was not 
done by Arthur Andersen.
    [Laughter.]
    Mr. Stark. I would like to see if we could try, because to 
me, in many cases what I am hearing, moving off welfare into a 
minimum wage job really decreases the aggregate resources of 
the family unit because they maybe will not get health care or 
they will not get child care, and if we could find ways to 
offset that, I think we would be doing a service.
    Mr. Thompson. Congressman, first of all, let me tell you 
that those walleyes were raised in Wisconsin. They just swam up 
to Canada where they would be packaged. I just want you to know 
that.
    [Laughter.]
    Mr. Thompson. I also want to point out that I want to work 
with you, and I love new ideas, as you do. I think that there 
may be something besides just poverty we should be addressing. 
I am working with Senators Carper and Bayh on some ideas in 
regards to employment and how we might be able to develop a 
credit for hiring individuals at a higher rate and giving them 
a credit. We are working on that.
    But I would like to work with you, Congressman, in regards 
to the poverty question, but I think it should be broader than 
just poverty. It should be education, it should be absenteeism, 
and so on and so forth, and I think we----
    Mr. Stark. Day care.
    Mr. Thompson. I think we could develop something. We will 
have to find some way in which we will be able to fund it. I do 
not want to take it out of the $200 million, but I am sure that 
there are some ways that we might be able to come up with a 
demonstration program that you would like and that I would 
like.
    Mr. Herger. The gentleman's time has expired. Thank you 
very much. Next, the gentleman from New York, Mr. Houghton, to 
inquire.
    Mr. Houghton. Thank you very much, Mr. Chairman. Before I 
inquire, I would like to yield to Mr. Shaw.
    Mr. Shaw. I thank the gentleman for yielding to me. When I 
was noticing the people sitting behind you, Mr. Secretary, I 
failed to notice one of my own from Florida, Don Winstead, who 
served as the Secretary of Welfare under two Governors, 
Governor Chiles and Governor Bush, and did a good job and was a 
great resource also. Thank you. I thank the gentleman for 
yielding.
    Mr. Thompson. He is great. I have got a great team, 
Congressman.
    Mr. Houghton. Thanks very much, Mr. Secretary, for being 
here and for the great work you have done. I also thank you, 
Mr. Shaw, for your leadership here.
    I would just like to ask you a specific question that is 
related to my State of New York. Under the current law, States 
are required to have 50 percent of their TANF families engaged 
in work-related activities. However, the current law also 
provides States with a caseload reduction credit that can be 
used to meet this participation requirement. The Administration 
is proposing to gradually increase the work requirement from 50 
to 70 percent, as you mentioned.
    In the case of my State, New York, it exceeds its ``all 
family'' Federal work participation rate requirement by almost 
six times, but its participation rate is not at 50 percent 
because of the caseload reduction.
    Mr. Thompson. That is correct.
    Mr. Houghton. And that is a problem, and maybe you could 
walk me through that arithmetic a little bit.
    Mr. Thompson. That is why we are changing it, Congressman, 
because under TANF 1, we wrote into the law a provision that 
for every percent of reduction in the number of cases, the work 
participation would go down by a like amount. Most States have 
reduced their caseloads to such a degree that most States are 
in the 5 to 10 percent level instead of the 50 percent which 
Congress set out. So we are going back to the 50 percent, and 
increasing the participation from 50 percent by 5 percentage 
points each year up to 70 percent.
    But in order to allow the States extreme flexibility, we 
are carrying over that work participation credit, that caseload 
reduction credit--100 percent the first year and 50 percent the 
second year. So New York, which has reduced its caseload by 
over 50 percent, will have a full year in which to phase in to 
the 55 percent. So New York will still have to develop a case 
file on each case, but they have already met the work 
participation for the first year.
    Mr. Houghton. Good. Thanks. That helps very much. I yield.
    Mr. Herger. I thank the gentleman from New York. Now, the 
gentleman from Michigan, Mr. Levin, to inquire.
    Mr. Levin. Welcome. I just wanted to probe what Mr. 
Houghton has raised, but I want to say something first about 
the spirit here. I hope we can work together.
    The fight in 1995 and 1996 was not mainly over work as the 
core of welfare reform. That had a clear majority going in and 
had been proposed by the President. We argued over mainly day 
care and health care and the major reductions for legal 
immigrants, much of the money coming from Supplemental Security 
Income and food stamps. Eventually, day care and child care and 
health care were adequately funded and the clear majority of us 
voted for it. Those were the arguments within the Conference 
Committee and they became rather intense, but it was always 
within the ambit of work as the core of welfare reform.
    So within that spirit, and by the way, Mr. Herger, I want 
to say to you--Mr. Rangel was not here when the Chairman 
spoke--you were said today to have said this. He hoped that a 
bill would get bipartisan support, but Republicans would not 
sit down with Democrats to write the legislation. If the 
Administration is working----
    Mr. Herger. Excuse me. I do not recall making that comment. 
Certainly, we are trying to work with the Democrats.
    Mr. Levin. Well, I think----
    Mr. Herger. Sometimes we are not understood when we are 
quoted, but certainly it is my desire to work with everyone on 
the Committee, as I have been with Mr. Cardin, the Ranking 
Member, and with anyone who wants to work on this.
    Mr. Levin. I hope that does not take from my time, because 
that is what was said here, and I am glad it was a misquote.
    I want to talk to you about the work participation because 
I do not understand what you are aiming for. Let us say there 
are 10,000 people on TANF in a State. One State moves 7,000 of 
the people off of welfare into work and another State--that is 
into the private sector--moves 70 percent into a workfare 
program where people do not receive cash assistance. Now, under 
what you have written here, the State that moves 70 percent off 
of welfare into work, they get a very partial credit for that, 
while the State that moves 70 percent, they are still on TANF 
in a way but they are in a workfare program, and because of 
that, they get full credit.
    I do not understand that. Why should a State that moves 70 
percent of people off of welfare into work get a very partial 
credit toward work participation while the State that has 70 
percent on a workfare program meets the work participation 
requirement?
    Mr. Thompson. Congressman, there is also a provision in 
there that when a person goes off of TANF, they still count 
toward the work participation rate for up to 3 months after 
that individual has left TANF.
    Mr. Levin. But that is for 3 months.
    Mr. Thompson. Yes.
    Mr. Levin. We are talking about a multi-year program.
    Mr. Thompson. That is correct.
    Mr. Levin. I do not understand that. I thought--and this is 
a friendly question, I want you to think about this, because I 
think our aim is not to keep people on TANF----
    Mr. Thompson. That is true.
    Mr. Levin. Working, but to get them off of TANF working and 
ultimately into a job that is productive enough so they are out 
of poverty. Is not the latter what our aim is?
    Mr. Thompson. Absolutely, Congressman.
    Mr. Levin. Then I think you need to take another look at 
the work participation. I will give you another example. If 
people are working in a lot of States 30 hours and then doing 
something else for the 10 hours so they meet 40, in a lot of 
States, they are, as a result, not eligible for cash 
assistance, so they are off of TANF. They would give that State 
only a partial credit for the people who are working 30 hours 
plus 10. What sense does that make?
    You said you were talking to the Senate about an employment 
credit. In the bill that Mr. Cardin and a number of us have put 
together with enough care so I think the Chairman should sit 
down and talk with us, we have an employment credit there. 
There is no employment credit in this bill. So what sense does 
it make to say in a lot of these States where people are no 
longer eligible for cash assistance if they get a minimum wage 
job that 30 plus 10 and the State gets essentially a quarter of 
a credit for that person? Tell me what sense that makes.
