[House Hearing, 109 Congress]
[From the U.S. Government Printing Office]





        WELFARE REFORM: REAUTHORIZATION OF WORK AND CHILD CARE

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

                                HEARING

                               before the

              SUBCOMMITTEE ON 21st CENTURY COMPETITIVENESS

                                 of the

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                             March 15, 2005

                               __________

                            Serial No. 109-4

                                1________

  Printed for the use of the Committee on Education and the Workforce



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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN A. BOEHNER, Ohio, Chairman

Thomas E. Petri, Wisconsin, Vice     George Miller, California
    Chairman                         Dale E. Kildee, Michigan
Howard P. ``Buck'' McKeon,           Major R. Owens, New York
    California                       Donald M. Payne, New Jersey
Michael N. Castle, Delaware          Robert E. Andrews, New Jersey
Sam Johnson, Texas                   Robert C. Scott, Virginia
Mark E. Souder, Indiana              Lynn C. Woolsey, California
Charlie Norwood, Georgia             Ruben Hinojosa, Texas
Vernon J. Ehlers, Michigan           Carolyn McCarthy, New York
Judy Biggert, Illinois               John F. Tierney, Massachusetts
Todd Russell Platts, Pennsylvania    Ron Kind, Wisconsin
Patrick J. Tiberi, Ohio              Dennis J. Kucinich, Ohio
Ric Keller, Florida                  David Wu, Oregon
Tom Osborne, Nebraska                Rush D. Holt, New Jersey
Joe Wilson, South Carolina           Susan A. Davis, California
Jon C. Porter, Nevada                Betty McCollum, Minnesota
John Kline, Minnesota                Danny K. Davis, Illinois
Marilyn N. Musgrave, Colorado        Raul M. Grijalva, Arizona
Bob Inglis, South Carolina           Chris Van Hollen, Maryland
Cathy McMorris, Washington           Tim Ryan, Ohio
Kenny Marchant, Texas                Timothy H. Bishop, New York
Tom Price, Georgia                   John Barrow, Georgia
Luis G. Fortuno, Puerto Rico
Bobby Jindal, Louisiana
Charles W. Boustany, Jr., Louisiana
Virginia Foxx, North Carolina
Thelma D. Drake, Virginia
John R. ``Randy'' Kuhl, Jr., New 
    York

                    Paula Nowakowski, Staff Director
                 John Lawrence, Minority Staff Director
                                 ------                                

              SUBCOMMITTEE ON 21st CENTURY COMPETITIVENESS

            HOWARD P. ``BUCK'' McKEON, California, Chairman

Jon C. Porter, Nevada Vice Chairman  Dale E. Kildee, Michigan
John A. Boehner, Ohio                Donald M. Payne, New Jersey
Thomas E. Petri, Wisconsin           Carolyn McCarthy, New York
Michael N. Castle, Delaware          John F. Tierney, Massachusetts
Sam Johnson, Texas                   Ron Kind, Wisconsin
Vernon J. Ehlers, Michigan           David Wu, Oregon
Patrick J. Tiberi, Ohio              Rush D. Holt, New Jersey
Ric Keller, Florida                  Betty McCollum, Minnesota
Tom Osborne, Nebraska                Chris Van Hollen, Maryland
Bob Inglis, South Carolina           Tim Ryan, Ohio
Cathy McMorris, Washington           Robert C. ``Bobby'' Scott, 
Tom Price, Georgia                       Virginia
Luis G. Fortuno, Puerto Rico         Susan A. Davis, California
Charles W. Boustany, Jr., Louisiana  Timothy H. Bishop, New York
Virginia Foxx, North Carolina        John Barrow, Georgia
Thelma D. Drake, Virginia            Major R. Owens, New York
John R. ``Randy'' Kuhl, Jr., New     George Miller, California, ex 
    York                                 officio


                                 ------                                
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on March 15, 2005...................................     1

Statement of Members:
    McKeon, Hon. Howard P. ``Buck'', Chairman, Committee on 
      Education and the Workforce................................     2
        Prepared statement of....................................     3
    Kildee, Hon. Dale E., Ranking Member, Committee on Education 
      and the Workforce..........................................     4

Statement of Witnesses:
    Austin, Curtis C., President, Workforce Florida, Tallahassee, 
      FL.........................................................    32
        Prepared statement of....................................    35
    Fallin, Casandra, Executive Director, Baltimore City Child 
      Care Resource Center, Baltimore, MD........................    49
        Prepared statement of....................................    51
    Greenberg, Mark, Director of Policy, Center for Law and 
      Social Policy, Washington, DC..............................    54
        Prepared statement of....................................    56
    Horn, Hon. Wade F., Ph.D., Assistant Secretary for Children 
      and Families, U.S. Department of Health and Human Services, 
      Washington, DC.............................................     6
        Prepared statement of....................................     7
    Mead, Larry, Ph.D., Professor of Politics, New York 
      University, New York, NY...................................    42
        Prepared statement of....................................    43


 
         WELFARE REFORM: REAUTHORIZATION OF WORK AND CHILD CARE

                              ----------                              


                        Tuesday, March 15, 2005

                     U.S. House of Representatives

              Subcommittee on 21st Century Competitiveness

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The Subcommittee met, pursuant to notice, at 10:04 a.m., in 
room 2175, Rayburn House Office Building, Hon. Howard P. 
``Buck'' McKeon [Chairman of the Subcommittee] presiding.
    Present: Representatives McKeon, Petri, Tiberi, Osborne, 
Inglis, Price, Foxx, Drake, Kuhl, Kildee, Payne, McCarthy, 
Tierney, Kind, Wu, Holt, McCollum, Scott, Davis, and Bishop.
    Staff present: Kevin Frank, Professional Staff Member; Kate 
Houston, Professional Staff Member. Melanie Looney, 
Professional Staff Member; Sally Lovejoy, Director of Education 
and Human Resources Policy; Donald McIntosh, Legislative 
Assistant; Stephanie Milburn, Professional Staff Member; 
Deborah L. Emerson Samantar, Committee Clerk/Intern 
Coordinator; Kevin Smith, Senior Communications Advisor; Rich 
Stombres, Assistant Director of Education and Human Resources 
Policy; Ruth Friedman, Minority Legislative Associate/
Education; Ricardo Martinez, Minority Legislative Associate/
Education; Alex Nock, Minority Legislative Associate, 
Education; Joe Novotny, Minority Staff Assistant/Education; and 
Mark Zuckerman, Minority General Counsel.
    Chairman McKeon. A quorum being present, the Subcommittee 
on 21st Century Competitiveness will come to order.
    We're meeting here today to hear testimony on ``Welfare 
Reform: Reauthorization of Work and Child Care.''
    Under Committee Rule 12 (b), opening statements are limited 
to the Chairman and the Ranking Minority Member of the 
Subcommittee. Therefore, if other Members have statements, 
they'll be included in the hearing record.
    With that, I'll ask unanimous consent for the hearing 
record to remain open 14 days to allow Members' statements and 
other extraneous material referenced during the hearing to be 
submitted in the official hearing record.
    Without objection, so ordered.

    STATEMENT OF HON. HOWARD P. ``BUCK'' McKEON, CHAIRMAN, 
  SUBCOMMITTEE ON 21st CENTURY COMPETITIVENESS, COMMITTEE ON 
                  EDUCATION AND THE WORKFORCE

    Good morning. Thank you for joining us for this important 
hearing.
    The Subcommittee is meeting today to hear testimony on the 
effects of welfare reform and the Temporary Assistance for 
Needy Families block grant.
    In addition, we're examining one of the most important work 
supports available to low-income families, Federal child care 
assistance.
    Many of us on this Committee remember the heated debates 
Congress had over welfare reform in 1996. After President 
Clinton signed the bill into law, some predicted it would have 
disastrous results.
    Instead, we now know that welfare reform has been an 
unqualified success. The poverty rate has dropped 9 percent, 
despite the 2001 recession.
    In addition, poverty rates have decreased throughout 
society. Since 1996, 1.4 million children have left poverty. 
Welfare caseloads have dropped over 60 percent from their all-
time high of 5.1 million families in March 1994 to 
approximately 2 million today, their lowest level since 1970, 
according to the U.S. Department of Health and Human Services.
    Census figures also show that employment by mothers most 
likely to go on welfare rose by 28 percent between 1996 and 
2003.
    Welfare reform opponents suggest that the decreases in 
welfare caseloads and child poverty during the late 1990's were 
the result of a healthy economy, not the welfare reform law. 
But history shows that this argument simply is not true. During 
the long economic boom in the 1980's, welfare caseloads 
actually rose, and during the recent recession of 2001, welfare 
caseloads held steady or continued to decline in many areas.
    The fact is that the 1996 welfare law's work requirements 
made the crucial difference in maximizing opportunities for 
welfare recipients to participate in the workforce.
    The focus on work requirements has changed the whole 
culture of the program for those involved, recipients, state 
staff, and even the general public. States now have the 
flexibility to create incentive for families to go to work.
    The success of the 1996 welfare reform law is beyond 
dispute. The challenge for Congress this year is to build on 
that success by putting even more Americans on the path to 
self-reliance.
    When the law is reauthorized this year, while it is true 
that the 1996 reforms significantly reduced welfare caseloads, 
we still have work to do. A majority of TANF recipients today 
are still not working for their benefits.
    According to the Health and Human Services Department's 
Sixth Annual Report to Congress, 58 percent of TANF adult 
recipients are not participating in work activities as defined 
by Federal law, which includes work in various job training and 
education activities.
    While we move families into work, one of the key supports 
available is child care assistance. We know that affordable, 
desirable, reliable, quality child care is critical to allow 
mothers to obtain and retain employment.
    Through the Child Care and Development Block Grant, the 
Federal Government has made a significant financial commitment 
to providing access to affordable child care to low-income 
families. Current funding totals $4.8 billion annually and 
states also used TANF funds to provide child care.
    Our bill would enhance this commitment by providing $1 
billion in additional mandatory funds for child care, and 
increasing the discretionary authorization by $1 billion over 
the next 5 years.
    The Child Care and Development block grant provides states 
maximum flexibility in addressing the child care needs of low-
income families and children.
    Importantly, the program ensures parents are free to choose 
the child care setting they prefer for their children. Parents 
may use their certificates for center-based care, a family 
child care home, relative care, or in-home care.
    In addition, the quality of care children receive is 
critical. Research indicates that the experiences of a young 
child greatly affect a child's success in school. For that 
reason, the House bill requires states to spend at least 6 
percent of their child care funds on certain activities to 
improve the quality of care.
    Today we will hear from the administration regarding their 
plans for the second phase of welfare reform, and Assistant 
Secretary Horn is here to testify about that proposal. Thank 
you for joining us.
    In addition, we will welcome a second panel of witnesses 
consisting of both researchers and those overseeing the 
implementation of welfare reform and child care, to gather 
their insights on the next best steps in welfare reform and 
child care.
    I know all will offer us insight into the strides that have 
been made as well as thoughts on further steps that need to be 
taken.
    The Subcommittee welcomes your participation.
    With that, I yield to my good friend and Ranking Member, 
Congressman Dale Kildee, for his opening statement.
    [The prepared statement of Chairman McKeon follows:]

Statement of Hon. Howard P. ``Buck'' McKeon, Chairman, Subcommittee on 
 21st Century Competitiveness, Committee on Education and the Workforce

    Good morning. Thank you for joining us for this important hearing. 
The subcommittee is meeting today to hear testimony on the effects of 
welfare reform and the Temporary Assistance for Needy Families block 
grant. In addition, we are examining one of the most important work 
supports available to low income families--federal child care 
assistance.
    Many of us on this Committee remember the heated debates Congress 
had over welfare reform in 1996. After President Clinton signed the 
bill into law, some predicted it would have disastrous results.
    Instead, we now know that welfare reform has been an unqualified 
success. The poverty rate has dropped nine percent, despite the 2001 
recession.
    In addition, poverty rates have decreased throughout society. Since 
1996, 1.4 million children have left poverty.
    Welfare caseloads have dropped over 60 percent from their all-time 
high of 5.1 million families in March 1994 to approximately 2 million 
today--their lowest level since 1970, according to the U.S. Department 
of Health & Human Services. Census figures also show that employment by 
mothers most likely to go on welfare rose by 28 percent between 1996 
and 2003.
    Welfare reform opponents suggest that the decreases in welfare 
caseloads and child poverty during the late 1990s were the result of a 
healthy economy, not the welfare reform law. But history shows that 
this argument simply is not true. During the long economic boom in the 
1980s, welfare caseloads actually rose. And, during the recent 
recession of 2001, welfare caseloads held steady or continued to 
decline in many areas.
    The fact is that the 1996 reform law's work requirements made the 
crucial difference in maximizing opportunities for welfare recipients 
to participate in the workforce. The focus on work requirements has 
changed the whole culture of the program for those involved--
recipients, state staff, and even the general public. States now have 
the flexibility to create incentives for families to go to work.
    The success of the 1996 welfare reform law is beyond dispute. The 
challenge for Congress this year is to build on that success--by 
putting even more Americans on the path to self-reliance--when the law 
is reauthorized this year. While it is true that the ``96 reforms 
significantly reduced welfare caseloads, we still have work to do: a 
majority of TANF recipients today are still not working for their 
benefits.
    According to the Health & Human Services Department's Sixth Annual 
Report to Congress, 58 percent of TANF adult recipients are not 
participating in work activities as defined by Federal law, which 
includes work and various other job training and education activities.
    While we move families into work, one of the key supports available 
is child care assistance. We know that affordable, reliable, quality 
child care is critical to allow mothers to obtain and retain 
employment. Through the Child Care and Development Block Grant, the 
federal government has made a significant financial commitment to 
providing access to affordable child care to low-income families. 
Current funding totals $4.8 billion annually, and states also use TANF 
funds to provide child care. Our bill would enhance this commitment by 
providing $1 billion in additional mandatory funds for child care and 
increasing the discretionary authorization by $1 billion over the next 
five years.
    The Child Care and Development Block Grant provides states maximum 
flexibility in addressing the child care needs of low-income families 
and children. Importantly, the program ensures parents are free to 
choose the child care setting they prefer for their children. Parents 
may use their certificates for center-based care, a family child care 
home, relative care, or in-home care.
    In addition, the quality of care children receive is critical. 
Research indicates that the experiences of a young child greatly affect 
a child's success in school. For that reason, the House bill requires 
states to spend at least six percent of their child care funds on 
certain activities to improve the quality of care.
    Today, we will hear from the Administration regarding their plans 
for the second phase of welfare reform, and Assistant Secretary Horn is 
here to testify about that proposal. Thank you for joining us. In 
addition, we will welcome a second panel of witnesses, consisting of 
both researchers and those overseeing the implementation of welfare 
reform and child care, to gather their insights on the next best steps 
in welfare reform and child care. I know all will offer us insight into 
the strides that have been made, as well as thoughts on further steps 
that need to be taken. The subcommittee welcomes your participation.
    With that, I yield to my friend and Ranking Member, Congressman 
Dale Kildee for any statement he may have.
                                 ______
                                 

STATEMENT OF HON. DALE E. KILDEE, RANKING MEMBER, SUBCOMMITTEE 
ON 21st CENTURY COMPETITIVENESS, COMMITTEE ON EDUCATION AND THE 
                           WORKFORCE

    Mr. Kildee. Thank you, Mr. Chairman.
    I'm pleased to join my Chairman and my friend, Buck McKeon, 
at today's hearing on the aspects of welfare reform related to 
child care and work requirements.
    I agree with my colleague that reform of the welfare system 
in 1996 was much needed. We went through various steps, and 
Congress and the President finally agreed resulting in the 1996 
bill being signed into law.
    The system in existence before 1996 was not properly 
focused on giving recipients the tools to gain high-paying 
employment and therefore pull themselves out of poverty. 
Families were not receiving the support they needed to ensure 
their future or the future of their children.
    Unfortunately, reductions in welfare caseload, employment 
of current and former welfare recipients, and reductions in 
childhood poverty have stalled or worsened since 2001.
    While child poverty dropped from 14 million children in 
1995 to 11 million children in 2000, this trend has reversed in 
recent years. As of 2003, 12.3 million children are living in 
families with incomes below the poverty line. Of that 12.3 
million, 4.6 million children are under age six.
    Additionally, many families who leave the welfare rolls 
remain poor.
    While welfare rolls since 1995 have dropped, children are 
still more likely to be poor than the elderly and non-elderly 
adults.
    The facts here are clear.
    Unfortunately, current efforts on welfare reform fail to 
address these problems adequately.
    While the legislation passed in 1996 set standards for 
work, we should be responding to meet these requirements in 
achievable reality.
    We support work. Americans want to work for a living. 
They're not looking for a handout. Instead, they need a hand 
up. The welfare bill instead rips the already meager support 
out from under our families on public assistance. H.R. 240, the 
welfare bill, increases work requirements without sufficient 
child care funding or much-needed flexibility and resources for 
education and training.
    The welfare bill provides for a $1 billion increase in 
child care funding over the next 5 years. The Congressional 
Budget Office has stated that over 4 billion in new child care 
resources are needed to meet work requirements of the bill.
    What are these parents who go to work going to do with 
their children?
    Problems children from low-income families face later in 
life can be traced back to poor quality early education and 
child care experiences. We need to break this cycle, not 
further exacerbate it.
    Getting off welfare reform should be about obtaining 
employment that pays a sustainable wage. Leaving the welfare 
rolls should be about leaving poverty behind. The welfare bill 
doesn't help these families accomplish this goal, which we all 
support.
    I hope today's hearing is a stepping-stone for us to 
continue to educate our colleagues on the importance of helping 
and not placing more barriers in the path of self-sufficiency.
    And again, Mr. Chairman, I thank you for this hearing.
    Chairman McKeon. Thank you, Mr. Kildee.
    Today, we have two panels of witnesses, and I'll begin by 
introducing the distinguished witness on the first panel.
    The Honorable Wade Horn is the assistant secretary for 
Children and Families at the U.S. Department of Health and 
Human Services.
    Since 2001, Assistant Secretary Horn has played a key role 
in implementing several of President Bush's initiatives to 
strengthen children and families.
    Dr. Horn oversees programs that promote the social and 
economic wellbeing of America's children, youth, and families, 
including TANF, foster care, Head Start, and child care.
    Prior to his appointment at the administration for Children 
and Families, Dr. Horn was president of the National Fatherhood 
Initiative and also was commissioner for children, youth, and 
families with the U.S. Department of Health and Human Services 
from 1989 to 1993.
    Dr. Horn received his Ph.D. in clinical child psychology 
from Southern Illinois University.
    Before the assistant secretary begins his testimony, I'd 
like to remind Members that we will impose the 5-minute limit 
on all questions.
    Dr. Horn, the floor is yours.

     STATEMENT OF HON. WADE F. HORN, ASSISTANT SECRETARY, 
 ADMINISTRATION FOR CHILDREN AND FAMILIES, U.S. DEPARTMENT OF 
           HEALTH AND HUMAN SERVICES, WASHINGTON, DC

    Mr. Horn. Thank you, Mr. Chairman. It's a pleasure to be 
here today.
    Mr. Chairman, Mr. Kildee, and Members of the Committee, I'm 
pleased to appear before you today to discuss the next phase of 
welfare reform.
    I'd like to take this opportunity to express my heartfelt 
thanks to you for your leadership and to the Committee for its 
unceasing efforts to further improve the lives of low-income 
Americans.
    The initial work in enacting PRWORA has had a profound and 
positive impact on our nation's vulnerable families. Building 
on this success, President Bush laid out a clear path for the 
next phase of welfare reform.
    I would like to briefly highlight key provisions of the 
President's welfare reform package of most interest to this 
Committee, and update you on the important progress we have 
made in strengthening families since the President's proposal 
was unveiled.
    I'll begin with TANF, the cornerstone of our welfare reform 
efforts.
    TANF is a remarkable example of a successful Federal-state 
partnership. States effectively emphasized work while providing 
families with needed training, job opportunities, and work 
supports.
    As a result the caseload has declined by 55 percent. 
Employment among never-married mothers has grown to 
unprecedented levels. Child poverty rates have declined, and 
birthrates for teenagers continue to decline.
    But even with this notable progress, states still face many 
challenges.
    The majority of adult TANF recipients are not engaged in 
employment-related activities. States have been less effective 
in placing clients with multiple barriers, and more effective 
of post-employment supports that lead to career development and 
wage progression are needed.
    Consequently, our efforts to reauthorize TANF build on our 
past success and address current challenges by:
    Strengthening the Federal-state partnership through key 
policy changes to increase state flexibility and by maintaining 
the current level of financial support;
    By requiring states to help every family they serve achieve 
the greatest degree of self-sufficiency possible;
    By improving program performance; and
    By permitting states to integrate the various welfare and 
workforce investment programs.
    I would like to turn briefly to child care, a key support 
service for low-income families.
    Access to child care assistance can make a critical 
difference in helping low-income families retain employment. 
Therefore, our proposal maintains the underlying structure and 
financing of these essential child care programs at the 
historically high level of funding.
    Specifically, $2.1 billion is proposed for the Child Care 
and Development Block Grant and $2.7 billion for the Child Care 
Entitlement, for a total of $4.8 billion.
    In addition, states continue to have the flexibility to use 
TANF funds for child care, both by transferring up to 30 
percent of TANF funds to child care programs and by spending 
additional TANF money directly for child care.
    When TANF funds are considered, as well as Head Start and 
other state and Federal funding sources, over $18 billion 
currently is available for child care and related services for 
children.
    Although I've focused on the areas of primary interest to 
your Committee, I'd like to acknowledge other key areas of our 
proposal that also play a critical role in improving the 
wellbeing of children and families.
    First, our proposal seeks to improve child wellbeing 
through programs aimed at encouraging responsible fatherhood 
and healthy marriages.
    Further, we build on the success of the child support 
program by increasing the amount of support collected and 
directing more of this support to families.
    Finally, the third piece of our welfare reform strategy 
supports reauthorization of the State Abstinence Education 
Program contained within PRWORA.
    Mr. Chairman, the proposal I bring to you today contains 
many different elements designed to improve the lives of the 
families who otherwise would become dependent on welfare.
    In his second inaugural address, the President stated that 
in America's ideal of freedom, citizens find the dignity and 
security of economic independence. These ideals certainly fit 
the President's concept of welfare reform as well as those 
embodied in H.R. 420.
    The Secretary and I stand ready to work with you on the 
next steps to making economic independence within the reach of 
America's most needy families.
    And I'd be very happy to answer any questions that you may 
have.
    [The prepared statement of Mr. Horn follows:]

Statement of Hon. Wade F. Horn, Ph.D., Assistant Secretary for Children 
and Families, U.S. Department of Health and Human Services, Washington, 
                                   DC

    Mr. Chairman, Mr. Kildee, and members of the Committee, I am 
pleased to appear before you today to discuss the next phase of welfare 
reform. Shortly after the President outlined his reauthorization 
proposal ``Working Toward Independence'' in February of 2002, and again 
early in 2003, the House passed bills that would achieve the necessary 
next steps outlined by the President. Mr. Chairman, I note that you are 
one of the original cosponsors of H.R. 240, which was introduced the 
very first day that this Congress convened. I would like to take this 
opportunity to express my heartfelt thanks to you for your leadership 
and to the Committee for its unceasing efforts to enact the next phase 
of welfare reform to further improve the lives of low-income Americans.
    It has been three years since President Bush first proposed his 
strategy for reauthorizing TANF and the other critical programs 
included in welfare reform. During this time, the issues have been 
debated thoroughly but the work has not been completed and States have 
been left to wonder how they should proceed. We believe it is extremely 
important to finish this work as soon as possible and set a strong, 
positive course for helping America's families. Secretary Leavitt and I 
are convinced that working together with you, we will be successful.
    The enactment of the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996 has had a profound, positive impact on our 
nation's vulnerable families. With our State partners, our 
accomplishments have far surpassed even the most optimistic goals. With 
heightened expectations of personal responsibility and greater 
opportunities, millions of families have moved from dependence on 
welfare to the independence of work. We have provided the necessary 
work supports, child care, and transportation to ensure that parents 
can get to work and stay there without worrying about the safety and 
well-being of their children.
    Building on these successes, President Bush laid out a clear path 
for the next phase of welfare reform. The proposal is guided by four 
critical goals that will transform the lives of low-income families: 
strengthen work, promote healthy families, give States greater 
flexibility, and demonstrate compassion to those in need. These are the 
guideposts that shaped the Administration's proposal for TANF, and 
child care. This framework has not changed.
    As we prepare jointly to move forward on making the President's 
welfare reform proposals a reality, I would like to use my time today 
to highlight the key provisions of the President's welfare reform 
package of most interest to this Committee and update you on the 
important progress we have made in strengthening families since the 
President's proposal was unveiled. I will begin with TANF, the 
cornerstone of our welfare reform efforts.

Temporary Assistance for Needy Families
    As the Assistant Secretary for Children and Families, I have heard 
one consistent theme about the Temporary Assistance for Needy Families 
program--TANF is a remarkable example of a successful Federal-State 
partnership. This Committee and Congress granted States tremendous 
flexibility to reform, design, and operate their welfare programs. 
Initially, some questioned the wisdom of this course of action and 
expressed concern about a potential ``race-to-the-bottom.'' Instead, 
States effectively emphasized work, while providing families with 
needed training, job opportunities, and work supports. In recent years 
after enactment of welfare reform, States have reported an average of 
843,000 new job entries each year. As a result, millions of families 
have been able to end their dependency on welfare and achieve self-
sufficiency. The welfare caseload has declined by 55 percent and the 
total number of families receiving assistance is now lower than at any 
time since 1970.
    Some other positive outcomes we have seen since the law's passage 
include:
      Employment among never-married mothers has grown to 
unprecedented levels. For example, between 1996 and 2003, the 
employment rate for never-married mothers increased 28 percent, from 
49.3 percent to 63.2 percent.
    Contrary to critics who claimed that welfare reform would 
impoverish one million children, the child poverty rate declined, with 
1.6 million fewer children in poverty. Overall child poverty rates 
declined from 20.5 percent in 1996 to 17.6 percent in 2003. The poverty 
rate among African American children declined from 39.9 percent to 33.6 
percent--lower than at any time before welfare reform was enacted, when 
child poverty rates for African American children were 40 percent or 
higher. Similarly, the poverty rate among Hispanic children declined 
from 40.3 percent to 29.7 percent. Although the poverty rate has 
increased some since 2000 as a result of the recent recession, the 
surge in job creation over the past 20 months portends favorably for 
renewed improvement in poverty rates.
      The birth rate for teenagers continues to decline, as 
does the number of births to unmarried teens.
    But even with this notable progress, much remains to be done, and 
States still face many challenges. While the basic structure and goals 
of TANF remain strong, we are concerned about some unfavorable trends. 
Despite the success in moving families from welfare to work, a majority 
of adult TANF recipients are not engaged in employment-related 
activities. In fiscal year 2003, States reported that only 31 percent 
of families with an adult recipient participated in the required 30 
hours of TANF work activities. We need to reverse this trend so that 
all TANF recipients are given the opportunity to become self-
sufficient.
    States also have been less effective in placing clients with 
multiple barriers (such as mental health issues, addiction, learning 
disabilities, and limited English proficiency) in work. We need to 
ensure that these barriers are addressed and that every family is given 
work opportunities leading to self-sufficiency. But our efforts cannot 
stop there. We also need to develop more effective models of post-
employment supports that lead to career development and wage 
progression, programs that sustain and keep families together, and 
programs that enable low-income, non-custodial fathers to help their 
families both financially and in non-financial ways.
    Consequently, our efforts to reauthorize TANF build on our past 
success and address current challenges by:
      strengthening the Federal-State partnership;
      requiring 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;
      improving program performance and, therefore, the quality 
of programs and services made available to families; and
      permitting States to integrate the various welfare and 
workforce investment programs operating in their States.
    I would like to offer some detail on each of these elements.

            Strengthen the Federal-State Partnership
    Although national caseloads are now less than half of what they 
were when the TANF block grant was first established, we propose to 
maintain the current level of support for TANF of $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 have historically low funding levels. This 
will allow States to maintain investments they have made in supporting 
families' transition from welfare to work, strengthening families, and 
providing other benefits and services that support the goals of the 
TANF program. It also will permit them to develop innovative programs 
to address remaining challenges.
    Other key policy changes that will increase State flexibility 
include: eliminating limitations on services for the unemployed by 
defining ``assistance'' so that rules tied to such spending will not 
apply to child care, transportation, and other support services; 
allowing States to designate and obligate ``rainy day funds''; and 
revising current restrictions on funds carried-over from one year to 
the next by allowing such funds to be spent on any service or benefit 
that achieves a TANF purpose.

            Maximize Self-Sufficiency Through Work
    A key component of our reauthorization proposal is to maximize 
self-sufficiency through work. States will be required over time to 
make certain that the percentage of TANF recipients engaged in work and 
productive activities grows and that the primary focus is on 
participation in work--subsidized or unsubsidized employment, on-the-
job training, and supervised work experience or community service. 
States also will be required to engage all TANF families with an adult 
in self-sufficiency activities and they must develop, and regularly 
monitor progress on, individual plans for each family that include 
appropriate activities leading to self-sufficiency.
    The current caseload reduction credit, the effect of which has been 
the elimination of the participation rate requirement in most States, 
will be phased out and replaced by an employment credit. The result of 
these policy changes will be to reinstitute a meaningful work 
participation rate requirement while increasing flexibility in how 
States can achieve that standard.

            Improve Program Performance
    Under TANF, States have become great innovators. But, the shift in 
focus to a work, and family support program has presented management 
challenges. Therefore, our fourth reauthorization component highlights 
improving program performance and accountability. For example, we 
replace the current High Performance Bonus with a $100 million Bonus to 
Reward Employment Achievement. Targeted on meeting the employment goals 
of TANF, it will reward States for successful job placements, sustained 
work, and wage growth.

            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 service delivery system under the 
Workforce Investment Act (WIA), States have made great strides towards 
transforming and integrating their public assistance programs into 
innovative and comprehensive workforce investment programs. But, with 
greater flexibility even more can be accomplished. The final key 
element of our TANF proposal, therefore, seeks to enable far broader 
State welfare and workforce program integration through the 
establishment of new State program integration demonstrations. The 
proposed demonstrations could modify 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 child care, a key support service for 
low-income families.

Child Care
    Access to child care assistance can make a critical difference in 
helping low-income families retain employment. Therefore, the 
Administration remains committed to preserving the key aspects of the 
child care program: parental choice, administrative flexibility for 
States and Tribes, inclusion of faith-based and community-based 
organizations, and development of literacy and other early learning 
skills for children in care; while maintaining the underlying structure 
and financing of these essential child care programs.
    Our proposal supports maintaining the historically high level of 
funding for child care, including $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. In addition, States continue to have the 
flexibility to use 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. When TANF funds are considered, as well as 
Head Start and other State and Federal funding sources, over $18 
billion currently is available for child care and related services for 
children.
    Funding available through CCDF, TANF, and the Social Services Block 
Grant will provide child care assistance to an estimated 2.2 million 
children this year. This is a significant increase over the number 
served just a few years ago; in 1998, about 1.8 million children 
received subsidized care.
    These substantial child care resources support our expectation that 
all families will be fully engaged in work and other meaningful 
activities by ensuring that safe, affordable child care is available 
when necessary.