    Mr. Thompson. Congressman, it makes a lot of sense trying 
to move people, as you said in the beginning, off of TANF into 
work, and we think any kind of work experience is good. We 
think even the 30 hours is very good and they still are going 
to get partial credit.
    Mr. Levin. Why not full credit?
    Mr. Thompson. We are striving to get every State to set up 
a program for each individual so that they can have a case file 
and every individual would have 40 hours outlined on how they 
are going to achieve that requirement, 24 hours of work and 16 
hours of other TANF-related activities.
    Mr. Levin. I will finish, because the red light is long. 
You took 30 seconds, let me take----
    Mr. Herger. It is a minute and 30 over now.
    Mr. Levin. Look, every State--there should be a case file. 
You can have that requirement without the 24/16 or giving a 
quarter of a credit if they are in the private sector while you 
give a full credit if they are in workfare. The individual file 
requirement has nothing to do, if I might say so, with that 
dilemma.
    Mr. Thompson. I will----
    Mr. Levin. And also, if they work 20 hours, and I tried to 
figure this out under your plan, and 20 hours of something 
else, which is true in a lot of States, you essentially say to 
that State, they get zero credit for participation. You say----
    Mr. Herger. If the gentleman----
    Mr. Levin. You want flexibility, but what is flexible about 
saying to a State, if it is 20 hours of work and 20 hours of 
vocational education after 3 months, you get zero credit for 
work participation? How is that flexible?
    Mr. Thompson. We think there is plenty of flexibility in 
there for the States to set it up, Congressman, and I will be 
more than happy to sit down with you and go into it in depth 
and also to work with you on your employment credit.
    Mr. Levin. Okay.
    Mr. Thompson. I think that is what you are asking for, and 
I am offering to help.
    Mr. Herger. Thank you very much. Time has expired, and the 
gentleman has 2 minutes and 53 seconds, so we did go a little 
extra, but it was a good question, and I appreciate the 
response.
    Now, the gentleman from Louisiana, a Member of the 
Subcommittee, Mr. McCrery, to inquire.
    Mr. McCrery. Thank you, Mr. Chairman, and welcome, Mr. 
Secretary.
    Mr. Secretary, your having been the Governor of a State 
which was a leader in welfare reform in the country makes you 
particularly well suited to lead the Administration's effort to 
reauthorize welfare reform.
    Mr. Thompson. Thank you.
    Mr. McCrery. It is because of that experience that I am 
going to ask you this question, and I apologize ahead of time 
for throwing you a curve here. It may not be a question which 
you have thought much about but which could come into play in 
the legislative process.
    My question is, as a former Governor of a State that dealt 
with welfare, kind of on the vanguard of welfare reform, how 
important do you think it is that Congress have this year a 
long-term reauthorization of this program as opposed to maybe a 
6-month or 1-year reauthorization?
    Mr. Thompson. I think it is very important, and I will tell 
you why. When we adopted TANF 1 for 5 years, we also had a 
provision in there that each year, the money could be sent back 
to the Treasury. So it sort of forced the States to make some 
bad decisions because the money was appropriated out on a year-
by-year basis and it was not obligated to the States, and if 
the States did not use it, then the Federal Government had a 
right to come back and reclaim that money or not send the money 
out. So as a result of that, some States that were aggressive, 
including Wisconsin, had to make some very aggressive decisions 
on how the money was going to be spent, so the money could be 
used.
    If you have a long-term commitment, you are able to plan 
for 5 years. You are able to develop that flexibility and that 
plan that is going to be able to be much more positive, 
visionary, and get people from dependence to independence, and 
that is why it is so important to have a long-range 
reauthorization rather than just 6 months to 12 months. You are 
going to have the Governors' out there and the welfare people 
very nervous about whether or not it is going to be 
reauthorized, whether or not the money is going to be there. 
Therefore, they are not willing to go the necessary step to put 
in State dollars and State resources to make the plan work, and 
that is the problem you have by a short-term fix.
    Mr. McCrery. Thank you. Let us explore the question of 
child care a little bit more because that is a legitimate 
concern of all of us who are wanting to move people from 
welfare to work. We understand in many cases we are talking 
about single mothers and they are going to have difficulties 
moving to work if they cannot get child care for their 
children. So it is a question that we ought to talk about.
    We are hearing from some that we need more funding, direct 
funding for child care. Can you recall what the level of 
funding for child care was before the 1996 law and how that 
compares to the funding after the 1996 law?
    Mr. Thompson. I am not exactly certain. I know it was a lot 
less. I know that we are getting more since then. The exact 
dollar amount, I do not know.
    But in regards to what level of funding we have right now, 
it is $4.8 billion, but we also built in flexibility. Thirty 
percent of the TANF funds can be used for child care, and an 
additional amount of money from the Social Services Block 
Grant. So instead of $4.8 billion, when you look at all of the 
potential sources of funds, it is well over $9 billion 
annually.
    Mr. McCrery. Actually, I believe States can transfer up to 
30 percent of their TANF block grant----
    Mr. Thompson. That is correct.
    Mr. McCrery. Into the child care block grant. They can 
actually use all of their TANF moneys for child care if they 
want to. In addition to that--and you are correct, by the way, 
the level of funding was substantially more following the 
enactment of the 1996 law for the child care block grant than 
it was before.
    Mr. Thompson. I just got the figures. It went from $2.1 
billion to $4.8 billion.
    Mr. McCrery. Yes. That is a huge----
    Mr. Thompson. I knew it was a lot, but I did not know how 
much.
    Mr. McCrery. A huge increase for child care. And as you 
pointed out, under TANF, they can transfer 30 percent of their 
TANF block grant into the child care block grant, or they can 
simply utilize their TANF funds for child care as part of their 
welfare program. And, in fact, Mr. Secretary, are not a lot of 
States using their TANF funds now to supplement welfare through 
providing child care resources?
    Mr. Thompson. Yes. I think all are, but I am not sure about 
that. I would suspect they all are. I know we did. I know we 
used a maximum amount in Wisconsin to do that.
    Mr. McCrery. And also, can States not spend their own money 
for child care if they want to and does that spending not count 
against their maintenance of effort requirement?
    Mr. Thompson. Yes, it does.
    Mr. McCrery. And are States doing that?
    Mr. Thompson. I know Wisconsin did. I do not know how many 
others. I know Michigan is, and I know other States are, but I 
do not know how many.
    Mr. McCrery. My time is expired. Thank you, Mr. Secretary. 
Thank you, Mr. Chairman.
    Mr. Thompson. Thank you, Congressman.
    Mr. Herger. I thank the gentleman from Louisiana. Now, the 
gentleman from Maryland, the Ranking Member of the Subcommittee 
on Human Resources, Mr. Cardin, to inquire.
    Mr. Cardin. Thank you, Mr. Chairman.
    Mr. Secretary, let me continue on some concerns I have on 
some of the new requirements that you are suggesting. We have 
already gone over the fact that under current law, a State can 
use as a legitimate work participation requirement an 
individual being involved in vocational education or training 
for currently 20 hours, changed to 24 hours under your proposal 
for the basic work requirement, but no longer does vocational 
education and training count in the initial 24 hours.
    You have made it clear--so, therefore, the States have the 
option of basically getting these people employed for the 24 
hours or finding some form of subsidized or workfare for the 
individuals in the first 24-hour requirement.
    You have made it clear, and I applaud you for this, that 
these individuals will be protected under the minimum wage 
principles, including community service, which I fully support 
and I thank you for clarifying that up front so that we do not 
have to reopen that battle from 5 years ago.