Other Elements of Welfare Reform
    Although I have focused on the areas of primary interest to your 
committee, I would be remiss if I did not briefly highlight other key 
areas of our proposal that play a critical role in the well-being of 
children, teenagers, and families. Indeed, we establish improving the 
well-being of children as the overarching purpose of TANF.
    In support of that overarching purpose, our proposal seeks to 
improve child well-being through programs aimed at encouraging 
responsible fatherhood and healthy marriages. By discontinuing the Out 
of Wedlock Birth Reduction Bonus and redirecting part of the High 
Performance Bonus Funding, we provide $200 million for programs aimed 
at promoting family formation and healthy marriages. We also provide 
$40 million in funding for the support of responsible fatherhood and 
healthy marriage programs to reverse the rise in father absence and its 
subsequent impact on children.
    Further, because child support is a critical component of Federal 
and State efforts to promote family self-sufficiency and child well-
being, we build on the success of the program to direct more support to 
families, increase the amount of support collected, and increase 
funding for the access and visitation program. If enacted, our child 
support proposals will result in almost $3.4 billion in additional 
financial support to families with a federal cost of only $52 million.
    The third piece of our welfare reform strategy supports 
reauthorization of the State Abstinence Education Program contained in 
PRWORA. In 2000, there were almost 19 million new cases of sexually 
transmitted diseases in the U.S. and, historically, about one-quarter 
of these cases have been teenagers. We know that those teens who choose 
to abstain from sex will not contact such diseases and will not become 
pregnant. The State Abstinence Education Program helps people develop 
inner strength, take charge of their lives, and direct their energies 
to healthy and productive choices. The goal of abstinence education is 
to encourage our Nation's youth to make the healthiest decisions for 
themselves, and our approach links these programs to positive youth 
development programs operated by community-based and faith-based 
groups.

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 families who otherwise would 
become dependent on welfare. In his second inaugural address, the 
President stated that in America's ideal of freedom, citizens find the 
dignity and security of economic independence. He expressed the vision 
of an ownership society, making every citizen an agent of his or her 
own destiny. These ideals certainly fit the President's concept of 
welfare reform as well as those embodied in HR 240. The Secretary and I 
stand ready to work with you on the next steps to making economic 
independence within the reach of America's neediest families. I would 
be happy to answer any questions you have.
                                 ______
                                 
    Chairman McKeon. Thank you, Mr. Secretary.
    You know, in working on this welfare reform now for several 
years, it seems in some of the debates like some people have 
the idea that asking people to work is kind of a punishment, 
but I have a different feeling. I think that giving people an 
opportunity to work enhances their self-esteem, it does a lot 
to build their character.
    We had--in one of the visits in my district, I was visiting 
a self-help center that helped mostly single women, single 
mothers, find employment and find ways to enhance their living 
conditions.
    On the day I was visiting, they had a mother that had been 
through the program come back and was talking to, it was about 
eight or ten women in the room. She had been on welfare for 
years.
    She told of the problems. She couldn't afford shoes for her 
children. She couldn't--she didn't get up and go to work. She 
would send the kids off to school, but they would look at her 
like, you know, ``What are you going to do all day, Mom?''
    And she said after she had gone through this program and 
gotten a job, she was doing quite well, and the testimony that 
she gave to these other women of how now she could buy shoes 
for her children, she could provide for her children, and the 
looks that they gave her as she went off to work, you know, 
was--they just all felt better about themselves. And she said, 
``I will never, ever go back on welfare again.''
    Well, hopefully, she won't have to, because I think the 
program is there for people that need help in their lives when 
they hit a bump in the road, but it's not ever--it was never 
intended, I don't think, to be a lifelong standard of living. 
It was to be a help.
    She took advantage of that, and now is doing much, much 
better, and hopefully those other women that were in that 
program are now in that same situation.
    I think welfare reform as we've worked on it has been a big 
success in moving people from welfare to work, but some critics 
commonly examine what kind of work and whether welfare reform 
recipients are stuck in low-paying jobs. Do you see the job 
advancement not just as job placement, but also as helping 
people move from a job to a better job to a career? And do you 
see that as an element of the TANF program? And how do you 
think the bonus to reward employment achievement, how will that 
assist in these efforts?
    Mr. Horn. Well, first of all, I agree with you. I think 
some of the best salespersons for welfare reform are recipients 
themselves, or more precisely, former recipients.
    One of the things we did before we developed the outlines 
of the administration's welfare reform reauthorization proposal 
is we did a series of listening sessions throughout the 
country, and we were always impressed, both then Secretary 
Thompson and myself, in hearing the stories of former 
recipients, and the dignity that they found through the work 
and employment that they achieved as a consequence of welfare 
reform.
    So those are stories that we heard again and again.
    In order for someone to get a good job, basically they need 
two things. They need a positive work history, and they need 
skills. The problem with a lot of people who are trapped on 
welfare is that they lack both of those things. They lack 
skills and they lack a positive work history.
    So what's central to the President's proposal is that we 
ought to help people who are trapped on welfare acquire both a 
positive work history and the skills they need to get a good 
job.
    Now, there's been a good deal of research that has looked 
at the difference between education-first strategies and work-
first strategies, and what they have found is that work-first 
strategies are more effective in getting people placed into 
employment and long-term earnings growth than education-first 
strategies, but the most effective strategy is a mixed 
strategy, a strategy that both emphasizes going to work 
quickly, but also wrapping around additional education and 
training experiences.
    And this is what's at the core of the President's proposal, 
the idea that we would not take away from the work-first 
approach, but we would encourage agencies to wrap around those 
core work experiences additional education and training 
experiences so they can develop the skills they need along with 
the positive work history to get a good job.
    And that's why the President says, ``Look, let's have 24 
hours of core work, get people into jobs, have them build a 
positive work history, but then don't ignore the rest of those 
hours in that week, but rather, challenge the agency to put 
that person in additional education and training experiences so 
they can develop the skills to go along with their positive 
work history so they can get even a better job in the future.
    Now, you asked about the employment credit.
    It's our feeling that what we ought to do is we ought to 
provide an incentive to states not just to reduce caseloads, 
but also to place people into jobs, and particularly jobs that 
have the potential for wage growth.
    And so the President's employment credit proposal is 
designed to provide incentive for states to actually place 
people into jobs as opposed to one that just simply provides an 
incentive to reduce caseloads.
    Chairman McKeon. Thank you very much.
    Mr. Kildee.
    Mr. Kildee. Thank you, Mr. Chairman.
    Mr. Horn, thank you for your testimony this morning.
    The President's budget did not propose cutting TANF or 
CCDBG, but according to last week's budget action in Congress, 
Republicans are planning to do just that.
    How can we expect states to meet H.R. 240's new 
requirements when they're going to have less money for the work 
supports that have allowed families to get off welfare? Should 
we follow the President's mark on TANF or the Budget 
Committee's mark on TANF?
    Mr. Horn. I am here representing the President's budget.
    We think that it is important to maintain the commitment to 
both the TANF program and the Child Care Development Fund.
    Mr. Kildee. I'm encouraged by your response, and I would 
certainly hope that the White House and yourself and the 
President would encourage the Budget Committee to reconsider 
their action on that, because I think it would be very, very 
harmful to the program.
    You know, we came together in 1996 in a bipartisan way, and 
some of us had some great reluctance, but we did come together. 
We wrote a bill that has the structural parts that can make the 
system work, but there has to be appropriate funding and 
adjustments must be made from time to time.
    Let me ask you this. The administration's proposal suggests 
that there will be more money for child care because states 
will be allowed to transfer 50 percent, not 30 percent, from 
TANF to CCDBG.
    But Mark Greenberg, who will be testifying on the second 
panel, says that this just isn't the case because the reserves 
for most states are likely to be depleted within a few years 
unless states make significant cuts in current level of 
services. So isn't the administration's explanation more hope 
than fact?
    Mr. Horn. Well, first, one of the things that we would like 
to do is to provide states with increased flexibility to spend 
money in the areas that they feel there's a priority for them, 
and that's one of the reasons we proposed raising the 
transferability from the TANF program to the Child Care 
Development Fund and also the Social Service Block Grant.
    But one of the things I think it's important to keep in 
mind is that if we pass a TANF reauthorization bill today that 
incorporates a provision in both the President's plan and in 
H.R. 240, if we pass that bill today, tomorrow states will have 
nearly $2 billion in additional funds that become freed up to 
spend for things like child care.
    Why is that? Because right now, there's almost $2 billion 
that is put in what are called carryover funds. Under the TANF 
programs, as you know, if you don't spend all the money in 1 
year, you get to carry it over from 1 year to the next.
    Almost $2 billion nationally is in an unobligated balance 
carried over from prior years in the TANF program.
    The problem is that under current law that $2 billion can 
only be spent for cash assistance, but the TANF program is no 
longer primarily a cash assistance program. It's a work support 
program.
    So why is it that we have a law that says that if you put 
money aside, the only way you can use that money in the future 
is for cash assistance as opposed to other kinds of work 
supports?
    Well, under the President's proposal and H.R. 240, those 
funds would be freed up to be used for a variety of purposes, 
including child care.
    So one of the consequences of not passing this bill is that 
$2 billion stays locked up, unavailable for states to use for 
child care.
    So we do believe that there would be an immediate influx of 
$2 billion nationally in additional funds which today cannot be 
used for child care, but could be used for child care if we 
pass this bill.
    Mr. Kildee. The administration's own budget tables show 
that 300,000 fewer children will have child care assistance by 
2009. Where do you expect those children to get the assistance, 
never mind that other children who are on waiting lists won't 
get assistance?
    Mr. Horn. I think it's important to keep in mind that the 
budget tables presume that there is no increased spending in 
discretionary budgets in the out years. That's just the way the 
budget tables are presented.
    But what we're proposing is the 2006 budget table of our 
budget regarding how much money to spend in discretionary child 
care. Decisions about how much money in discretionary child 
care to spend in 2007 or 2008 or 2009 or 2010 have not been 
made yet. Those will be made at those appropriate times, and 
the President would then release his budget.
    So when you say that there's a decrease of 300,000 children 
in the budget tables, that's presuming no additional increase 
in discretionary child care spending over the course of the 
next 4 years, when those decisions have not yet been made.
    Mr. Kildee. I see my time has expired. Thank you very much, 
Mr. Horn.
    Chairman McKeon. Thank you.
    The Chair yields 5 minutes to the gentlelady from North 
Carolina, Ms. Foxx.
    Mrs. Foxx. Mr. Chairman, I was not expecting you to 
recognize me at this point. Could I pass and come back?
    Chairman McKeon. You bet.
    Mrs. Foxx. Thank you.
    Chairman McKeon. Next is Mr. Kuhl.
    No questions.
    Next is who? Mrs. Drake.
    Mrs. Drake. Thank you, Mr. Chairman.
    I'd just like to comment to you, Dr. Horn, that I know in 
Virginia we really worked on the welfare to work, but in our 
area, we really went to work with our social services and our 
business community to bring everybody together to make sure 
that there were jobs, that our business community understood, 
our faith community, our social services, and our business 
community, and those meetings still take place today, not quite 
as frequently as they did in the early days.
    But the biggest concern that I have deals with the work 
component of it, because I do know people who participate in 
that, and their biggest concern is they either can't find the 
people who want to work or they don't come back.
    And these businesses would give just about anything to have 
people that they know would show up for work every day, and I'm 
not talking about minimum-wage jobs, either.
    So what I'm extremely concerned about is how we make sure 
we support those people, get them back to work, and I never 
understood why so many people seemed more concerned about 
keeping a $300-a-month payment to a single mother on welfare 
than to have her out in the job force earning $800 or $1,000 a 
month.
    So thank you for what you've done.
    It's not really a question, but I really would like us to 
focus on how we get more people into those roles so when I see 
my friends back home, they aren't telling me that they can't 
get people to fill these spots.
    Chairman McKeon. Thank you.
    The gentleman from Virginia, Mr. Scott.
    Mr. Scott. Thank you, Mr. Chairman.
    Dr. Horn, does a minimum-wage job plus the EITC get you out 
of poverty?
    Mr. Horn. No, it doesn't, but that is not the average wage 
that someone leaving welfare gets.
    The average wage, studies of welfare leavers suggests that 
the initial wage that most people earn is between $7 and $8 an 
hour, and that there is in fact significant wage progression 
the longer that they stay in their jobs.
    So--and with a $7 to $8-an-hour job working full-time, 
full-year, combined with the earned income tax credit, you do 
in fact lift most family configurations out of poverty.
    Mr. Scott. Does the EITC plus a minimum-wage job plus child 
support get you out of poverty?
    Mr. Horn. Well, I suppose that would depend on how much 
money you get from child support, but again, the critical thing 
is, the assumption in your question seems to be that most of 
those who leave welfare go to minimum-wage jobs, and that's not 
the case.
    Most people who leave welfare go to jobs where they're 
being paid $7 to $8 an hour with significant wage progression 
the longer they stay in those jobs.
    Mr. Scott. Do you count food stamps as part of that? Are 
food stamps part of that equation? I mean, if you get a 
minimum-wage job--some people end up on a minimum-wage job, 
whether it's almost or whatever, some do end up on a minimum-
wage job.
    Do those in minimum wages get food stamps?
    Mr. Horn. I'm sorry, say that again?
    Mr. Scott. Do they get food stamps?
    Mr. Horn. If you're on a minimum-wage job?
    Mr. Scott. Right.
    Mr. Horn. So long as you satisfy the income test and the 
asset test, then you're eligible for food stamps.
    Mr. Scott. One of the barriers to employment obviously is 
child care, particularly if you have two children. The 
arithmetic is real tight with one child, but with two children 
the expenses just make the arithmetic very difficult. If we go 
to a 40-hour week, that's going to make the situation even 
worse than it is now.
    What can we do to ensure that there's enough child care for 
people that want to work?
    It seems to me that if we provide that child care, not only 
will the person be able to work, but you've created some jobs, 
they're all domestic--I mean, it's not like, you know, some of 
the money is floating out--that if you provide a lot of child 
care, you'll be providing an opportunity for that person and 
creating a lot of jobs in the child care industry.
    What are we doing to make sure that there's adequate child 
care, particularly if we're talking about going to 40 hours a 
week?
    Mr. Horn. Well, first of all, we share your view that the 
goal of welfare reform ought not to be just to reduce the 
caseloads, but to move families toward self-sufficiency, and 
particularly to move them out of poverty.
    The difficulty with the current system is that the emphasis 
is on part-time work. The problem with part-time work is, at 
relatively modest wages, it doesn't move you out of poverty. It 
may earn you enough to get you out of a cash benefit in TANF, 
but doesn't get you out of poverty. And so the question is, how 
do we then move more people out of not just the welfare rolls, 
but out of poverty?
    The only way to do that is to have a strategy for helping 
them get into full-time employment, because full-time 
employment, as I've said, even at relatively low wages, 
combined with the EITC, does move most family configurations 
out of poverty.
    Now, of course, child care is a very important service to 
help support people in that endeavor, and as I said earlier, 
one of the things, one of the consequences of passing this bill 
now, is that we would immediately free up an additional $2 
billion in unobligated carryover balances nationally that 
states could then use for child care.
    The longer we delay, the longer that $2 billion stays 
locked up and not available for use for child care.
    So if a state needs more money for child care to help 
people get jobs and stay in jobs, then one of the ways that we 
can do that is to pass this bill and unlock those unobligated 
carryover balances.
    Mr. Scott. The budget projects possible cuts--long-term 
projections--possible cuts in Medicaid. What would that do to 
someone's self-sufficiency getting off of welfare? Because a 
lot of these jobs do not have health benefits.
    Mr. Horn. Clearly, that--you know, health insurance and 
health care is an important piece of helping families reach 
self-sufficiency.
    Now, I do not oversee the Medicaid program, and so I would 
leave it to--
    Mr. Scott. It would be your recommendation, I'd assume, 
that we increase Medicaid for coverage for those that are on 
the margin, near the minimum wage, or those that are getting 
jobs without benefits, to help them stay self-sufficient, 
because if we cut back--I know in Virginia, if you make more 
than about six or $7,000 a year, you can't get on the Medicaid, 
and it's kind of hard to be self-sufficient without some kind 
of health insurance.
    Mr. Horn. Well, under current law, and contained within the 
President's proposal, there continues to be 12-month 
transitional Medicaid benefits for those who earn enough when 
they leave welfare--earn so much that they're no longer 
eligible for Medicaid--and we do not propose to change that.
    Mr. Scott. Have you done any study to see what happens to 
people after the 12 months?
    Mr. Horn. I'm not aware of a study that's looked at that.
    Chairman McKeon. Thank you.
    The gentleman from Nebraska, Mr. Osborne.
    Mr. Osborne. Thank you, Mr. Chairman.
    Dr. Horn, thank you for being here today.
    Just a couple quick questions.
    One is, what would you envision states could accomplish 
with the state and local flexibility waiver you've outlined? Do 
you see specific things that they might accomplish with that 
procedure?
    Mr. Horn. I'm very glad you asked that question, because I 
think one of the overlooked pieces of the President's proposal 
is the program integration waivers, and I happen to believe 
that that is one of the most ambitious and revolutionary pieces 
of the President's proposal, because when you get down to the 
local level, whether you're talking about a service provider or 
a client, the thing that drives them crazy is the fact that 
they have to negotiate a maze of Federal programs that often 
have conflicting eligibility and reporting requirements.
    And so what a state could do under the President's proposal 
for program integration waivers is, they could submit a 
proposal to combine, to better align a number of Federal 
programs at the local level so that people could--so that you 
could create a seamless system of services for low-income 
families, so they wouldn't have to negotiate this maze of 
various different programs, so you could better align 
eligibility criteria.
    For example, you could better align work requirements. You 
could develop, for the first time, an integrated information 
technology system, so that you wouldn't have to have different 
information systems for these various different programs.
    So I think that is one of the most ambitious and 
revolutionary aspects of the President's plan, and we hope that 
it will be part of whatever bill is finally passed.
    Mr. Osborne. And the second question. I understand that 
marriage and family formation were included as pieces of the 
reforming welfare in the 1996 legislation, yet we have seen 
very little state activity in this area.
    And I wondered if you could comment on this and speculate 
as to why we haven't seen more progress; because it seems like 
strengthening families is a critical issue.
    Mr. Horn. And no one disagrees that strengthening families 
is an important piece of welfare reform. No one disagrees that 
a family starts off very disadvantaged if they have a child out 
of wedlock when they're very young and before they've finished 
their education.
    The problem is that back in 1997, when faced with the 
transition from an open-ended entitlement to a block grant, 
states could rely upon a decade or so of experiments about how 
to develop and implement welfare-to-work programs, but there 
wasn't the corresponding research base as to how to go about 
strengthening in the same way.
    And so what states tended to do is they tended to focus on 
the work aspects of the law and less so on the family formation 
aspects of the law.
    That's why the President has suggested that we ought to 
take this opportunity to create two new funds, one a 
competitive state grant program and the other a broad-based 
research, demonstration, and evaluation and technical 
assistance funding stream, that would provide funds to states 
to innovate in the area of family formation, and to evaluate 
those efforts so we could build that research base so that 
states could then implement what we learn.
    Because that's what we hear again and again from states. 
It's not that they don't want to do something in this area. 
They're just not sure exactly what to do in this area.
    Now, that is changing. We over the last 3 years have been 
doing some demonstration programs. We're learning things that 
we didn't know just 3 years ago.
    But there still is a need for, we believe, some separate 
funding streams that would support the development of new 
learning in this area.
    Mr. Osborne. Thank you, Dr. Horn.
    Mr. Chairman, I yield back.
    Chairman McKeon. Thank you.
    The gentleman from New York, Mr. Bishop.
    Mr. Bishop. Thank you, Mr. Chairman.
    And thank you, Dr. Horn, for your testimony.
    You've said a great deal this morning that I think most 
reasonable people would not only agree with but applaud. You've 
said that we need--I believe I'm paraphrasing you--we need to 
find policies that encourage career development and wage 
progression. You've said that the goal of TANF ought to be to 
move families toward self-sufficiency. You've said that we need 
to develop strategies that will help people get skills to get a 
good job and keep a good job.
    I don't see how any reasonable person could disagree with 
any of that.
    But I find that at least it seems that one of the core 
elements of the bill before us would take us in the opposite 
direction of all of that, and that is the de-emphasis, if you 
will, on vocational education. Current law allows up to a year 
of vocational education to count toward the work requirement. 
The bill before us eliminates that.
    And I'm a firm believer in the transforming power of higher 
education. Certainly the Federal Government has given its 
support of higher education. And I find that incongruous, that 
we would espouse all those goals, yet take away the means that 
is now available to people to achieve those goals.
    I'd be interested in how you reconcile that apparent 
contradiction.
    Mr. Horn. First, it's not correct to say that either the 
President's proposal or H.R. 240 eliminates the ability to 
enroll people in vocational education. What it does is, it 
limits, in the case of the President's proposal, the use of 
vocational education counting as work from twelve months to 3 
months, and under H.R. 240, I believe it limits it to 4 months.
    But in terms of the additional hours that you wrap around 
the core work experience under both the President's proposal 
and H.R. 240, you could continue to enroll people in vocational 
education.
    Mr. Bishop. If I may interrupt.
    Is it your belief, then, that there are vocational 
education programs that would provide people with sufficient 
skills to get and hold a modest-paying job, I believe you put 
it, that can be completed in 3 months, or four?
    Mr. Horn. I believe that the important thing is to move 
people quickly into work, while wrapping around that core work 
experience additional education and training experiences.
    We heard from Congresswoman Drake the concern that--from 
employers--that it's hard for some employees--well, some 
employees lack what employers call soft skills.
    Mr. Bishop. But isn't it now the case that large numbers of 
people leaving welfare have difficulty maintaining stable 
employment and particularly have difficulty maintaining 
employment that pays them above the poverty level? And if that 
is the case, would not increased education be a vehicle to get 
them beyond that status?
    Mr. Horn. We're not against additional education and 
training experiences. We just believe it should be wrapped 
around core work experience.
    Mr. Bishop. And I guess my question is, to you, is why do 
you believe that if, in fact, the experience is that people are 
leaving welfare and not having the capacity to hold onto jobs 
that pay them a modest wage?
    Mr. Horn. I don't think that the research would suggest 
that what you say is necessarily so. The research that I've 
seen suggests when you survey former welfare recipients 
themselves, the majority say that they are better off after 
having left welfare than when they were on welfare.
    And again, we agree on the goal. We have no disagreement. 
It's important for us to focus on not just reducing caseloads, 
but moving people out of poverty and toward self-sufficiency.
    In order to do that, you need two things.
    Mr. Bishop. Let's stay on that for a second.
    Mr. Horn. Yeah.
    Mr. Bishop. Because I agree with you.
    So is it the contention of either H.R. 240 or the President 
that the current policy that allows for up to a year of 
vocational ed to count, is it your contention that that policy 
takes us away from that goal, and minimizing the vocational ed 
requirement gets us close to that goal?
    So in other words, the less vocational education we have, 
the closer we are to the goal of providing a job that would pay 
someone a modest wage?
    Mr. Horn. I wouldn't put it exactly the way you just put 
it.
    Mr. Bishop. I'm sure you wouldn't.
    Mr. Horn. I think that what has worked in welfare reform is 
the focus on work, and that when you look at the research that 
looks at education-first strategies versus work-first 
strategies, work-first strategies out-perform education-first 
strategies, but the most successful are those that have mixed 
strategies, that may have some short-term, intensive training 
up front, but then quickly moves people into jobs, and then 
wraps around additional education and training experiences, 
including vocational education.
    Mr. Bishop. OK, thank you. I see my time has expired.
    Thank you, Mr. Chairman.
    Chairman McKeon. Mr. Price.
    Mr. Price. Thank you, Mr. Chairman.
    I appreciate the opportunity to see Dr. Horn once again. 
I'm sorry I arrived late, and I hope that my questions are not 
redundant.
    I'm so pleased to have you before this Committee and 
providing your expertise. I know your heart and your passion 
for families and children, your history in working with the 
National Fatherhood Initiative, and I commend you and 
appreciate you being here today.
    I'm somewhat confused, or amused, I guess, by folks who 
will in essence say ``The sky is falling'' once again.
    When we look back, and I was looking through your written 
testimony, we've heard that leaving welfare and not holding 
jobs is what is the order of the day.
    In fact, if you look at the facts from our previous welfare 
reform, the child poverty rates declined, 1.6 million fewer 
children in poverty, overall the child poverty rates have 
declined; poverty rates for African Americans have declined; 
poverty rates for Hispanic children have declined.
    What we have here is a success story upon which we need to 
build, and I commend you for bringing forward your initiative.
    I have a couple of specific questions that I'd like to ask.
    The first relates to work requirements, and I apologize 
again if this was covered.
    But it's my understanding that the states have been allowed 
to offset their work participation requirements through 
reductions in their caseloads, and one of the unintended 
consequences of that I believe to be diluting work 
participation.
    And so I would ask you about your stance, or the 
administration's stance on the strengthening of work 
requirements and how that's addressed in 240.
    Mr. Horn. I don't think anyone in 1996 imagined that 5 
years later we would see a nearly 60 percent decline in the 
caseloads. Even the most wildly optimistic supporters of 
welfare reform back in 1996 would never have predicted that 
dramatic decline in the caseloads.
    One of the consequences of that is, as you point out, the 
caseload reduction credit has essentially eviscerated the work 
participation requirement for most states.
    The difficulty with that is when there's no longer any 
pressure on the states to satisfy an ambitious work 
participation rate, less people go to work, and that's what 
we've been seeing the last 3 years, a declining percentage of 
the caseload are fulfilling enough work to satisfy the work 
participation rate, or work participation requirement.
    And so one of the things that we feel very strongly about 
is that we ought to re-emphasize work as the core reason why 
welfare reform has been successful, and one way to get there is 
to re-implement a meaningful work participation requirement on 
the part of the states.
    Mr. Price. And you believe that 240 addresses that 
satisfactorily?
    Mr. Horn. Absolutely. You know, what it does is, it moves 
us toward a more ambitious work participation rate requirement 
on the part of the states, because the longer that states 
aren't challenged to meet an ambitious work participation rate, 
the easier they fall back on the old ways of thinking of AFDC, 
that somehow those who are on the rolls, despite all the 
evidence to the contrary, are somehow more challenged, are 
somehow more difficult to work with, and therefore are not 
capable of going to work.
    Mr. Price. Or want to be there?
    Mr. Horn. Yes.
    Mr. Price. Yeah. Absolutely. And I appreciate that.
    The other point is the mandatory funding, which is set at 
$1 billion over 5 years in 240. And my question relates to the 
relationship between mandatory funding and the quality of the 
program itself, and whether there's any virtue--do you see any 
virtue or do you have any opinion about moving this program to 
the discretionary side?
    Mr. Horn. Well, I know there are many who would say that 
they have more comfort when the dollars are on the mandatory 
side than the discretionary side.
    On the other hand, if you're a program manager at the local 
level and you get a dollar for child care, it buys the same 
amount of child care whether it came from a discretionary 
pocket or a mandatory pocket.
    Mr. Price. Do you believe there's any relationship between 
quality and mandatory money?
    Mr. Horn. I don't see how that would be the case.
    Mr. Price. Thank you. Once again, I commend you for your 
work.
    I yield back.
    Chairman McKeon. Thank you.
    The gentlelady from California, Mrs. Davis.
    Mrs. Davis. Thank you. Thank you, Mr. Chairman.
    Thank you, Dr. Horn, for being here.
    You mentioned how important it is to re-emphasize work, and 
I agree with that, but we know that people can't go to work if 
they don't have child care.
    And you mentioned that $2 billion that's been accumulating. 
Could you tell me a little more about that? How long has that 
been accumulating? Why haven't those dollars been tapped 
before?
    Mr. Horn. One of the provisions of the original TANF bill, 
as you know, is that if a state didn't spend all the money--
    Mrs. Davis. Right.
    Mr. Horn [continuing]. They could carry over into 
subsequent years. One of the ideas was that if you needed less 
money this year, you could put some money aside for when you 
might need additional money because of an economic downturn.
    The difficulty is that the current law does not allow 
states to designate--
    Mrs. Davis. Right.
    Mr. Horn [continuing]. The so-called rainy day funds as 
obligated, so they're in there as, and they are, technically, 
unobligated funds. Once they're in a carryover status, whether 
obligated or unobligated, they can only be used for--well, I'm 
sorry. If they're unobligated funds in carryover status, they 
can only be used for cash assistance. They can't be used for 
work support, such as transportation, child care, and so forth.
    And these funds have been accumulating over the last 7 
years, and what we'd like to do is say let's give more--states 
greater flexibility in the use of those funds, and if they feel 
the need to use those funds for child care, great; if they feel 
they need to use those funds--
    Mrs. Davis. Would this be ongoing, then?