    We just got yesterday, and I will give you a copy of this, 
from the Congressional Research Service (CRS) indicating that 
if you calculate the minimum wage based upon the welfare 
benefits and the food stamp benefits, that in a significant 
number of States, they would not be able to do workfare up to 
24 hours, that that would be below the minimum wage and, 
therefore, could not be done. So this CRS report indicates that 
we would be treating States differently in this requirement.
    Your State of Wisconsin could impose a 24-hour workfare. 
The State of Illinois could only do 21 hours of workfare. The 
State of Alabama could only do 17 hours of workfare. I point 
that out because I think that is an inequity. It is something 
we have to deal with as we try to refine the proposals that are 
being suggested, and I just really wanted to put that on the 
record, and I will make sure you get a copy of the CRS report.
    Mr. Thompson. Congressman, if I could--I do not want to 
interrupt you----
    Mr. Cardin. Sure.
    Mr. Thompson. I think you are reading the proposal wrong, 
because our proposal also says that if you only meet the 17 
hours and that is all you can do to meet the minimum wage, that 
is satisfactory.
    Mr. Cardin. Right. But my point is, you are saying, 
therefore, for the people--you are obviously encouraging lower 
grant levels. You are saying for the people of Alabama that 
there will be a 17-hour requirement but for the people of 
Wisconsin, it is 24 hours, set by Federal standard, even though 
the State may wish to have a comparable--Alabama may want to do 
what is being done in Wisconsin, and we are not allowing them 
under this restriction. I understand what the underlying 
statute provides, but I do not know if that is fair, for us to 
impose different standards for different States.
    Mr. Thompson. I am willing to look at it again. I am 
willing to work with you. I also want to point out that, with 
regard to the vocational education aspect that you talked about 
at the beginning, Congressman, if the vocational education is 
in the field while the person is working, it does count. It is 
only the vocational education in the classroom that does not.
    Mr. Cardin. I appreciate that clarification. I was not 
aware of that, but we are getting closer. That is good. Now 
just deal with the classroom and we will be there.
    The second point I want to bring up in the time that 
remains is that my State of Maryland wants to supplement wages 
for those who are working. They were prepared last year to use 
State-only money because, quite frankly, they did not want it 
to count toward the 5-year clock. They thought that was wrong. 
So they were prepared to use State-only money. Well, in the 
last year, I think most States have run out of a lot of their 
flexible funds. It is a tough budget year. They would like to 
use TANF funds to supplement the wages, which they can do, but 
if they do under current law, it would count toward the 5-year 
clock.
    My understanding of the 5-year clock is that we want people 
to work. That was the whole concept. So I guess I would ask you 
to, and the Governors' have weighed in on this, why should we 
not allow some flexibility here? If the individual is working 
and if the State wishes to supplement the wages, they could do 
it through the Tax Code and it would not count toward the 5 
years. Why can they not do it directly without it impacting on 
the 5-year clock?
    Mr. Thompson. Well, no State has come close to the 5-year 
clock with the 20 percent exceptions that are built into it. 
You are allowed to exempt 20 percent of the population from the 
5-year limit. No State, to my knowledge, is anywhere close to 
that record, so I do not think Maryland has to worry about 
that.
    The second thing is, I do not know if Maryland has a State 
earned income tax credit.
    Mr. Cardin. We do.
    Mr. Thompson. I know that is what I did in Wisconsin, with 
a State earned income tax credit. It works extremely well and 
that also does not----
    Mr. Cardin. They have that, and I think they want to do 
both. The problem, of course, is the 5-year clock is lifetime, 
so we are only 5 years into the program. I just urge you to try 
to bring some of the Governors in, some of your colleagues in 
from the States because they are concerned about this issue.
    Mr. Thompson. Thank you very much. I will be more than 
happy to work with the Governors. In fact, several of them have 
already been in to see me about it on both sides of the aisle--
on all three sides of the aisle.
    Mr. Herger. The time is expired. I thank the gentleman from 
Maryland. Now, the gentlelady from Washington, Ms. Dunn, to 
inquire.
    Ms. Dunn. Thank you very much, Mr. Chairman.
    It is delightful, Mr. Secretary, to see you once again on 
the other side of the table from us, but yet in a position that 
is even more powerful, I think, to do good for folks who want 
to move from welfare to work than you were doing even 5, 6 
years ago.
    I have seen all kinds of numbers on why promoting healthy 
marriages improves the well-being of children. A child born and 
raised outside marriage is seven times more likely to live in 
poverty than a child born and raised by two parents. A child 
born and raised outside marriage will spend 51 percent of 
childhood in poverty. By contrast, a child born inside marriage 
and raised by both parents in an intact marriage will spend 
over 7 percent of childhood in poverty. A child born and raised 
inside marriage is five times less likely to be dependent on 
welfare than a child born and raised outside marriage.
    You get the point, and you established some of these 
statistics in the State of Wisconsin. We did it in the State of 
Washington as we moved 40,000 families off welfare and, I hope, 
encouraged good unions among many of them.
    What I would like you to do for us, if you would, please, 
is discuss the new account that is being set up in the 
Administration's bill that will encourage marriage.
    Mr. Thompson. Thank you very much, Congresswoman Dunn. 
There are two proposals. The first one is the illegitimacy 
bonus, which I think most people have indicated has not worked 
out very well. So we are taking $100 million, which is the 
total amount of that bonus, and we are putting it into a new 
demonstration program to allow communities, regions, whatever, 
to apply for it. We think there will probably be five to seven 
that will apply for it that get it to set up programs, and this 
program will be set up at the local level to try and assist 
individuals, individuals that are already married, to find out 
if they have problems, to be able to counsel them, whether it 
be over alcohol, drugs, anger, gambling, whatever the case may 
be.
    In the cases of individuals who want to get married, give 
them some counseling in order to have a healthy marriage. Also 
to make sure that if individuals are contemplating marriage, 
see if they have some problems and set up programs to assist 
them, such as taking care of the children, such as making sure 
that they know how to handle their finances, which is a big 
problem in new marriages, and be able to assist them to develop 
a healthy marriage. The reason for that is to make sure that 
the children are taken care of. That is one program.
    The second program is a program set up for the States, and 
that is taking $100 million out of the performance bonus and 
that has to be matched dollar-for-dollar by the States. So it 
is actually a $200 million program, $100 million from the 
States, $100 million from the Federal Government, and the 
States would set up their own programs. Nothing is being forced 
upon them.
    The States would, I think, aggressively seek these dollars 
and set up their own programs, but there is nothing to tell the 
State of Washington, the State of Wisconsin, the State of 
Michigan, or whatever the case may be that they have to apply. 
If they want to set up the program, the money will be available 
and they will set up the program in order to try and help 
individuals maintain and strengthen their marriages, or assist 
them in forming healthy marriages if they so desire.
    Nothing in these programs will do anything to encourage 
people to get into an abusive situation or force marriages. 
This is completely voluntary, Congresswoman.
    Ms. Dunn. Thank you very much, Mr. Secretary.
    I wanted to ask you another question, also, related to my 
own State's high unemployment rate. It is number two in the 
Nation at 7.5 percent last month and we are fearful that it 
might be going in the wrong direction.
    Can you let us know, is there any reason to believe that 
the state of the economy is reflected in the number of people 
who are on TANF, on welfare, or are there other factors that 
influence the welfare caseload?
    Mr. Thompson. We think that welfare reform has worked even 
in the downturn. I mentioned the City of New York previously. 
The City of New York had an uptick, an increase in welfare 
cases after September 11 in New York City, in October and 
November, but it has leveled off. Now I believe the latest 
statistics show that the City of New York is actually lower 
than what it was pre-September 11. So it indicates to us that 
welfare reform does work.