    Mr. Horn. Would it be ongoing?
    Mrs. Davis. So the $2 billion that's been accumulating is 
available, but from that--once that $2 billion is used, if it 
perhaps could be used for child care or whatever states would 
want, are we going--are you suggesting that we basically 
eliminate that and no longer have those funds accumulating in 
that way, specifically targeted?
    Mr. Horn. No, obviously, once those funds are depleted, 
then they aren't there anymore.
    However, the $2 billion is an understatement of what's 
actually available. For example, in your state of California, 
all of your carryover funds in the state of California, it's my 
understanding, are designated as obligated. Why? Because you're 
a county administered system.
    Now, at the county level, they may not in fact be 
obligated. At the county level, they may in fact not, they may 
be unobligated carryover funds.
    Mrs. Davis. I think my concern is, I'm happy to see that 
there are some dollars that may be available to the states, but 
whether this is more one-time funding or rather, it's ongoing 
funding, because if it's more one-time funding, my guess--and I 
want to ask you, too, about the unmet need that we have in 
child care--is that it could be used quite quickly, and then we 
perhaps have not built into the new, our new reauthorization 
additional funds for child care.
    Is that--would you say that's correct, or--
    Mr. Horn. It's certainly correct that, once carryover funds 
are depleted, then there are no more carryover funds.
    Mrs. Davis. Right, right. So that we're talking about one-
time funds as opposed to ongoing dollars, and that's a concern 
that I would have.
    Mr. Horn. Although states would still have the ability to 
put additional carryover funds, if they don't spend current 
year dollars, back into their account.
    One of the problems with not being able to designate so-
called rainy day funds as obligated is that several years ago, 
Congress took a look at those large carryover balances and made 
the assumption that states didn't need that money because, gee, 
if they didn't spend it, they must not need it, and there were 
some, some who wanted to go after those carryover funds and cut 
those funds in order to achieve some deficit budget relief.
    In fact, there were letters that were sent by Members of 
Congress to states saying, ``Spend the money, don't leave it 
there, spend the money.''
    Mrs. Davis. Right.
    Mr. Horn. And so what we're saying is that states ought to 
have the ability to carry these funds over from year to year, 
and then utilize them as they see fit in subsequent years.
    Mrs. Davis. OK. And what would you suggest is the unmet 
need in child care?
    Mr. Horn. I'm not quite sure what the question is.
    Mrs. Davis. In--whether it's in numbers, perhaps not 
numbers, but percentages, if we--if states were to pass along a 
lot of those dollars for child care, what then?
    Do we have a sense of what that unmet need would be, and--
    Mr. Horn. Well, it's a very--it's actually a very 
complicated question to answer, because the way that we tend to 
think about unmet need is we start with a single funding 
source, and we ask how many people are eligible, how many 
people get that benefit.
    And we assume that people who aren't getting a benefit from 
that funding source are not getting a benefit from any funding 
source, and that's not true.
    There's 900,000 kids, for example, who are in the Head 
Start program, but we don't count them in the calculation of 
``unmet need'' when it comes to child care.
    Now, we also have to define the population. If we're 
talking about TANF, there's no evidence that lack of child care 
subsidies is a significant barrier to work for people who are 
on TANF.
    In fact, there's a provision in the law--no one suggests we 
change it--that prohibits a state or local agency from 
sanctioning a family who doesn't take a job, who's on TANF, if 
child care is not available to them, and we're saying we don't 
want to change that.
    So we believe that there's, yes, that there is plenty of 
money available to provide child care subsidies for those who 
are TANF as they move off TANF and into employment.
    Mrs. Davis. OK. My time has run out, but perhaps we can 
follow up with that, because I think that we certainly have a 
number of people that suggest to us that that's not the case.
    Thank you.
    Chairman McKeon. The gentlelady's time has expired.
    The gentlelady from North Carolina, Ms. Foxx, has a 
question.
    Mrs. Foxx. Thank you, Dr. Horn, for your comments.
    I have a question I'd like to ask you, and then I'd like to 
make some comments about some of the things that have been 
said.
    If we took a hypothetical family of four, making $24,000, 
that's never been on welfare, and compare that to a 
hypothetical family of four that's been on welfare, that now 
gets food stamps, that gets subsidized housing, that gets 
Medicaid, that gets EITC, I'd like to compare the benefits that 
that family that's never been on welfare gets to the family 
that's been on welfare for many years and now is getting--they 
get cash benefits through TANF for a period of time, they have 
gotten free education for a period of time.
    I'd really like to see a list of all of those benefits that 
are given to the family that's been on welfare compared to the 
family that's never been on welfare.
    I think it would be an astounding thing for the American 
people to see the difference in how we treat people who have 
been on welfare compared with those who aren't, because there's 
no end to the benefits that they get in terms of food stamps, 
housing, Medicaid.
    Is that correct? Those benefits will go on and on. Is that 
correct?
    Mr. Horn. Well, they don't go on and on. At some point, if 
they earn enough money, then they lose eligibility for those 
benefits.
    Mrs. Foxx. Thanks.
    Well, I'd like to see a little chart that shows where those 
benefits begin and where they drop off, and compare that to a 
family, again, making $24,000, showing what they pay in taxes.
    And I just think that would be a very interesting piece to 
see, because I think that the idea that somehow or another 
people who have been on welfare never benefit anymore after 
they stop drawing TANF funds is a very distorted picture.
    The other thing, I guess, a couple of comments I'd want to 
make.
    I was a community college president before I was in the 
legislature, and so I know a little bit about a lot of these 
programs. And one of the concerns that I had as a community 
college president was that there were so many programs out 
there that were preparing to prepare to prepare to prepare to 
commence to begin people getting into vocational education.
    People could stay--and that's another chart I'd like to 
see. How long can you get benefits that--from programs where 
you're never in a vocational education program, but you're 
preparing to get into a vocational education--I saw people 
sometimes spend 2 years before they actually got into a program 
that could benefit them in terms of real skills that they got, 
and I'd love to see a chart that shows that. That may have 
changed some over the time that I have not been directly in 
education, but I would like to see that.
    You mentioned a little bit about research, and I know a 
little bit about that area, too, probably not enough. But one 
of the things that I know most about research is that you can 
put a teacher in with a class of children that are below 
average, but tell that teacher that those people are above 
average, and they will perform at the above average level. That 
research, as I recall, is some of the best and most valid 
research that we have.
    Would you say that there is analogous research, or would we 
think that adults might do the same kind--might exhibit the 
same kind of behavior? If we tell people they're not going to 
get a government handout any longer, but they have to go to 
work, does that not produce different behavior?
    Mr. Horn. Well, I think expectations have enormous effects 
on behavior. As a child psychologist, I know that to be true.
    I also think that was one of the most damaging things about 
the old welfare system, is that we didn't believe that those on 
welfare had the same human capacity to get and keep a job as 
the rest of us, and we told them that, and we told them that so 
frequently, they started to believe it.
    And then one of the great successes about welfare reform is 
that we changed that dynamic, and now we were challenging 
welfare recipients to go get a job, and many of them will tell 
you, they will say, ``You know, I was scared at first. I didn't 
think I could do it. I've never actually had a job, or the jobs 
I've had have always been very episodic and very spotty, but my 
caseworker kept encouraging me and encouraging me, challenging 
me to do it, and you know what? I got enormous satisfaction 
from realizing I could do it.''
    We changed the dynamic with welfare reform in 1996, and we 
now think it's time for us to go to the next phase of welfare 
reform that challenges people not just to get part-time jobs, 
but to get full-time jobs, because if you have a part-time job 
at relatively low wages, even with the earned income tax 
credit, you may no longer qualify for a cash benefit, but 
you're going to be poor.
    The only way to escape poverty is to get a full-time job, 
full-year, and when you do that, combined with the earned 
income tax credit, you're not only not going to be on TANF cash 
benefits anymore, you're also not going to be in poverty.
    So for everybody who says, because we all agree that we 
want to reduce poverty, we want to get people out of poverty--
and in fact, TANF has had some success in doing that; 1.6 
million less kids in poverty than back in 1996. But for those 
who say that the President's plan is the wrong plan, I say give 
us another idea, then. I mean, give us another idea.
    How is that we can get people out of poverty by continuing 
to emphasize full-time work--I mean part-time work? We need to 
move to full-time work emphasis and assume that welfare 
recipients are able to move eventually into full-time work and 
not assume that they are only capable of part-time work.
    Chairman McKeon. The gentlelady's time has expired.
    Ms. McCollum.
    Ms. McCollum. Thank you, Mr. Chair.
    I had the job as a state legislator serving on the Health 
and Human Services Committee in Minnesota, implementing welfare 
reform, and I think Minnesota had a program in place which was 
nationally recognized, and we had identified, and I can get the 
documentation, that access to education made a difference for 
women in particular for not just being barely self-sufficient 
but being self-sufficient, and weathering economic downturns.
    We also were very fortunate, I think as a country, as we 
move forward with this great experiment of making our 
communities stronger, our country stronger by more people being 
productive, of also having a really good economy kick in at the 
same time.
    And so I'm here to tell you that in Minnesota right now, 
we're seeing the effects of the way our economy has stagnated, 
because we have gone from 2001 to 2004, we have gone, with the 
number of Minnesotans living in poverty now, from 6 percent to 
almost 9 percent, and part of that has to do with the economic 
downturn.
    So some of these jobs are very sensitive to what is going 
on in the economy.
    One of the jobs in which women who had no education were by 
and large placed in was retail, and I'll say I know quite a bit 
about retail, because I did it for years, and I was a manager 
there, and I know the starting salary for even someone working 
full-time, if they're fortunate enough to get it in the retail 
industry, is going to be $8 an hour, and it's not likely going 
to come with very good health care benefits.
    So I think we need to be careful when we talk about stories 
that we've heard and that, without having hard evidence in 
front of us and realizing each state is different in the way 
that they've used funds and that.
    In Minnesota, we decided that if a mother was going to go 
to vocational school to learn how to become--work one of the 
ladders up in the health care industry, that that was work, 
that if she had two children to take care of and she went to 
school and she did her homework and she worked part-time, quite 
often at the hospital, that that was work, because that child 
still needed to have with their homework and other things like 
that, so we did count it in.
    And I'm a little alarmed at the way everything is getting 
all lumped together again, because I think you did point out 
that some states really took the initiative.
    Wisconsin, former Governor Tommy Thompson's state, took the 
initiative and really had some success stories.
    So what is a little disheartening to me here with what I 
see the proposal is, here we go again with one-size-fits-all 
from the Federal Government, and for those states who have been 
the laboratories and have moved forward, and can document hard, 
good, successes of people transitioning off, being able to 
survive economic downturns, that we might start undoing the 
very thing that has made successful families.
    I'm a little concerned that I'm not seeing where--I want to 
see these states that didn't heed the alarm, the warning, the 
opportunity that was given to them by this Congress as some 
states did, because when you start changing the work 
qualifications and the way it counts, I wonder if then 
Minnesota will have more people going into the retail industry 
waiting at a counter, rather than going into the health care 
industry, maybe starting out being a nursing assistant, and 
then on their own time later on, after they're done going 
through the TANF process, maybe two or 3 years later, after 
they're self-sufficient and the children are a little older, 
taking that LPN, then becoming an R.N.
    We were developing a ladder, and education being a 
foundation of that.
    So the question that I have is, how are we going to make 
sure that we don't undo some of the very successes that you 
were talking about, in taking away some of the states' 
flexibility in determining what they needed to provide in order 
for their citizens to be successful families and successful 
taxpayers?
    Mr. Horn. Well, I think there's a great deal in both the 
President's proposal and H.R. 240 that provides additional 
flexibility to the states to determine how they're going to run 
their programs.
    There's--this is a complex piece of legislation, to be 
sure, but there is a lot within the legislation that actually 
increases the flexibility of the states. I've mentioned some 
already.
    The use of carryover funds for something other than just 
cash assistance; I've mentioned the program integration waivers 
that would provide enormous flexibility for states to structure 
new, seamless systems of supports for low-income families.
    Also, for the first time, states would be able to get 
credit against the work participation rate under both the 
President's proposal and H.R. 240 if the family met the core 
work requirement but didn't get to the total number of hours.
    Right now, if you are working 29 hours, under the current 
law, 29 hours, the state gets zero credit for that individual 
against their work participation rate.
    Under the President's proposal and H.R. 240, you would get 
a pro-rated amount of credit against your work participation 
rate.
    So I think there's a lot of flexibility that's provided in 
the bill.
    Ms. McCollum. Mr. Chair, I would--I put forth and I ask for 
hard statistical information as to how--and you don't have to 
provide it for all 50 states, but I would like to know how the 
President's plan, how you see how it's going to impact the 
success, the success that we've had in Minnesota.
    And Mr. Chair, as the bill goes forward, I think we also 
need to watch what's going on the bankruptcy bill, because one 
of the goals of the President's plan here is collecting more 
child support, and in the bankruptcy bill, child support comes 
after debtor collection, is my understanding.
    Chairman McKeon. The gentlelady's time has expired.
    The gentleman from Massachusetts, Mr. Tierney.
    Mr. Tierney. Thank you, Mr. Chairman.
    Thank you, sir, for your testimony today.
    You asked a moment ago for somebody to give you and the 
President another idea, so I want to share with you, the Mass 
Taxpayers' Foundation, which is basically a business-oriented 
group in my state, together with the United Way, did a report, 
``Background 2001/2002,'' and the idea they had was that the 
work requirement should be filled with more education and 
training, the problem being in Massachusetts, and I think a 
number of other states, in order to have somebody who can 
really come to work for you, their skill level and education 
level has to be higher than it is, what is seen for most people 
that are leaving welfare and getting ready to work on a work-
first type of basis.
    So their recommendation clearly was that you could increase 
the number of hours per week required, but that they supported, 
in fact, the bill that Ms. Roukema from New Jersey and I had 
put out, that would allow for education and training 
opportunities to count for the first 24 months, and then in the 
second 24 months, up to 16 hours, to count on that, and they 
thought that that really would make a difference.
    Part of that was based on their finding in the Census 
Bureau's report that 39 percent of women without a high-school 
education live in poverty. Only 17.6 percent of women with a 
high-school diploma live in poverty, 8.5 percent of women with 
some college live below the poverty line, but only 4 percent of 
women with a 4-year college degree live in poverty at all.
    So the contention, the conclusion was that obviously 
education pays, it ought to count, and work on that.
    So I think that was their idea, and I've heard all that 
you've said about wrapping it around and whatever, but clearly, 
they have their own experiences. They have their own needs in 
the workforce, and their idea is quite different.
    Do you have any rebuttal that you want to put out to the 
numbers from the Census Bureau that show the significant rise 
out of poverty from that? Is there some statistical basis that 
you have?
    Mr. Horn. We have at least a decade of experience using 
randomized controlled experimental designs comparing education-
first strategies to work-first strategies. That's hard 
evidence.
    Mr. Tierney. I wish you'd share those with the Committee.
    Mr. Horn. Absolutely.
    Mr. Tierney. Because, you know, I don't think that, you 
know, that they meet with the reality of what these studies 
show, and I'd like to see them, just--
    Mr. Horn. I'd be very happy to provide you with those 
studies.
    Mr. Tierney [continuing]. To see what they do on that.
    You know, the Educational Testing Service says that at 
least 70 percent of the jobs that are created are going to 
require people with elevated skills and education levels, and I 
just don't see throwing them into work-first, because I think 
one of the things we all agree is that people can learn, and 
that they will work, and they can get their skills up there.
    So it sort of baffles me that we're not trying to make that 
happen so that we serve two things--one, getting those people 
on a sustainable course so they can really earn a decent 
living, not just scrape by, and two, we've got a competitive 
strategy that we need in this country while China and India and 
other countries are eating our lunch.
    And all the employers in New England and all in my area are 
saying to me, you know, ``Work-first doesn't work for me 
because they're not ready to go to work for my business. Go 
down and tell the President and the people that ain't going to 
work in our area, to get our types of products up to where 
we're going to be able to sell back to China.''
    You know, we got a situation where every six ships that 
come in from China, five of them leave empty, because we're 
just not making the kind of sophisticated product and new lines 
or whatever that we can sell back.
    So I'd appreciate it if you'd get me that information, 
because I think we're going to see some disparities there.
    Let me ask you a little bit about the waiver authority, the 
state waiver authority on that. When Secretary Thompson was 
here and testifying, we had a discussion, and he indicated that 
the state waiver elimination that was in the bill was not an 
important aspect of the President's plan and that he and the 
President were negotiable on that. Both he and the President, 
he said, support state flexibility.
    In fact, we know, and I was just reading an editorial that 
one of the Boston papers had on there about Secretary Thompson.
    When he was Governor back in 1987, he got a waiver from the 
Reagan administration and he experimented with a job training 
program for teenage mothers on welfare. He had a number of 
other experiments on that.
    Do you still share, does the President still share the 
comment of Secretary Thompson that they're not inclined to do 
the waiver, that they agree with flexibility, that that's an 
issue that they would talk about?
    Mr. Horn. In terms of the program integration 
demonstrations?
    Mr. Tierney. No, they were basically for a flat-out state 
waiver. You know, they were eliminating it in their bill, but 
he was telling me when he was talking here that neither he nor 
the President agreed to the elimination of the state waiver, 
and that they would not be opposed to having the state waivers 
be put back into the bill.
    Mr. Horn. I misunderstood. So you're talking about the AFDC 
waivers?
    Mr. Tierney. Exactly.
    Mr. Horn. And we do not believe that is necessary, to 
extend, continue to extend AFDC waivers.
    Mr. Tierney. The Secretary's position no longer is the 
position, then? Because he sat in the chair where you're 
sitting right now and said that as far as he was concerned, he 
favored the waivers, he believed the President did support 
state flexibility, and that they were not glued to, and indeed 
were negotiable on that aspect.
    Mr. Horn. Well, we believe that the program integration 
waivers are far more helpful to states than continuing the AFDC 
waivers.
    Mr. Tierney. Obviously he didn't, so the position has 
changed. In other words, you're no longer honed to Secretary 
Thompson's position on that, there's a new game in town, and 
that's changed?
    Mr. Horn. As far as I'm aware, the administration's 
position has been, and the proposal continues to not support 
the extension of AFDC waivers.
    Mr. Tierney. Well, I mean, he said what he said, and it's 
on record. So that was the position then and now is now.
    So thank you.
    Chairman McKeon. The gentleman's time has expired.
    The gentlelady from New York, Ms. McCarthy.
    Mrs. McCarthy. Thank you, Mr. Chairman.
    And I thank you for your testimony.
    There are a couple things I want to kind of go over, 
because I'm still a little bit fuzzy about it.
    When you talk about jobs and moving up in the line, what 
kind of jobs are you talking about? What are these, especially 
the young women, single parents, what kind of jobs are they 
moving into?
    Mr. Horn. Well, what often happens is that the first job 
that someone who has very little work history gets is in an 
industry in which the standard is not full-time work, but part-
time work.
    Mrs. McCarthy. Right.
    Mr. Horn. And it is not impossible under the current law 
for someone to earn enough in a part-time job to no longer 
qualify for the TANF cash benefit.
    Now, we don't think that that ought to be an occasion for 
throwing a wild party.
    Mrs. McCarthy. That's actually not what I'm talking about. 
Are they getting a job as a secretary, or like in New York, are 
they picking up garbage on the front lawn?
    Mr. Horn. There's a variety of different jobs that they 
get. They're often in the service industry, and in the service 
industry, the jobs are often part-time, and we don't think we 
ought to be satisfied with that.
    Mrs. McCarthy. Most of those jobs actually don't move up.
    Mr. Horn. That's right, because what happens is that you 
need two things to get a good job. You need a positive work 
history and you need skills. If one or both are missing, you're 
not going to get a good full-time job.
    And so if you go to an employer and you say, ``Look, I've 
got this great Ph.D. and great skills, but I've never worked a 
day in my life and I'm 45 years of age,'' that employee is 
unlikely to say, ``Gee, just because you got a Ph.D., come work 
for me.''
    On the other hand, if you say, ``Look, I've worked for 20 
years straight, but I don't have any computer skills,'' it's 
unlikely you're going to get a job in a computer company.
    What you need is you need both--
    Mrs. McCarthy. I'm actually just--
    Mr. Horn [continuing]. A work history and good skills.
    Mrs. McCarthy. What I'm actually talking about is that 
basically in New York, where I see these women that certainly 
have wanted to work--I work with a number of homes that are 
unwed mothers, they go out, they have to work, obviously, to be 
in the program.
    The only things that's good for these particular mothers is 
basically the homes that they're in, they have volunteers that 
watch the kids during the day, so they don't have to go to day 
care.
    Most of them end up going to school, whether in the 
evening, you know, because we're trying to get them skills so 
they can get out there and get decent jobs, because even in the 
course of living, you know, and I can't speak for other states, 
but if you're in New York, even if you're making--if you live 
in my area--and believe me, we're mostly middle-income 
families, middle and, you know, working poor, as I call them--
they can have two or three jobs at $7 and $8 an hour; you're 
not going to find an apartment, you're not going to be able to 
certainly move up the ladder.
    Because I've been working with these young women for too 
many years, and most of them, even when they graduate from the 
program, come back at every opportunity just to get food.
    So with that--but I'm going to go back to something else 
again, because I know we have a confusion on the monies. When 
you talk about, you know, the child care funding through the 
Child Care Development Block Grant, you know, it's been frozen 
technically since 2002, so when we start looking at the states 
that you're saying have had a surplus, which they might have 
had in the past, do we actually know if the states have a 
surplus per se for 2004 to 2005?
    Going with testimony of Mark Green, who is following 
yourself on this panel, it has been suggested that 
reauthorization could unlock as much as $2 billion in 
unobligated prior year TANF funds, which currently would only 
be used for assistance, which could be used for allowable TANF 
purposes under the pending bill.
    He supports the proposal to broaden allowances for the 
reserve funds, but enacting this proposal would not free up 
significant new resources for child care for two reasons.
    First, the majority of the states have already effectively 
used their obligated funds for child care by rearranging how 
current and carryover funds are spent.
    The second part, and I can't read the whole thing because 
I'll run out of time, the last 3 years, states have spent more 
in TANF-funded benefits and services than they have received in 
their annual block grants and have drawn down prior year funds 
to help pay for current service levels.
    This strategy cannot be sustained, especially when the 
question my colleague, Ms. Davis, had mentioned that this might 
be a $2 billion increase and that would be it, then our states 
are going to be in a problem.
    And I guess I follow through with, you know, I spent some 
time over the last break going to day care centers. They're 
already getting hit.
    Now, I'm lucky. I have some great day care centers around 
me. Hard-working families middle-income families, and then they 
take in maybe 30 or 40 families coming off welfare.
    Oh, and I used up my time. Rats.
    And they're going to have to let all these kids go, because 
the state has already cut back on the funding, they're not 
going to be able to stay in here, and per se, you know, here 
you have an opportunity for these kids to be in, in my opinion, 
good day cares versus just sticking them into a day care and 
they're not getting an education or anything else like that.
    Mr. Horn. Congresswoman, just to use your state as an 
example, the state of New York has $239 million in unobligated 
carryover balances, $239 million.
    Mrs. McCarthy. When did that come through? What year is 
that?
    Mr. Horn. That's through September 30, 2004.
    Mrs. McCarthy. September 30th?
    Mr. Horn. 2004.
    Mrs. McCarthy. Well, why aren't they using it, then?
    Mr. Horn. Because they can't.
    Mrs. McCarthy. Because they came down--it's not--
    Mr. Horn. That's the problem.
    Mrs. McCarthy. It's not getting down to the day care 
centers.
    Mr. Horn. They can't use it right now. That's the point. 
The point is they cannot use that money, not a penny of it, for 
child care.
    Pass this bill, and New York tomorrow could use $239 
million in additional funds for additional child care services.
    Mrs. McCarthy. It doesn't make sense.
    Chairman McKeon. The gentlelady's time has expired.
    Mr. Secretary, thank you very much for your time, your 
valuable testimony. We have been called now to vote. We will 
excuse you and we will recess for 20 minutes, give us time to 
vote and come back, and we'll begin the new panel.
    Thank you very much.
    Mr. Horn. Thank you.
    [Recess.]
    Chairman McKeon. The Subcommittee will come to order.
    I apologize. One vote became two votes.
    We're now ready for our second panel. I'll introduce the 
panel.
    First will be Mr. Curtis Austin, president and CEO of 
Workforce Florida, which is Florida's State Workforce 
Investment Board.
    Mr. Austin is responsible for coordination of statewide 
workforce initiatives.
    Prior to holding this post, Mr. Austin served as staff in 
the Florida Senate and was a faculty member in the College of 
Communication at Florida State University.
    Mr. Austin is a graduate of the great Brigham Young 
University and attended the University of Southern California.
    Next, we'll hear from Dr. Larry Mead, professor of politics 
at New York University.
    Dr. Mead teaches public policy in American government. He's 
an expert on the problems of poverty and welfare in the United 
States.
    Among academics, he was the principal exponent of work 
requirements in welfare, and is also a leading scholar of the 
politics and implementation of welfare reform programs.
    Dr. Mead has consulted with Federal, state, and local 
governments in this country and with several countries abroad. 
He received his Ph.D. in political science from Harvard 
University.
    Then we'll hear from Ms. Casandra Fallin, executive 
director of the Baltimore City Child Care Resource Center.
    Ms. Fallin oversees a variety of services designed to 
enhance the quality, accessibility, and affordability of child 
care in Baltimore City.
    The center's services include resource and referral 
counseling for parents and employers, recruitment and training 
of child care providers, technical assistance to providers, 
data collection, and community education designed to increase 
public awareness of child care issues.
    Her agency also is a delegated Head Start agency.
    Prior to joining the center, Ms. Fallin was employed with 
Maryland Department of Human Resources for more than 25 years. 
She started at a very young age.
    She also has served on numerous boards and committees that 
address issues surrounding children and youth.
    Finally, Mr. Mark Greenberg, director of policy for the 
Center for Law and Social Policy.
    Mr. Greenberg focuses on issues relating to Federal and 
state welfare reform efforts with particular focus on job 
programs, education and training, and child care issues.
    He has written extensively on the implementation of Federal 
welfare reform law and made presentations before numerous state 
associations and advocacy groups.
    Prior to joining CLASP, Mr. Greenberg worked for 10 years 
in legal services programs.
    Mr. Greenberg is a graduate of Harvard College and Harvard 
Law School.
    And I'll give you the same reminder I gave to the 
Secretary, and to the Members. We have a 5-minute time limit.
    The time, Mr. Austin, is yours.