    The second thing is that we also allow for flexibility in 
case of a downturn so that States have a contingency fund of $2 
billion if they want to apply for it.
    And the third thing is they have the caseload reduction 
credit that they can apply to the first 2 years, 100 percent 
the first year. The State of Washington, which has done an 
excellent job of reducing its caseload, really does not have 
any extra requirements because with the caseload reduction 
credit that they are receiving, they would not have--I believe 
Washington is one of those States that has reduced by over 50 
percent--would not have any extra requirements whatsoever.
    Ms. Dunn. And just to finish up, Mr. Chairman, you think 
that we are in good shape to reauthorize this legislation for 5 
years with the flexibility that we have built into it?
    Mr. Thompson. I think it is absolutely necessary to do so. 
I think that with what we are proposing here, and with 
something that Congressman Herger has worked on and is 
developing, along with Congressman Cardin, we can come up with 
a bipartisan proposal that is going to be absolutely excellent 
for the second step in TANF. That will get people moving up the 
economic ladder and getting more people from poverty into a 
workable job that is going to be able to allow them to have the 
American dream.
    Mr. Herger. The gentlelady's time has expired, and I thank 
the gentlelady from Washington. Now, the gentleman from 
Washington, Mr. McDermott, to inquire.
    Mr. McDermott. Thank you, Mr. Chairman. It is good to see 
you again, sir.
    Mr. Thompson. It is always a pleasure, Congressman.
    Mr. McDermott. Since the time on the Budget Committee, 
somebody told me a joke, or a story about a guy up in Fond du 
Lac who went to the county fair and bought a mule and they 
asked how much----
    Mr. Thompson. Fond du Lac, Washington, or Fond du Lac, 
Wisconsin?
    Mr. McDermott. No, that is Fond du Lac, Wisconsin.
    Mr. Thompson. Okay.
    [Laughter.]
    Mr. McDermott. They said, it takes one bucket of oats every 
day to feed this mule. So the farmer took him home, worked him 
a while, said he wondered if he could get by with three-
quarters of a bucket. He tried that for a while and things 
seemed pretty good. Then he tried a half a bucket. One day, the 
mule died.
    Now, it looks to me like what we are doing here without 
thinking about it is exactly that. The State of Washington, I 
have here what they are going to pass in the next couple of 
days as the budget for Work First in Washington State, which 
you say is a good program. It has taken us down. It has reduced 
our caseload by 47 percent. They are now cutting $54 million 
out of it. They are taking $7.5 million out of the training. 
They are wiping out the work experience contracts, so saving $3 
million, because it did not work. They did a study at the 
School of Public Affairs at the University of Washington, and 
they followed 3,000 families and the work experience contracts, 
it was a good idea, but it just simply did not raise anybody's 
income.
    What I am concerned about is the fact that in a time when 
States have less money--Mr. Cardin already referred to 
Maryland, and we are not alone, the two of us--you have now 15 
million kids eligible for child care. I understand all this 
moving money around. The Child Care Development Block Grant 
program covers about 12 percent, and people in the States are 
shifting enough to cover another 5 percent, but most kids do 
not have--there is not money sufficient for the child care. And 
yet in this bill, we are going to extend the work period from 
30 hours to 40 hours. So we have not got enough money to cover 
the kids now. How can you extend the work requirement and say 
10 more hours out there without child care?
    I understand I am talking not to the guy who wrote this 
budget but the guy who is sent up here to defend it, and for 
that, it is a terrible job you have got, but the fact is, you 
cannot flat-line that money if you are serious about not 
leaving kids out there unprotected.
    Mr. Thompson. I am very serious about it, Congressman.
    Mr. McDermott. I know you are.
    Mr. Thompson. I am very serious about it. I understand that 
there are four things in order to make a successful welfare 
program. The first one is health care. The second one is child 
care. The third one is job training. And the fourth one is 
transportation.
    We think that this proposal, considering the fact that we 
have a war going on, homeland security infusions of new dollars 
are necessary, that this is the amount of money that we have 
available. We sincerely believe that it is adequate to do the 
job to continue to move individuals out of poverty into 
independent work and we believe that sincerely.
    Now, we also are allowing for a lot of flexibility at the 
State level, and that, is providing 100 percent caseload 
reduction credit in the first year, as well as 50 percent in 
the second year. We believe then, maybe at that time, the 
economy is going to increase. Maybe at that time, the war is 
over. Maybe at that time, we will have some extra money to go 
the next step as far as child care. But right now, we think it 
is adequate, and it is----
    Mr. McDermott. But the State of Washington, you just heard, 
has 7.5 percent unemployed----
    Mr. Thompson. I understand that.
    Mr. McDermott. And no sign it is going up. Boeing just lost 
all its contracts with South African Airlines. They switched to 
Airbus. You have got every indication that things are getting 
worse, at least in our State. Now, Mr. Greenspan has convinced 
everybody in the Congress except me, I guess, that the 
recession is over, but this State is not going to have the 
money or the flexibility when they cut $53 million out of this 
program alone. They just cut $1.5 billion out of the budget.
    So the question really is, how do you do that without 
raising the amount of money? If you think it is successful to 
get people off welfare and onto--is it that you think the money 
that was going into the welfare grant is suddenly going into 
the child care grant? Is that it?
    Mr. Thompson. It is 30 percent. You have got the 
flexibility to move 30 percent there, Congressman, if you so 
desire. There is actually, if you want to move all that money, 
there is over $9 billion that could be put into child care. But 
you have got to also realize that the caseload is one-half of 
what it was 5 years ago, and even with inflation, with a 50-
percent reduction in caseload, you still have an increase in 
child care money this year at level funding.
    Mr. McDermott. But do you disagree with my figures----
    Mr. Thompson. No, I do not.
    Mr. McDermott. That 2 million are covered out of the 15 
million? You do not disagree with that?
    Mr. Thompson. I do not disagree with your numbers.
    Mr. McDermott. But you just think it is Governors are not 
managing well? I mean, is that the bottom line?
    Mr. Thompson. No, I am not going to get into a fight. I 
just think that we have this flexibility, we have this amount 
of money, and we think that as far as TANF is concerned, this 
is an adequate amount of money at this point in time in order 
to do the job, Congressman.
    Mr. Herger. The gentleman's time has expired.
    Mr. McDermott. Thank you.
    Mr. Herger. Mr. Secretary, the way the current law has 
worked out, there really seems to be no effective work 
participation requirement in most States today and States 
generally have full flexibility in designing their work 
programs using Federal dollars. The most recent data we have on 
work by the current welfare caseload shows what that has meant.
    An amazing 58 percent of adults on welfare in 2000 were 
doing nothing at any given moment to work or prepare for life 
after welfare. That is a shocking statistic given what we know 
about how successful welfare reform has been in reducing 
caseload and poverty and otherwise encouraging work.
    Do you have any insight into why so many adults on TANF are 
not participating in any work activities, and what would you 
propose to change this?
    Mr. Thompson. We have been somewhat guilty of our 
successes, because when the Congress set the 50 percent level 
they also put in the provision that for every 1-percent 
reduction in the caseload there would be a 1-percent reduction 
in the work requirement. So when you have a reduction of 50 
percent, you are able then to satisfy the requirements of the 
law without having anybody work. That is why we are putting 
back in the 50 percent level and phasing out the caseload 
reduction credit. That is how we are satisfying it, and we are 
raising that by 5 percent a year. Over 5 years, it will get up 
to 70 percent.
    Mr. Herger. So then this is something that is being 
recognized----
    Mr. Thompson. It is.