 STATEMENT OF CURTIS C. AUSTIN, PRESIDENT, WORKFORCE FLORIDA, 
                        TALLAHASSEE, FL

    Mr. Austin. Thank you, Mr. Chairman and Members of the 
Committee.
    Every morning in Africa, an antelope wakes up. It knows it 
must outrun the fastest lion, or it will be killed; and every 
morning in Africa, a lion wakes up and it knows that it must 
run faster than the slowest antelope, or it will starve.
    It doesn't matter whether you are a lion or an antelope. 
When the suns up, you better be running.
    Florida understands that when we started the great movement 
toward welfare reform, that there were things which were of 
life and death importance in many people's lives that we would 
have to be able to deal with every day.
    In 1994, the state was very frustrated with what they saw 
was a myriad of different government entities that were dealing 
with all sorts of these different parts.
    One of those was the employment office. Employment became a 
critical piece as we passed welfare reform. We said, how are we 
going to be able get a person a job?
    But we had already developed those offices in multiple 
different places.
    We developed them for veterans and for dislocated 
homemakers, or dislocated workers, for youth, for all sorts of 
different people, and we found out that at least in eight 
different agencies in Florida, we were providing employment 
services.
    We were taking the capacity of the state, what little money 
we did have in that, and developing that same capacity time and 
time and time again, in different agencies.
    Florida decided that we would no longer do that, that we 
would consolidate those resources together.
    And so the model that we developed, with the flexibility 
that the Congress gave us, was to be able to focus around 
functions of government, not upon funding streams.
    The employment office became the key. We saw employment as 
critical for self-sufficiency. We also saw it critical to be 
able to eliminate the stigma that former welfare recipients 
have, or to be able to teach dignity and respect.
    We saw it as a place to be able to gather together all the 
resources that might be able to help a person be successful.
    The employment office was the front door to that 
opportunity.
    One of the other reasons why that was so critical is that 
we looked at it as a way that we might be able to bring 
together additional resources.
    The workforce boards, which you all created also, in 
another piece of legislation, brought together a whole series 
of players.
    I was very impressed in the first discussion that you had 
earlier today about how often people assume that only the 
resources that were available in this money were used for these 
resources, that all the child care money happened to be here, 
that all the employment money happened to be here.
    On those workforce boards, you brought together education, 
you brought together the workforce system, you brought together 
the community-based organizations and the faith-based 
organizations, you brought together other community-based 
providers; and they have a whole lot of resources that also 
address these exact same problems.
    In another life, I sit--as a member of my church, I preside 
over nine congregations in my church. That's not a paid 
position. And I deal with as much welfare issues probably as 
they do at the welfare office, every Thursday night.
    Those resources were brought together at that board to be 
able to say, how do we start to be able to solve problems?
    Now, how much money you appropriate to us matters a lot in 
Florida, but the fact of the matter is we have a problem to 
deal with whether you appropriate lots or none.
    And so we said, we need to be able to get onto the issue of 
how do we fix that problem?
    Since 2000, when the major restructuring took place in the 
state of Florida, with the state-level dollars along, $100 
million devoted to training, we've trained over 225,000 people 
at the state level, but we had to get $400 million in matching 
money. Most of it came from the private sector.
    We didn't argue with the legislature or with the Congress 
on how much money. We said, ``There are people who will benefit 
from this. Let us go out and find that money.''
    There was a lot of discussion earlier in the presentation 
here about whether we have work-first or we train first. We 
think it's a misnomer.
    Everyone is right. If you get a lot of education, you're 
going to be able to be less likely to be poor.
    How do you get people to complete? The history of these 
programs is not that they complete their programs if we start 
to be able to train them first.
    So what Florida has done, and one of the examples in my 
written testimony gives you, is about what we call the career 
advancement and retention challenge.
    What happens if we look at all the people, not just those 
who come in for cash assistance, but all who otherwise qualify 
for these programs, and train them on the job with their 
employer?
    You'll see wage gains of over $10,000 a year, because there 
is an incentive there for you to complete your training when 
your boss is paying for part of your training, and when it's a 
mandate for your job.
    The issue isn't whether education is important or whether 
work is important. Everyone agrees they're both important.
    The issue is, how do you pair those two pieces together to 
make sure a person completes that training and stays on the job 
and is retained.
    And when the business person becomes the partner, then all 
of a sudden, the world starts to be able to change.
    The Florida system was designed not by government, not by 
social service advocates, but was designed by the business 
community.
    We held hearings throughout the state to be able to say how 
can we fix the problems that are going on; how do we engage the 
Chambers of Commerce; how do we get the Economic Development 
Organizations; how do we in fact get the employers to make this 
part of their assignment?
    They all are the ones who designed the system and said, 
``If it comes through an employment office, and I know the 
person has got a skill set, we can deal with them.''
    Skill sets mean, will you show up every day and will you 
call if you can't come.
    The employment office is given the resources to keep the 
person coming. You don't have child support today, you don't 
have--I mean child care money today, I can pay for your child 
care. You don't have gas money today, here's a gas coupon. You 
don't have a bus ticket, here's a bus ticket.
    In those one-stop centers, the resources are placed there 
to be able to make sure that there is no excuse that a person 
can't go to a job.
    Is it always easy? No. Are resources tight? Yes. But the 
fact of the matter is, we have put together the business 
leaders in the business community there and all of the 
government communities there, and education, to be able to 
solve that problem, and that's what the one-stop system is 
about.
    Those local one-stops, those local workforce boards have 
been tasked specifically to be able to find those resources.
    Are we finding, do we have continued problems in being able 
to get everybody's needs met? Yes. But when we got rid of the 
system of entitlements and started to say how do you invest 
what resources you do back into the community, things changed.
    Twenty-seven months of sustained job growth in Florida is a 
testimony not only to the fact that we're a low-tax state, but 
we're a state where there's been consensus.
    In Florida, this isn't an R/D issue. It's not a Republican/
Democrat issue. Multiple administrations, Governor Chiles, 
Governor Bush, both have supported it. It is not a rural or an 
urban issue.
    It is a way in which the state has been able to say, we are 
going to stop arguing about what resources we are given and 
give the business community the responsibility at the local 
level to figure this out.
    And so no longer do we spend our time arguing about what 
you're going to give us, but how is the next process that will 
be able to develop the economy in any given part of the state.
    I think that the thing that frustrates us sometimes is that 
there's a lot of bureaucracy in the back pieces of that, and I 
think that frustrates you-all, also. I mean, most of you have 
been in your own communities. You understand what your 
intentions are as you pass a piece of legislation and what they 
roll out to you sometimes are not the same.
    If we can keep the focus on how we get to the end of the 
road and those outcomes, and if you can continue to increase 
the flexibility given to states, then those things can take 
place.
    But hold us strictly accountable for those outcomes. We 
have no problem being held to strict accountability on 
outcomes.
    Florida has received $76 million in TANF bonuses, 48 
million of that since the year 2000. All of it has come for 
employment performance. None of it has come from putting people 
on other forms of welfare, such as food stamps or Medicaid. We 
are proud of that fact.
    Are there people in the state who need those additional 
resources? Yeah. But we are most proud of the fact that we've 
been able to change the system so that it has become an 
employment system, and not a system of public assistance.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Austin follows:]

     Statement of Curtis C. Austin, President, Workforce Florida, 
                            Tallahassee, FL

        ``Every morning in Africa, an antelope wakes up. It knows it 
        must outrun the fastest lion, or it will be killed. Every 
        morning in Africa, a lion wakes up. It knows that it must run 
        faster than the slowest antelope or it will starve. It doesn't 
        matter whether you are a lion or an antelope when the sun comes 
        up, you'd better be running.'' An African Proverb
    Florida owes debts of gratitude to many for the success of welfare 
reform. Foremost, it owes a business community that has stepped forward 
and redesigned service delivery systems. The Chambers of Commerce and 
Economic Development Organizations have changed the dynamic so that 
Florida One-Stops more consistently provide skilled labor to the 
employer community, rather than ask businesses to ``help us with our 
problems'' based on civic responsibility. Florida appreciates the past 
work of the Congress and the Department of Health and Human Services 
for granting considerable flexibility to states to figure out how to 
best implement welfare reform.
    Many Florida lawmakers have assisted Governor Jeb Bush and the late 
Governor Lawton Chiles in exercising leadership and utilizing the 
flexibility provided by Washington, to create a demand driven, one-stop 
system providing workforce services to the employer and employee 
communities that today assists in maintaining Florida's vibrant 
economy. That system has responded to periods of low unemployment, to 
the difficulties of 9/11, and a season of unusual hurricane activity 
with timely responses to business needs. In Florida, we know that the 
27 months of sustained job growth that we have experienced is not just 
because of workforce development, but we hope that we have been part of 
the secret to success.
    In the past five years, the public employment system in Florida has 
trained more than 225,000 people to be more productive as they compete 
in the 21st Century Economy. Workforce Florida has used state level 
funds (federal and state funding) to target high skill, high wage 
occupations, training over 127,000 employees with appropriations of 
more than $100 million matched with more than $400 million in local and 
private sector resources to truly partner with the business community 
for success of all Floridians, including those who began as welfare 
clients.