    Mr. Herger. And something that we are working in the 
proposal, the President's proposal, to correct?
    Mr. Thompson. That is correct.
    Mr. Herger. Thank you very much. With that, I recognize the 
gentleman from California, Mr. Becerra, to inquire.
    Mr. Becerra. Thank you, Mr. Chairman.
    First, Mr. Secretary, let me thank you. Again, you are 
always more than open and always very accessible to all of us, 
whether here in Committee or in other venues when we have an 
opportunity to speak to you, so I want to thank you very much 
for doing that and I hope we continue to see that, not just in 
the Department of Health and Human Services but throughout. I 
think it is a great model to follow, and I applaud you for 
that.
    Mr. Thompson. Thank you.
    Mr. Becerra. I also want to echo what you said earlier and 
the Chairman said earlier about Dr. John Eisenberg. My wife 
used to work with Dr. Eisenberg at the Agency for Healthcare 
Research and Quality, and she felt his passing, as all who 
worked with him did, because he was just such a brilliant man.
    Mr. Thompson. Fantastic.
    Mr. Becerra. He went far before his time. So I want to also 
acknowledge that and pay my respects to him and, of course, my 
condolences to his family, as well.
    Mr. Thompson. Thank you for saying that, Congressman. I 
appreciate that.
    Mr. Becerra. Absolutely. Sometimes we lose the best too 
quickly, and Dr. Eisenberg----
    Mr. Thompson. I will pass that on to his wife, if you do 
not mind.
    Mr. Becerra. Of course. Thank you. Thank you.
    I wanted to touch on a few issues. On the child care issue, 
I think you have responded to some degree on that. I hope that 
you will consider looking at that a little closer because I 
think what Mr. McDermott is pointing out is so very true, that 
we are not doing enough. More than a third----
    Mr. Thompson. Everything that Congressman McDermott asks me 
to do, I always do because he is Irish.
    [Laughter.]
    Mr. Becerra. As you are probably aware, more than a third 
of the States in this country have either frozen their intake 
or have a growing wait list of parents who are waiting to 
receive some form of child care assistance. When you talk about 
the numbers, I know that there was a study done in the State of 
California up in the Santa Clara County area that showed that 
over a third of their intake and those waiting for child care 
assistance were people earning $10,000 or less, so clearly, 
without that assistance, there is no way that they will be able 
to afford that child care that they desperately need for their 
kids, so I hope that we will continue to work on that.
    Mr. Thompson. Thank you.
    Mr. Becerra. On the issue----
    Mr. Thompson. I want to work with you on that, too, as 
well, Congressman.
    Mr. Becerra. Thank you. On the issue of work activity, I 
want to take some issue with what the Chairman just said about 
58 percent of individuals--again, we are talking mostly about 
women with children--doing nothing. It is not that they are not 
doing nothing, it is just that some of what they are doing is 
not recognized as work activity.
    Mr. Thompson. That is true.
    Mr. Becerra. Some of them are going to college. Some of 
them are trying to find other ways to train themselves, and 
they are not getting credit for it. And beyond that, they are 
also, hopefully, taking good care of their children and trying 
to make do with the little they have. So I hope that we do not 
disrespect any woman who is out there trying to get herself 
away from poverty and get herself to self-sufficiency, and we 
should be doing a great deal to help them.
    In that regard, on education and training, I hope that we 
are able to work with the Administration and do a little bit 
more. I, too, am concerned about the restrictions on what could 
be classified as work activity and I would urge you, Mr. 
Secretary, and I know you are sensitive to this already, to 
consider including English as a Second Language (ESL) as a 
work-related activity because you have got scores of 
individuals--let me give you a statistic that I think is very 
telling.
    You have got 42 percent of immigrant adults in this country 
working at about minimum wage or below, a little bit over 
minimum wage, about $7.50 and below an hour. That compares to 
about 28 percent of the rest of the working population. They 
are truly, as we say, those that are perhaps a paycheck away 
from disaster, hard times, and yet they have a higher 
percentage of involvement in the work force. Their work 
participation rates are higher for immigrant adults than they 
are for U.S.-born adults.
    So they try harder to find jobs, they usually hold more 
jobs because they are earning less, yet once the economy turns 
down, as it has, they are the most susceptible to the hard 
times because they have not had a lot of money, so it is tough 
to save a lot, and so when it is a bad time economically, they 
have probably lost not just their jobs, but probably did not 
have any benefits, and they are trying to make ends meet.
    So I would hope that in the process, we consider that a lot 
of these folks are trying to do exactly as we say. Learn 
English. English is the language of commerce. If we do not help 
them move forward in what they are already trying to do, we 
just make it more difficult for them to ever leave that world 
where they are always a paycheck away. So I would hope that 
maybe you will consider looking at English as a Second Language 
as something that we should consider as classifying as work 
activity.
    I have been approached by several people in my State of 
California. There are two individuals, one is Phyllis Mahoney, 
another is Kerri Medina. Both are in college. One is in a 4-
year State university in California. They are telling me that 
because of the way the law is written, both federally and at 
the State level, they are about to lose their opportunity to 
continue their college education and get those college degrees, 
in some cases a 4-year baccalaureate, which means that they 
will probably never have to be on welfare again.
    The more we do to help women who are taking that 
initiative, even though the hard times that they have suffered 
through in the past and the fact that they have to deal with 
raising a family has not precluded them from moving forward, I 
hope we will consider that education should be an option, 
especially postsecondary education and ESL.
    Mr. Chairman, I will stop with one last comment because I 
was hoping to get some responses from the Secretary, but I used 
up my time. Immigrants, you found fit, and I am pleased that 
you found fit to try to do more for legal immigrants with food 
stamps, which I think was the right thing to do. Over the last 
several years, the previous Administration was trying to undo 
some of the harsh actions taken in 1996 against immigrants.
    Please consider the fact that the ban that you right now 
have in place in your legislation on legal immigrants does a 
disservice to folks who are trying to get themselves further 
along. The fact that they do not earn a lot does not mean they 
should be penalized in hard times, and I hope that we can work 
with you on that, as well.
    Mr. Thompson. Thank you very much, Congressman. You have 
asked several questions, and there is no question that I want 
to work with you on the subjects you have raised.
    With regard to education, I am a big proponent of 
education, but you also have to realize this is a work program 
and you have to have work as the essential element. There are 
plenty of college kids that are on welfare that are working and 
still going on to college with child care and so on. There is 
no question that we have to work on this child care, and I want 
to work with you. I want to work with Mr. McDermott, Mr. Levin, 
Mr. Rangel, Mr. Herger, and all the other individuals. But you 
have a limited amount of money and you have to make things do.
    Mr. Becerra. By the way----
    Mr. Herger. The gentleman's time is expired.
    Mr. Becerra. I would mention, Mr. Secretary, as Governor, 
you yourself provided the food stamp and----
    Mr. Thompson. Yes, I did.
    Mr. Becerra. AFDC-like, Aid to Families with Dependent 
Children, benefits to legal immigrants even though the Federal 
Government did not provide the funding, so I want to 
congratulate you on doing that. I hope now as Secretary, you 
can move forward at a Federal level so we can provide that 
latitude.
    Mr. Herger. The gentleman's time is expired.
    Mr. Thompson. On legal immigrants, you know that there is a 
provision in the immigration law that says that a person has a 
sponsor that is supposed to take care of him or her for 5 
years. The Administration feels that that is sacrosanct and 
should be taken into consideration.
    Mr. Becerra. Thank you, Mr. Chairman.
    Mr. Herger. I thank the gentleman from California and the 
Secretary. Now, the gentleman from Pennsylvania, a Member of 
the Human Resources Subcommittee, Mr. English, to inquire.
    Mr. English. I thank the Chairman, and like the others on 
the Committee, I would like to thank you, Mr. Secretary, for 
taking the time to testify.
    I have a couple of questions. As you know, from your own 
expertise, poverty can have a number of different sources. Some 
of them are economic. Some of them are also, unfortunately, 
behavioral, and in some of those cases, we need to pay 
particular sensitivity and recognize a particular need for 
intervention.
    I wonder if the Administration has considered, although it 
is not part of your proposal, embracing some full or partial 
requirement for drug testing recipients of welfare benefits, 
and as someone whom I am sure has contemplated this issue in 
the past, I wonder if you would share with us your view of the 
pros and cons of putting in place a policy like that.
    Mr. Thompson. We discussed it, Congressman. We did not put 
it in. We thought that it should be left up pretty much to the 
States to do that at the State level rather than have a 
national policy on it, I know the State of Michigan is 
attempting to do something in this regard.
    Mr. English. On the issue of marriage, the Administration 
has had the courage to make this a central theme in its 
proposal, but one of the reasons why marriages break up among 
the working class, to the extent that there is an economic 
incentive, I fear that a lot of it may be tied to some of the 
marriage penalties that are built into the programs----
    Mr. Thompson. You are absolutely correct.
    Mr. English. But also marriage penalties built into the Tax 
Code through the earned income tax credit. I wonder to what 
extent the Administration would welcome a further initiative in 
this area, and do you feel this would be useful?
    Mr. Thompson. I do not know what the Administration policy 
is on that. I can tell you my personal policy is I think it is 
absolutely necessary and important. I would welcome it. I would 
like to work with you on it. I think that we could achieve a 
great deal of equity in it. I think it is really sad that you 
have some marriage penalties in the Tax Code that actually 
prevent individuals from getting married.
    Mr. English. I am grateful for your offer, and I would 
certainly like to take you up on it, not only through this 
reauthorization but for the long haul.
    Mr. Secretary, as a former Governor, undoubtedly, you share 
the concern of many for the financial health of our States, 
particularly as they take on the burden of providing these 
services. Can you describe for us the provisions that the 
Administration has put in its proposal for the continuation of 
rainy day funds and also the maintenance of effort requirement 
that exists under current law for continuing paid contributions 
to----
    Mr. Thompson. We thought it was necessary to continue the 
maintenance of effort requirement, although we have loosened it 
and allowed for more flexibility in some cases. But overall, it 
is basically the same as they were in TANF 1.
    As far as the contingency fund, we put back in the $2 
billion. We changed it so that a State's share of the $2 
billion could be used up fully in 1 year, whereas in TANF 1, it 
had to be used up over 5 years, and we think that there is more 
flexibility. If there is a real downturn, the States would need 
that money and, therefore, the flexibility was put in so that 
it could be used all up in 1 year if so needed.
    Mr. English. Thank you. Mr. Secretary, I guess my final 
question has to do with the child support enforcement component 
of what you put forward. I noticed that you include in it a $25 
processing fee.
    Mr. Thompson. That is correct.
    Mr. English. Some people might be concerned that that could 
be onerous. Could you speak to that?
    Mr. Thompson. That $25 fee is not for anybody that is 
currently on TANF or has ever been on TANF. The $25 fee is only 
for those individuals that are using the system in order to 
collect their money, and we feel that is a small amount. But I 
want to make it crystal clear that anybody that is on TANF or 
has ever been on TANF will not have to pay the $25 fee. Only 
those individuals outside of the system of TANF that want to 
use the child enforcement mechanism would pay a one-time 
administrative fee of $25.
    Mr. English. Thank you, Mr. Secretary, and thank you, Mr. 
Chairman.
    Mr. Herger. I thank the gentleman from Pennsylvania. Now, 
the gentlelady from Florida, Mrs. Thurman, to inquire.
    Mrs. Thurman. Thank you, Mr. Chairman.
    Mr. Secretary, thank you for being here. I would say that I 
think all of us are pleasantly surprised with the numbers that 
we have heard over the last couple of years of what is 
happening with welfare and how we have reduced and put people 
back to work. Certainly as Mr. Shaw said, we did hear some 
tremendous numbers in Florida, and we are very pleased with 
that. I think all of us that worked on the changes in 1996, we 
are very pleased that we are able to come back and have this 
kind of a story.
    But what I do have, and I think some of my colleagues have 
probably brought these issues out, but since it is really 
something that we just talked about with the State yesterday 
and to the two appropriations chairmen of those committees that 
were going to be making some determination and are very 
concerned, first, let me say this.
    I want to thank you and others for making sure that the 
supplemental grants were passed in the stimulus package. I 
cannot begin to tell you how excited Florida was that they got 
their $60 million, and that is a big issue for them because for 
the first time, they are in a deficit in their TANF moneys of 
over $11 million. So this will make a tremendous difference to 
them, but it is something they are going to have to work 
through.
    The second thing, though, I would say, and they made this 
comment over and over again. Judge Kierney made it, and I would 
like to say to you that we invited them up to meet with us on 
this issue and some disproportionate share issues and some 
other things, that you will make your team available to those 
folks in Florida as we start to see the language be put into a 
bill because I think they would like to have an opportunity to 
kind of look at this.
    They have asked that, first of all, we know that the $16.5 
billion level for many was a tough sell. We understand that 
there were a lot of people that would have liked to have seen 
those dollars cut. We thank you very much for keeping that, 
although in saying that, we would hope that some of us can make 
the case to our colleagues that maybe there are some areas that 
we need to adjust, child care or another area that Florida 
talked about was in transportation.
    The other issue that I would talk about is the area of 
flexibility. In Florida, as you may know, some of those moneys 
were actually given to the State community colleges for people 
to attend education classes for a year. Now, if our numbers are 
right, then what we have actually done is we have put ourselves 
in a situation where we have said to folks, okay, you are going 
to pull yourself up by the bootstraps. We are going to give you 
this education.
    But some of those that may not have had that opportunity, 
if this piece of legislation should go into place with the 
requirement now or what the requirement would be, would not 
have that same opportunity, and I think we need to think about 
that. If we move people from one place, from welfare to work, 
the next obvious is to have them move up in that workplace, and 
we all recognize, the President and all of us, that the one 
area we do this is in education. So I think we need to keep 
that in the back of our mind, that education ought to be a key 
component to this to keep people moving in the right direction.
    The other thing that they asked, and some of this you have 
already talked to, is they are asking to maintain the authority 
to transfer the 30 percent of the TANF funds into child care 
development and they are also asking that the--and that the 
Social Services Block Grant, we would eliminate the 4.25 
percent restriction that has been placed on the Social Services 
Block Grant program as they see that as something that would be 
helpful.
    They would like to provide better program alignment and 
simplification for integrating the funding and program rules 
across the public assistance and workforce development. And 
then they also would like to make sure that we establish 
improving the well-being of children as the purpose of TANF.
    Those are some of the criteria that they set out for us, 
and as I said, I hope that we will have the opportunity to keep 
this dialog open with Florida.
    Mr. Thompson. You asked several things. Let me try and go 
down them.
    Mrs. Thurman. Okay.
    Mr. Thompson. First off, the staff, everybody in the 
Department of Health and Human Services, from my immediate 
staff, has been told many times, when anybody from Congress 
wants something, that they are up here.
    Mrs. Thurman. Perfect. Thank you.
    Mr. Thompson. Democrat, Independent, Republican alike, we 
want to work with you. The second thing is, I think I made a 
mistake by hiring somebody from Florida.