How is Florida ``Organized?''
            Consolidated and Coordinated Administration
    Policy makers in Florida began in the mid-1990's to rethink the 
delivery of services to clients of its ``employment services.'' The 
federal and state governments had, over a long period of time, 
assembled significant resources to assist job seekers and businesses in 
finding appropriate employment arrangements. As policy makers addressed 
the needs of specific groups (welfare recipients, veterans, youth, 
``dislocated workers,'' the disabled, youth ``aging-out'' from state 
custody, ex-offenders, older workers, displaced homemakers, displaced 
professionals, etc.), employment programs multiplied. Job training and 
placement programs were housed in a variety of governmental agencies. 
Many of these programs delivered the same services to differing and, at 
times, the same clientele.
    Most of the programs included: facilitated job search, development 
of soft skills (dress and appearance, business etiquette, resume 
construction and interviewing skills, etc.), access to job openings, 
and some form of skills training. Eventually a consensus developed 
among policy makers that it would be cheaper and more effective to 
coordinate the administration and delivery of such services than to 
duplicate them in multiple governmental agencies. Florida began to 
abandon the organizational structures that had arisen around ``the 
buckets of money'' and started to focus on the outcomes desired.
    Recognizing that the key to success of these employment programs 
was the ability of Florida employers to provide ``good jobs,'' Florida 
turned to the business community to organize the system. Anticipating 
changes at the national level, Florida began its primary restructuring 
in 1996. The business community had little faith in government to 
timely respond to business needs. In an attempt to orient the 
bureaucracy to labor market needs and to keep focus on the business 
customer, Florida launched public-private partnerships to spearhead its 
economic development (Enterprise Florida, Inc.) and workforce 
development (The Jobs and Education Partnership) efforts. Florida also 
created a state level board, outside of the direct control of the state 
agency traditionally tasked with welfare programs, to direct welfare 
reform (The State WAGES--Work And Gain Economic Self-sufficiency--
Board). These partnerships crossed traditional agency lines and funding 
streams, effectively narrowing the focus of all programs to the 
employment goals shared by the policy makers that had created the 
various funding streams.
    The enactment of the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996 allowed Florida to create a structure to 
enable the transition of welfare recipients from the ``world of 
government assistance'' to ``the world of work'' through one-stop 
centers. The law ended low-income families' entitlement to cash 
assistance and replaced it with a block grant to states. The Temporary 
Assistance for Needy Families (TANF) block grant gives states broad 
discretion and flexibility to reform, design and operate welfare 
programs for families with children, but places a strong emphasis on 
employment-oriented services by requiring families to meet work 
requirements and states to meet work participation rates.
    In 1998 Congress passed the Workforce Investment Act (WIA), which 
overhauled the federally-funded system for job training and other 
employment-related services for adults, dislocated workers, and youth. 
WIA was intended to address concerns about the fragmentation of 
federally-financed job training efforts, and the weak performance of 
many programs financed under the Job Training Partnership Act. The 
principal policy response to this fragmentation was the requirement 
that every local workforce board create a ``one-stop'' delivery system 
in which many local entities operating key federally-funded programs 
must participate and in which individuals could more easily access 
programs and services regardless of funding source or administering 
agency.
    TANF was not one of the partners federally mandated to participate 
in the new one-stop system. However, the flexibility in the 1996 TANF 
legislation allowed states to define service delivery models that best 
met the needs of families in each state. Florida used that flexibility 
in setting up the workforce one-stop system with the goal of meeting 
the needs of job seekers, incumbent workers, and employers. The one-
stops, among their other responsibilities were tasked with providing 
employment services to those families with work requirements under 
TANF.
    Florida further refined its model with the passage of the Florida 
Workforce Innovation Act of 2000. Consolidation of many of the 
workforce funding streams was completed and Workforce Florida, Inc. 
(the designated state workforce development board) was born from a 
merger of The Jobs and Education Partnership and the State WAGES Board. 
The Legislature created Workforce Florida, a private not-for-profit 
corporation, and designated it as the principal workforce policy and 
oversight organization for the state. Workforce Florida's purpose is to 
design and implement strategies that help Floridians enter, remain in, 
and advance in the workplace. The Agency for Workforce Innovation was 
also created by the legislature as Workforce Florida's administrative 
agency, and tasked to insure that the state appropriately administers 
federal and state workforce funding by administering the plans, 
policies and oversight responsibilities of Workforce Florida.

            Local Delivery of Services
    Florida's integrated workforce system includes a variety of 
employment and training programs, some of which are funded through the 
state's TANF block grant. In addition to WIA and TANF funded employment 
services, the workforce one-stop system also includes Wagner-Peyser 
services, Food Stamp Employment and Training services, Veterans 
employment services and resources for filing unemployment claims 
telephonically or via the internet. The workforce one-stop system is no 
longer the welfare office, the unemployment office or the job training 
office--but rather the public employment center where all services that 
support employment including labor market information, available job 
listings, relevant training opportunities, work supports, career 
counseling and assessment to identify and address barriers to 
employment are provided.
    Florida has 24 regional workforce boards which oversee the delivery 
of services to families and all Floridians through the workforce one-
stop system. These regional boards work very closely with local 
Department of Children and Families staff who deliver eligibility 
determination for cash assistance; with local Partnership for School 
Readiness staff who oversee child care services; and with local 
economic development organizations who facilitate partnerships with 
local businesses. These organizations work with other local partners to 
ensure that programs and services do meet the needs of local families 
and local businesses; that resources are maximally leveraged; and that 
duplicative administrative costs are eliminated.

            What Key Principles Guide the System?
    The front door to the system is the employment center, not the 
welfare center. The workforce system strongly embraces the concept that 
is articulated in Chapter 445, Florida Statutes, of breaking the 
welfare culture from the very first contact with the system. The 
ability to direct individuals to employment activities rather than just 
sign them up for cash assistance is the way the system was conceived 
and codified in law. Florida's ``work first'' philosophy is rooted that 
many of the cash assistance clients were (and are) single mothers who 
have not been fully prepared for the working world. It was reasoned 
that many of the skills that welfare clients would need to be self-
sufficient (showing up on time, calling if you were sick, etc.) would 
best be taught in the workplace, by trial and error. While some 
bemoaned the initial ``churning'' as employees found and lost 
employment, that process was critical for full transition to self-
sufficiency. It was not unusual for employees to be hired into a series 
of part-time jobs (sometimes simultaneously) and even sometimes 
multiple full-time jobs until they found a ``permanent'' position.
    The workforce system partners support the concept that the dignity 
of former welfare recipients is advanced by being productive 
participants in the state's job market. One-stops have been empowered 
to do what is necessary to reinforce the value of work. Florida 
authorizes the one-stops to divert potential clients from cash 
assistance, if providing resources (bus tickets, gas coupons, child 
care, etc.) can keep an employee working, rather than signing up for 
cash assistance.
    When cash assistance is given, it must be as an aide to employment 
and self-sufficiency. All other public assistance (food stamps, child 
care, Medicaid and other health assistance programs, public housing, 
etc.) were all viewed in the same light. All state welfare programs 
became part of the employment process which enabled the former welfare 
client to become more and more self-sufficient. The system was designed 
with incentives and penalties to motivate those receiving cash 
assistance to move off of welfare. Those who chose employment were 
better off each step of the way. Sliding scales for assistance allowed 
them to have greater and greater resources.
    Employers should not be confused or burdened by competing 
government funded employment agencies. The current system design for 
delivery of services was generated from a Florida Senate project that 
solicited input from all relevant parties, including the employers of 
Florida. The employer community validated the value in consolidating 
the service delivery system for welfare clients, dislocated workers and 
other WIA funded clients, veterans and disabled veterans and the public 
labor market exchange functions (Wagner/Peyser) into the current one-
stop system. Business does not want to deal with multiple offices 
chasing the same employment opportunities, and wants one interface for 
all employer services. Importantly, the workforce system now is focused 
on meeting the needs not only of TANF eligible clients, but also of the 
business customers whose partnerships are critical for offering 
opportunities for career advancement and for creating jobs.
    Outcomes matter. Whether assessing the progress of welfare 
transition clients, service providers, or the regional workforce boards 
that oversee the one-stop system, attention to outcomes has changed 
Florida's approach to employment programs, including those for TANF 
clients.

How has the system worked?
            High Performance Related to Case Reduction
    Florida has consistently been ranked in the top four states 
nationally relative to caseload reduction. As of the end of February, 
2005, the number of Families containing an Adult that were receiving 
Cash Assistance in Florida was 20,968, a 86% reduction from the 152,436 
cases as of the time TANF was enacted in 1996.

            High Performance Related to Employment
    Florida's welfare transition achievements include not only ranking 
in the top four nationally in caseload reduction, but also ranking 
among the top performers in work-related measures--job entry rate, job 
retention rate, earnings gain rate; and in annual improvement in those 
work-related measures--increase in job entry rate, increase in job 
retention rate and increase in earnings gain rate. Over the last six 
years (beginning in 1998) Florida has earned approximately $73 million 
dollars in TANF High Performance Bonus (HPB) awards for outcomes in the 
work-related measures. Florida earned an additional $3 million related 
to Family Formation and Stability.
    Approximately $48 million of the $76 million high performance bonus 
dollars noted above have been earned for years 2001, 2002, and 2003 
which are years after Florida implemented the integrated TANF/WIA 
workforce one-stop system. The Department of Health and Human Services 
awarded Florida $28 million for 2001 ($10 million more than any other 
state), nearly $10 million for 2002 (Florida ranked 4th in the nation 
in work-related measures) and $10.2 million for 2003 (Florida ranked 
1st in increased job entry rate).
    Focusing on ``work first,'' the Florida workforce system has 
successfully placed welfare clients onto the first rungs of career 
ladders that are allowing them to enjoy, in many instances for the 
first time, the rewards of productive employment. Florida used the 
flexibility in the existing TANF Legislation to conduct demonstration 
projects identifying promising service delivery models for post-
employment services to be replicated throughout the state. Two of the 
successful programs that started with ``work first'' and proceeded to 
``train next'' provide examples of Florida's approach.

                Passport to Economic Progress (Passport)
                   Working One-on-One with Individual

    The Passport to Economic Progress is a post-employment program and 
clients must be employed and earning less than 150% of the Florida 
poverty level to participate. Passport was designed to work with 
individual employees to provide incentives to gain skills to increase 
their salaries. Passport offers performance based incentive bonuses 
contingent upon achieving specific benchmarks prescribed in the 
client's self-sufficiency plan. The self-sufficiency plan is developed 
by the client in consultation with the career manager, is based on her/
his objectives to become self-sufficient and emphasizes the importance 
of individual responsibility. The Legislature intended to create 
through this Act a demonstration program for the provision of such 
incentives and services with the goal of developing a model for the 
continued evolution and enhancement of welfare-reform efforts in 
Florida.
    Outcome data compares the wages of Passport clients from the 1st 
quarter of the program year to the 4th quarter of the year and also to 
the wages of the control group (employed clients who had exited cash 
assistance for a job during the same time period as the Passport 
program but were not enrolled in the post-employment Passport program). 
There is also data that compares the employment rates for the Passport 
group to the control group.
      During the 1st quarter of the Passport 03-04 program 
year, passport clients were earning median quarterly wages of $2,527 
(annualized wages of $10,108). These same clients were earning median 
quarterly wages of $3,087 (annualized wages of $12,348) in the fourth 
quarter of the program year, a 22% gain in earnings over the year. 
Clients in the control group earned median quarterly wages of $2,595 
(annualized wages of $10,380).
      During the 4th quarter of the Passport 03-04 program--82% 
of Passport clients retained employment compared with 49% of the 
control group.

               Career Advancement and Retention Challenge
                         Working with Employers

    In many of its employment training programs, Florida decided not to 
treat those who had applied for cash assistance differently from those 
who did not apply, but would have qualified. In many of the employment 
programs, former clients and those most likely to become cash 
assistance clients (low-income and food stamp clients) were also 
include in training initiatives.
    The CARC project is a program designed to train those who have 
obtained employment, but are not yet self-sufficient. Participants must 
be employed and earning less than 200% of the Florida poverty level. 
CARC projects are predicated on partnerships among local employers, 
TANF eligible employees, training providers and the workforce one-stop 
system. Regional workforce boards work with employers to identify 
innovative approaches to achieving career advancement and job retention 
for TANF-eligible, employed workers.
    One of the keys to this approach is that it allows training for all 
qualified employees at a given worksite, rather than waiting for such 
workers to contact the one-stop individually. Such innovative 
approaches may include, but are not limited to creative, non-
traditional training programs, support services and mentoring services. 
The Regional workforce board staff work with the employer and employees 
to plan a training program that considers the employees' regular work 
schedules, the needs of the employer, opportunities for earnings gains 
and advancement upon completion of the program and what leveraged 
dollars or in-kind contributions will be made by the employer or 
training provider. The program emphasizes measurable outcomes for the 
employees and employer.
    Outcome data compares the wages of CARC clients from a defined pre-
program period to defined post-program period and also to the wages of 
the control group (employed clients who had exited cash assistance for 
a job during the same time period as the CARC program but were not 
enrolled in the post-employment CARC program). There is also data that 
compares the percentage of CARC clients retaining employment to the 
control group.
      During the second and third quarters preceding the 
beginning of the CARC 02-03 Program--CARC clients were earning median 
quarterly wages of $5,081 ($20,324 annualized). During the second and 
third quarters following the end of the CARC 02-03 Program--CARC 
clients were earning median quarterly wages of $7,732 ($30,928 
annualized). Earnings increased approximately 52% from pre-program to 
post-program. This compares with the control group's median quarterly 
wages of $3,064 ($12,256 annualized).
      During the first quarter following the CARC program 82% 
of the CARC clients retained employment and 82% retained employment 
during the second and third quarters following the CARC Program. During 
the same time period, fiscal year 02-03--64% of the control group were 
employed and earning median quarterly wages of $3,064.