    Mrs. Thurman. We actually do not think that is a mistake, 
by the way.
    [Laughter.]
    Mr. Thompson. He is absolutely a pain. He is always saying, 
``How does this affect Florida?'' So you have somebody in the 
inner circle that is looking out for you on a daily basis. And 
maybe the supplemental fund we were discussing should be 
reduced. There was one person here who was talking very 
strongly and said, ``That would hurt Florida.'' So I want you 
to know you are well represented in the inner circle, 
Congresswoman.
    And the third thing, in regards to this, I want to work 
with you. I certainly appreciate the offer, and you have got 
these issues. On education, we may have some difficulties 
because I do not want to turn this into a college tuition 
program. I want to make sure that this maintains its emphasis 
on work, because I think that is so important.
    Mrs. Thurman. But I think it does. I mean, I think we are 
at that same goal, that it should be about work, but what we do 
not want to see happen is----
    Mr. Thompson. I agree with you.
    Mrs. Thurman. To the young woman who goes from a $7 an hour 
job to a $10 an hour job, loses her child care, but can never 
get to the $20 an hour so she can pay for her child care.
    Mr. Thompson. Thank you so very much, Congresswoman.
    Mr. Herger. The gentlelady's time is expired. Now, the 
gentleman from Arizona, Mr. Hayworth, to inquire.
    Mr. Hayworth. Thank you, Mr. Chairman, and Mr. Secretary, 
we welcome you even as my home State welcomes so many Wisconsin 
citizens down for spring training.
    [Laughter.]
    We hope you will have a chance to come enjoy the Cactus 
League, and we know you are hard at work here in so many 
different endeavors.
    Mr. Thompson. You have not invited me down yet, 
Congressman, but I will be more than happy to come if you do.
    Mr. Hayworth. Well, good. I am glad to know that, and I am 
glad it is part of the record.
    [Laughter.]
    We will take care of that, perhaps in another venue, 
Governor.
    We looked at your innovation in Wisconsin and Arizona tried 
to follow suit, as in the year 2000, my home State received a 
Federal award when it was one of five States to receive $20 
million in TANF funds for reducing the rate of out-of-wedlock 
births. I am happy to see the Administration's proposal adds a 
new component to offer incentives and technical assistance to 
help identify and foster strategies that will promote healthy 
marriages and improved child well-being.
    It has been talked about before. My colleague from 
Washington State, Ms. Dunn, touched on this. My friend from 
Pennsylvania touched on a couple of other aspects of proactive 
steps we can take to deal with this important situation. And, 
of course, research has demonstrated a clear link between child 
well-being and being raised by two parents in a healthy 
marriage.
    Now, as is often the case here in the beltway, what Drew 
Pearson and Jack Anderson called the Washington merry-go-round, 
I am concerned that opponents are creating confusion around the 
fine points of this new component. So once again, for the 
record, can you clarify that the purpose of this measure is not 
to force anybody to get married or to stay in a marriage that 
could be dangerous.
    Mr. Thompson. Absolutely, we do not want to force 
marriages. We do not want people to stay in abusive situations. 
What we want to do is we want to counsel individuals so that 
they can develop a healthy marriage, a healthy marriage that is 
going to be able to help their children achieve whatever those 
children want to achieve and be able to help those children 
develop the best that they possibly can. That counseling is 
going to require counseling on finances, counseling on 
communication skills, counseling on whatever the States or 
communities want to set up. But in no way do we want to force 
marriages or keep individuals in abusive situations.
    Mr. Hayworth. Mr. Secretary, I appreciate you stating that 
for the record. You would be--well, maybe you would not be 
surprised. I have actually been on some television shows where 
it seemed that the direct opposite was being suggested, but 
then again, that is what transpires in political discourse 
these days.
    Thank you. We look forward to having you in Arizona, and 
Mr. Chairman, I thank you for the time.
    Mr. Thompson. Thank you, Congressman. You are wonderful.
    Mr. Herger. I thank the gentleman from Arizona. Now, the 
gentleman from Texas, Mr. Doggett, to inquire.
    Mr. Doggett. Thank you very much, Mr. Secretary, and you 
are going to need, what, about a couple hundred million dollars 
to provide that counseling on marriage?
    Mr. Thompson. Pardon?
    Mr. Doggett. It is about $200 million worth of counseling 
that you are seeking on marriage?
    Mr. Thompson. Yes. There are two programs. One program is 
taking the $100 million out of the illegitimacy bonus program 
and putting about $75 million of it into a program for 
communities and regions to apply for demonstration programs. 
The other $25 million is for technical assistance to States and 
$5 million of that amount is for technical assistance to Native 
American tribes. And then the other $100 million out of 
performance bonus is for the States and the States have got to 
match that dollar-for-dollar.
    Mr. Doggett. They can essentially do whatever they want to 
with those monies----
    Mr. Thompson. That is correct.
    Mr. Doggett. As long as they can make--the type of programs 
you talk about or some other if they can make the case that it 
encourages marriage?
    Mr. Thompson. I would not say encourages marriage. I would 
say in order to develop healthy marriages.
    Mr. Doggett. Okay. My concern is with the child care issue 
that you have been raising, and you have been asked about it 
before. I am pleased that Chairman Thomas has indicated that he 
feels this is one of the areas we need to do some more work on, 
because in the capital city of Texas that I represent, we have 
about 1,800 children, going up and down a little bit, each 
month that are on a waiting list for child care. We have about 
39,000 or 40,000 in the State of Texas on waiting lists for 
child care.
    Your proposal that adds this $200 million for marriage 
counseling or the like does not add any additional money to 
take care of those child care needs as I read the proposal, and 
I think it is the same way that the National Governors' 
Association that you were once so active in and the National 
Council of State Legislatures and the American Public Health 
Association read that. I believe that the effect of this level 
of funding, though you could shift monies from elsewhere, you 
would be depriving resources from elsewhere to do that, and the 
effect of the level funding is to reduce the actual purchasing 
power for child care.
    Beyond the waiting list and the people that get frustrated 
and are no longer on the list, the other big concern in the 
child care area I have is that we end up in competition between 
funds that are designed to enhance quality and funds that are 
designed to meet the needs of the people who are waiting there 
for services. In one area of Texas, the quality improvement 
reimbursement rate is only about a 70-cent increase over the 
non-quality improvement. I am concerned that child care, as I 
know you are, be more than just babysitting with minimum wage 
workers.
    Do you feel that we need to do more to increase child care 
quality, and how is that reflected in your proposal?
    Mr. Thompson. You have asked several questions in leading 
up to that, Congressman. First off, I do not think it is a cut, 
because you have reduced the caseload by over 50 percent, and 
the level of funding with a reduction of caseload by 50 percent 
is still an increase. If you extrapolate it out 5 years and you 
still have the child support proposal, and the child care block 
grant remains the same, with the caseload going down, you still 
are increasing the number of dollars on a per capita basis for 
individuals. That is point number one.
    Point number two, we believe strongly in quality day care 
centers, but we also believe that the individual mother of 
those children should have the choice as to what is the best 
for those children, and that is in this proposal.
    Mr. Doggett. What do you do in your proposal to increase 
quality at child care centers for those working mothers, and 
fathers, for that matter, who need to have child care?
    Mr. Thompson. We believe that the States are the ones that 
are responsible for improving the child care quality----
    Mr. Doggett. And that there is no Federal responsibility?
    Mr. Thompson. Well, there is Federal responsibility for 
making sure that States maintain the requirements. We put that 
in the block grant, but the States set up the child care 
provisions.
    Mr. Doggett. Mr. Levin, did you want me to yield to you for 
a moment?
    Mr. Levin. There are just a few seconds. Mr. Secretary, 
this chart that comes from the Committee on Ways and Means, it 
says the source is the U.S. Department of Health and Human 
Services. Does this come from your Department or is it from the 
Committee on Ways and Means? You do not know?
    Mr. Thompson. I do not know, Congressman. I cannot answer 
that.
    Mr. Levin. All right, because it does not include----
    Mr. Thompson. If it has got the Department on there, I am 
sure it came from my Department.
    Mr. Levin. All right. Well, we may----
    Mr. Thompson. But I have not seen that until today.
    Mr. Levin. Okay. We would like to chat with your Department 
about the data. It does not include a number of activities----
    Mr. Thompson. Okay.
    Mr. Levin. In the zero, like substance abuse and mental 
health services and----
    Mr. Thompson. Is there an individual's name on there?
    Mr. Levin. No. We will be in touch with you.
    Mr. Thompson. Okay, fine.
    Mr. Levin. Thank you.
    Mr. Herger. Just in answer to that, we in the majority took 
some HHS data and made a chart on that, so Mr. Levin, we will 
certainly pass on to you what information we have.
    [The chart follows:]

                  MAJORITY OF TANF RECIPIENTS ARE NOT

                       WORKING FOR THEIR BENEFITS
[GRAPHIC] [TIFF OMITTED] T8687A.000


    SOURCE: U.S. Department of Health and Human Services.
    * Work Activities as defined in Federal law which includes work and 
various other job training and education activities.

                                


    Mr. Levin. Will you give us the data that you based the 
chart on?
    Mr. Herger. Yes, we certainly will.
    Mr. Levin. Okay. Thank you.
    Mr. Herger. With that, the gentleman from Texas, Mr. Brady, 
to inquire.
    Mr. Brady. Thank you, Mr. Chairman. I appreciate your 
leadership on this issue.
    As the Committee and the Congress goes forward in 
reauthorizing welfare and continuing its progress, there is 
some debate about what has contributed to the progress we have, 
the economy is sort of the sole reason we have done well, or 
the reforms, the work first approach that has been so much a 
part of welfare reform. Can you sort of enlighten the Committee 
on which has contributed the most toward reducing our roll?
    Mr. Thompson. I do not think there is any question at all. 
I think it is the law and the opportunity for States to 
innovate at the State level that have been able to reduce the 
welfare case levels. The economy certainly helps, but even 
though we went into a recessionary period in the last year, we 
have seen the cases, they have ticked up somewhat, but it has 
been pretty level. It has been the augmentation of the economy 
that has been helpful, but it has been basically the reform 
package that has required States and individuals to work that 
has really made the difference, Congressman.
    Mr. Brady. And so for us as we continue, it is important 
not to just rely on the economy to help reduce these rolls 
further but that we continue that work first education toward a 
good job, child care toward a good job, transportation toward a 
good job, so that we keep reducing those. We know a lot of the 
cases we have now are a little tougher situations. They do not 
have the family infrastructure you might have had in those 
circumstances so that we provide flexibility but we do not back 
off from work first and just rely on the economy or something 
else to make this progress continue.
    Mr. Thompson. I think that would be a terrible mistake. We 
have seen a program that is working. It has probably been one 
of the most successful programs to change social habits in the 
last 50 to 60 years in America, and it is based upon the 
component that people have to work in order to get out of 
poverty.
    Mr. Brady. You bet.
    Mr. Thompson. And I think it would be a terrible mistake to 
turn this into an education bill, and I hope that that does not 
happen. I think the work requirement is the key element that is 
going to make this a continuation of a successful program.
    Mr. Brady. Thank you, Mr. Secretary. I yield----
    Mr. Cardin. Would the gentleman from Texas yield for a 
moment?
    Mr. Brady. Sure.
    Mr. Cardin. I appreciate the exchange, and I happen to 
agree that the law change 5 years ago was a very major factor 
in the success that we have had. I think the economy also was a 
factor, and I think everyone would agree that if there are jobs 
out there, it helps. But also, the earned income tax credit was 
also a factor of Congress in a bipartisan way trying to make 
work pay.
    There always will be multiple factors, but I think Congress 
can be pleased that the law that we passed 5 years ago played a 
significant role in accomplishing the results we see today.
    I thank the gentleman for yielding.
    Mr. Brady. You bet.
    Mr. Thompson. Congressman Cardin, you are absolutely 
correct, and I would like to echo one thing. You know when you 
put the earned income tax credit in conjunction with a State 
income tax credit, you have a viable program there that is very 
helpful to individuals who work and that is very important.
    Mr. Levin. Will the gentleman from Texas yield for another 
30 seconds?
    Mr. Brady. Just reclaiming my time for a moment, I was not 
here in 1996. I came to Congress the year after. But I knew 
something was done right when last year or the year before 
during all the Presidential elections, we had the conventions 
of both parties on prime time TV every night and every speaker 
talked about the success and progress of welfare reform, 
whether they were Republicans or Democrats. You know when 
everyone is taking credit for something that we must have been 
on the right track.
    Mr. Thompson. It made me feel very good.
    Mr. Levin. Will the gentleman yield?
    Mr. Brady. Not at this time. Mr. Chairman, I would yield 
back my time.
    Mr. Herger. I thank you. This concludes our hearing.
    Mr. Thompson. Thank you.
    Mr. Herger. What, I think, an outstanding way to conclude 
is with this, when you have both parties taking credit for 
something, you know it must be working well.
    Mr. Secretary, I certainly want to thank you for, again, 
the leadership you gave back even prior to the 1996 law back in 
Wisconsin of really leading the way in this and all your work 
working with the Congress, even as Governor of Wisconsin then, 
and now serving as we work to fine tune and improve on what is 
already an outstanding program. I thank you very much for your 
very outstanding and helpful testimony today.
    With that, the full Committee of Ways and Means hearing 
stands adjourned.
    Mr. Thompson. Thank you very much, Mr. Chairman, for your 
leadership and thank you all, all the Members on a bipartisan 
basis, for your cooperation on this issue, and good luck.
    Chairman Thomas. Thank you. The hearing is adjourned.
    [Whereupon, at 4:27 p.m., the hearing was adjourned.]
    [A submission for the record follows:]
 Statement of the Hon. Rob Portman, a Representative in Congress from 
                           the State of Ohio
    Mr. Chairman, thank you for holding this important hearing on 
welfare reform. Mr. Secretary, welcome, and thank you for coming to 
share the President's proposal for building on the success of the 
landmark 1996 welfare reform law.
    Governor Bob Taft, from my home State of Ohio, supports the general 
framework of the President's reauthorization plan. Governor Taft 
appreciates the flexibility that the 1996 law has given Governors. 
Governor Taft does have a concern that I am told other governors share. 
The Administration's proposal increases the transferability of TANF 
funds to Social Service Block Grants (SSBGs) to 10% over time, rather 
than ensuring the current 10% transferability as authorized in the 1996 
welfare reform law.
    The 1996 welfare reform law authorized $2.38 billion for SSBGs, and 
authorized States to transfer up to 10% of TANF funds into the SSBGs. 
The transferred funds are able to be used for work support programs and 
services that are tailored to the State's particular needs, such as 
adult day care, mental health services, and substance abuse programs, 
and in Ohio, are delivered at the county level.
    We encourage the Administration to consider maintaining the current 
10% transferability of TANF funds to SSBGs throughout the course of the 
reauthorization. I look forward to working with the Chairman and 
Secretary Thompson on this issue.

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