Recommendations for TANF Reauthorization
    TANF Reauthorization should build on the existing flexibility in 
the current TANF legislation. Currently states have flexibility to 
design welfare service delivery models and discretion to use TANF funds 
for non-cash services such as child care, transportation and employment 
services. These services should continue to be available to not only 
families receiving monthly cash assistance checks but also to families 
who have exited the cash assistance program due to employment, working 
poor families who have never received cash assistance but are defined 
as ``needy'' in that they are earning less than 200% of the FPL for 
their family configuration and for non-custodial parents. The focus of 
the TANF program services must be on helping all needy families move 
along the continuum to self sufficiency.
    Additional flexibility would include the following:
      Fully funding the TANF block grant and supplemental 
grants to states--I would note here that even though Florida's TANF 
caseload is currently approximately 21,000 families with an adult 
subject to time-limits and work activities--we actually provided 
employment-related services to approximately 140,000 TANF eligible 
families during fiscal year 03-04;
      Increasing state flexibility in the use of funds and 
allowing states to designate a contingency reserve with unobligated 
funds--We learned first hand during the 2004 hurricane season the 
criticality of being able to respond quickly to conditions that can 
change from a situation in some localities of near full-employment, 
with a desperate need for additional workers, to one of significant 
lay-offs. Priority services and priority programs may change over-
night. Today, changes occur quickly and must be responded to quickly. 
The introduction of a major employer or the loss of the same can also 
dramatically change the economic situation. The flexibility of the TANF 
block grant has allowed us to organize our local operations to respond 
swiftly and in the targeted locations to changing local conditions. The 
integrated TANF/WIA service delivery model in Florida has also proved 
beneficial in allowing us to be responsive to changing local 
conditions;
      Unlocking surplus funds that currently can be used only 
to pay benefits (not for child care, job search, transportation, 
training, etc.)--These funds can be used to provide employment related 
services to thousands of TANF eligible Florida families to help them 
achieve self-sufficiency;
      Allowing spending on all families, reducing out-of-
wedlock births and family formation to count toward the MOE 
requirement--This will recognize the importance of providing and 
measuring outcomes of these programs if they can be counted toward the 
MOE requirement; and
      Providing a framework for state program integration 
demonstrations--Florida welcomes the opportunity to further integrate 
our workforce one-stop system. Florida has taken the increased freedom 
granted under the Workforce Investment Act to begin an outreach to 
business. Building a skilled workforce is one of the most urgent 
challenges to ensuring Florida's economic competitiveness, particularly 
for our value-added targeted industries statewide. Engaging the 
business community not only insures jobs for all job-seekers, but 
assists in the state's aggressive pursuit of other sources of funds for 
existing training programs and potential expansion of services.
    We look forward to the new TANF Legislation offering even greater 
flexibility as we move into this next phase of welfare reform and build 
on our successes.
    TANF Reauthorization should first focus on outcomes. Florida 
strongly encourages the model of demanding high performance and 
providing flexibility in obtaining the performance goals. If processes 
are dictated, the resources any given state can use to maximize 
performance are significantly decreased. I would urge you to make clear 
your desired outcomes, and then let the states and local areas find a 
way to accomplish those goals taking advantage of local conditions. We 
have used an incentive award system in Florida for four years, similar 
to the work measures in the TANF High Performance Bonus Awards, 
rewarding local regions with additional resources for a job well done. 
It has been one of the great drivers for system-wide performance 
improvement.
    The outcomes must answer these basic questions:
    1.  After all is said and done, did the person get a job?
    2.  How valuable are the skills that person has acquired in the 
market place? (or How much did he or she make?)
    3.  Have they been able to retain their employment? and
    4.  How much is this costing us?
    Florida has now tracked these same measures for three years. 
Combining effectiveness measures and efficiency measures allows 
assessment of a system and allows comparison with other service 
delivery systems. These questions are reasonable and should allow the 
federal government to assess whether the funds are being properly 
invested in communities or not. They allow individual states to add 
additional measures to ensure that the needs of a particular state are 
addressed.
    While we have heard concern that measuring efficiency can divert 
attention from the hardest to serve, that has not been our experience 
in Florida. Florida's look at ``efficiency'' has revealed the 
duplicative administration of the public workforce system. It is not 
unusual for administrators in one part of the system, to be frustrated 
and purchase duplicative services elsewhere, rather than fix what seems 
to be broken. For example, when labor market information is provided in 
less than friendly format to businesses, purchasing the same type of 
data a second time--rather than fix the service already being provided 
by the system--should not be the first solution. Measures of efficiency 
are important because service costs are driven lower--not with 
decreased services for those who need them, but by forcing the 
bureaucracy to work for economies of scale in purchasing and 
partnership in procuring services.
      We support the concept of the Employment Achievement 
Bonus as this focuses on essential work measures.
      We support the concept of an employment credit that 
includes diversion as this provides us with the flexibility to design 
our local programs to meet the needs of job seekers and achieve the 
required participation rate.
      We support the concept of allowing states to claim 
partial credit for part-time work as this will allow us to design 
programs to better serve clients with specific barriers and still 
achieve the required participation rate.
    Again, we believe that building on the existing flexibility in the 
current TANF Legislation and focusing on outcomes will allow us to 
continue integrating our public assistance programs into our 
comprehensive workforce one-stop system. The public workforce system is 
designed to direct entry level employees not only to new jobs, but to 
increased skills to insure that each worker who obtains employment can 
become self-sufficient. The reauthorization of TANF Legislation will 
help us provide thousands of Florida families with accessible programs 
and services that will allow them to reach the ultimate goal of self-
sufficiency. As the House addresses reauthorization, I would hope the 
elements I have discussed are considered so that our integrated 
workforce one-stop system can successfully transition into this next 
phase of welfare reform.
    TANF reauthorization must not lose its focus on work. States are 
subject to fiscal penalties for, among other reasons, failing to meet 
work participation rates, failing to implement the five year time-
limit, and failure to impose sanctions on those who do not comply with 
program requirements. Florida has consistently supported these 
requirements. Because of its caseload reduction, Florida has been, in 
effect, exempt from participation rate requirement for many years. 
Nevertheless, while we believe a sense of fairness requires 
consideration of past performance, the additional pressure to continue 
to transition welfare recipients to self-sufficient workers is welcomed 
by the policy structure in Florida.
    As the outcomes from our post-employment programs indicate, 
continuing to work with employees and employers to address skills 
upgrade training benefits both the worker and the employer. We submit 
that a strong pre-employment and post-employment service delivery model 
is essential to achieving the overarching goal of self-sufficiency for 
Florida's families. ``Work'' is the key to self-sufficiency and should 
be celebrated by all who work in this system.
    In conclusion, I would suggest that the focus on work not only 
assists in good economic times, but also in slower periods. As Florida 
discovered when the economy softened post 9/11, an additional safety 
net is created by the employment system for low-income Americans. 
Florida saw relatively little change in the cash assistance caseload, 
as the Unemployment Compensation system was the first level of safety 
net for the thousands who had a record of employment. Such safety nets 
are critical if we know that every day we must ``wake up running.''
                                 ______
                                 
    Chairman McKeon. Thank you.
    Dr. Mead.

STATEMENT OF LAWRENCE M. MEAD, PROFESSOR OF POLITICS, NEW YORK 
                    UNIVERSITY, NEW YORK, NY

    Mr. Mead. Thank you, Mr. Chairman.
    I'm very pleased to be here.
    I've been researching welfare and welfare reform for almost 
30 years, and I think I've learned a little about it. I'll be 
speaking today in part on the basis of a book I published last 
year on welfare reform in Wisconsin, which involves other 
states, as well.
    Other witnesses have commented on how successful TANF has 
been. The thing that I want to emphasize is that that success 
depends crucially on tying welfare very closely to employment, 
so that those who go on and or apply for aid have to do 
something immediately to deal with employment.
    The chief question facing reauthorization is how to bring 
that link tighter than it's been, and in this respect, I want 
to mention a set of issues which others have barely touched on 
today, and these have to do with a series of loopholes in the 
old law, in the way TANF is written currently.
    The effect of these rules has been to exclude an important 
part of the caseload from having to meet the work requirements.
    One of those ways, the only ones that's been mentioned, is 
the caseload fall credit, which has the effect of reducing the 
standards that states have to meet for the work participation 
rate.
    The current bill and the administration propose a 
replacement credit of various kinds. I would not. I would 
simply eliminate this credit and hold the states accountable 
for the 50 percent rate which is in the current law, phased in 
over several years.
    It's important to seek simplicity and clarity, to make 
clear what the standards are.
    The trouble with the current bill's approach is that it 
ostensibly raises the threshold to 70 percent, but then there 
are various credits and offsets and exclusions which affect--
have the effect of reducing the operative rate to something 
like the 50 percent we already have, so I would eliminate the 
credits. I would simply go to the 50 percent rate and enforce 
it more clearly.
    In addition to the caseload fall credit, there's the 
problem of partial sanctions.
    The current law allows states to exclude simply the adult 
from the grant in the case of noncooperation with the work 
test. That's a serious problem in California and New York, the 
states with the largest caseloads.
    In New York, it's virtually impossible to apply the work 
test seriously, because something like 40 percent of the cases, 
or 30 percent, are outside--they're in sanction status, and 
therefore, in effect, outside the work test.
    A further issue is child-only cases. Currently, 37 percent 
of the caseload is child-only. These cases escape the work 
requirements and the time limits.
    In addition to this, these programs are TANF-funded. In 
addition, some states have separate state programs which they 
use to put cases that are at the time limit or which have been 
sanctioned. These separate state programs are not TANF-funded, 
but they have the effect of excluding important parts of the 
caseload.
    This Committee should address how to bring the state-only 
programs and the child-only cases under the work test. I think 
there are a number of ways to do this, and I discuss this in my 
testimony.
    Probably the most feasible might be simply to include these 
programs in the denominator of the calculation for a state's 
participation rate, so the states will have some incentive to 
restrict the number of cases going into these categories.
    Without this, unless we address the child-only issue in 
particular, you do not have a complete work test intent.
    Now, alongside these exclusions of various elements of the 
caseload, I think the issues the committee has addressed are 
important, but less important.
    The committee proposes that there be enhancements in the 
percentage of participation rate that a state has to achieve, 
and also the number of required hours be raised from 30 or 25 
to 40.
    I recommend against these steps. I think that it's 
infeasible as a practical matter to expect to see 70 percent 
participation without the various offsets and exclusions and so 
on, which really make it 50 percent. Let's be honest. Let's go 
for the 50 percent and enforce that, and not claim we're doing 
something more.
    And the same with the 40 hours. We can't do that as a 
practical matter. We can do 30 hours.
    I base this on the Wisconsin experience. This state has 
extraordinary administration. They rebuilt welfare from the 
ground up. It's the most unusual performance, really, in 
welfare reform that the Nation has seen.
    This state does not achieve 70 percent. This state does not 
achieve 40 hours. If this state can't do it, nobody can do it.
    Now, I agree with the Secretary's statement that we have to 
seek full-time jobs, but that's a different point from 
mandating a certain number of hours for the state. What TANF 
initially does is mandate the state, sets standards for the 
state, and the state then sets standards for the caseload.
    If we really enforce the 50 percent and the 30 hours, 
rather than claim to do it and then do something--claim to do 
more and then do something less, if we really enforce the 50 
percent and 30 hours, we will transform welfare, particularly 
if we also eliminate these exclusions, and especially the 
partial sanction and the child-only cases.
    It's like tax reform. The goal should be to broaden the 
base, and if you broaden the base, then you can actually limit 
how much you have to impose on the people that you are taxing.
    Same thing here. Broaden the base of the work test. Bring 
in all these excluded groups. And then you won't have to go 
beyond 50 percent or 30 hours.
    [The prepared statement of Mr. Mead follows:]

    Statement of Lawrence M. Mead, Professor of Politics, New York 
                        University, New York, NY

    I am a Professor of Politics at New York University and a longtime 
student of welfare reform. I've written several books on the subject, 
most recently a study of welfare reform in Wisconsin.\1\ I appreciate 
this chance to testify on the work and child care provisions of H.R. 
240, which would reauthorize Temporary Assistance for Needy Families( 
TANF).
---------------------------------------------------------------------------
    \1\ Lawrence M. Mead, Beyond Entitlement: The Social Obligations of 
Citizenship (New York: Free Press, 1986); idem, The New Politics of 
Poverty: The Nonworking Poor in America (New York: Basic Books, 1992); 
idem, ed., The New Paternalism: Supervisory Approaches to Poverty 
(Washington, DC: Brookings, 1997); idem, Government Matters: Welfare 
Reform in Wisconsin (Princeton: Princeton University Press, 2004).
---------------------------------------------------------------------------
The Success of Reform
    Welfare reform is unquestionably a success. Since their height in 
1994, the rolls in AFDC/TANF have plummeted by over 60 percent. The 
overall poverty rate fell from 14.5 percent in 1994 to 11.3 percent in 
2000, before rising to 12.5 percent in 2003 due to the recent 
recession. For children, the equivalent figures are 21.8, 16.2, and 
17.6 percent.\2\ These gains are less dramatic than the caseload fall 
but still notable. Other research establishes that the noneconomic 
effects of reform on families and children have also largely been 
positive.\3\
---------------------------------------------------------------------------
    \2\ U.S. Department of Commerce, Bureau of the Census, Income, 
Poverty, and Health Insurance Coverage in the United States: 2003, 
Series P-60, No. 226 (Washington, DC: U.S. Government Printing Office, 
August 2004), tables B1, B2.
    \3\ Rebecca M. Blank and Ron Haskins, eds., The New World of 
Welfare: An Agenda for Reauthorization and Beyond (Washington, DC: 
Brookings, 2001); Gayle Hamilton, with Stephen Freedman and Sharon M. 
McGruder, National Evaluation of Welfare-to-Work Strategies: Do 
Mandatory Welfare-to-Work Programs Affect the Well-Being of Children? A 
Synthesis of Child Research Conducted as Part of the National 
Evaluation of Welfare-to-Work Strategies (Washington, DC: U.S. 
Department of Health and Human Services and U.S. Department of 
Education, June 2000).
---------------------------------------------------------------------------
    Most analysts think that the main force behind these gains was that 
work levels among poor heads of family rose. In 1993, only 44 percent 
of poor female heads with children were employed, only 9 percent full-
year and full-time. These figures rose by 1999 to 64 and 17 percent, 
before ebbing to 55 and 16 percent in 2003.\4\ Like the caseload fall, 
the work gains reflected TANF's stiffer work requirements as well as 
good economic conditions and new subsidies for wages and child care. 
Yet most studies conclude that welfare reform was the most important of 
these forces.\5\
---------------------------------------------------------------------------
    \4\ Data from the March Current Population Survey for 1994 (table 
19), 2000 (table 17), and 2004 (table POV15)
    \5\ Council of Economic Advisors, ``The Effects of Welfare Policy 
and the Economic Expansion on Welfare Caseloads, An Update'' 
(Washington, DC: Executive Office of the President, August 3, 1999); 
David T. Ellwood, ``The Impact of the Earned Income Tax Credit and 
Social Policy Reforms On Work, Marriage, and Living Arrangements'' 
(Cambridge, MA: Harvard University, Kennedy School of Government, 
November 1999); Jeffrey Grogger, ``Welfare Transitions in the 1990s: 
The Economy, Welfare Policy, and the EITC,'' Journal of Policy Analysis 
and Management 23, no. 4 (Fall 2004):671-95.
---------------------------------------------------------------------------
    The new work requirements diverted many families into jobs who 
might previously have gone on aid. Under JOBS, the predecessor of TANF, 
the share of AFDC cases meeting work participation norms rose from 22 
percent in 1994 to 33 percent in 1996. Under TANF, much more of the 
caseload was made mandatory for work and the hours demanded increased, 
yet the work participation rate still rose from 31 percent in 1997 to 
34 percent in 2000, before falling to 33 percent by 2002.\6\ By a 
broader measure, 19 percent of cases were active in 1994, rising to 43 
percent in 2001.\7\ While the majority of cases were not yet meeting 
the work test, the pressure to work was sufficient to transform welfare 
in much of the country, at least in the conditions of the last decade.
---------------------------------------------------------------------------
    \6\ Data from the U.S. Administration for Children and Families.
    \7\ U.S. Congress, House, Committee on Ways and Means, 2004 Green 
Book: Background Material, and Data on the Programs Within the 
Jurisdiction of the Committee on Ways and Means (Washington, DC: U.S. 
Government Printing Office, March 2004), p. 7-81. The broader measure 
includes activity for any number of hours and applies to all cases, 
whereas the TANF rate has higher hours demands and excludes some cases.
---------------------------------------------------------------------------
    The ideal in welfare reform is to link benefits as tightly as 
possible to work. That requires a clear work test that employable 
recipients must meet as soon as they apply for aid, not sometime later. 
Equally important, there must be ample benefits to support working, 
particularly child and health care. That combination was realized most 
fully in Wisconsin, the subject of my recent book. For that reason, the 
Badger State achieved almost the greatest caseload fall in the country 
as well as almost the highest work participation rate--69 percent in 
2002.
    Reauthorization should maintain pressure on states to move the 
remaining recipients toward work. That in my view mainly requires 
fixing problems in TANF that have shielded many recipients from a need 
to work at all. Raising formal work standards should be secondary. I 
close with some shorter comments about child care.

Fixing Problems in TANF
    Recently, due to shortcomings in the original law, some states have 
found ways evade TANF's work demands. Some of these problems are 
addressed by H.R. 240, but some are not.

            Caseload fall credit
    TANF demanded that states raise the share of their cases where 
adults were in work activities by increments, until 50 percent were so 
engaged by 2002. But the law also allowed states to count against those 
targets any percent by which their caseloads fell after 1995. Because 
the fall was unexpectedly great, the credit cut the standards states 
had to meet to trivial levels. In 2002, the threshold was zero for 
twenty states. In that year, all states met these reduced standards, 
but only twelve states would have met the original 50 percent norm, 
only five of them without benefit of a waiver (see further below). The 
national participation rate reached only 34 percent in 2000, in 2002 33 
percent.\8\
---------------------------------------------------------------------------
    \8\ These five were IL, IA, OH, WI, and WY. See U.S. Administration 
for Children and Families, Temporary Assistance for Needy Families 
Program (TANF): Sixth Annual Report to Congress (Washington, DC: U.S. 
Administration for Children and Families, November 2004), table 3:1.
---------------------------------------------------------------------------
    The credit adds complexity, making monitoring the states more 
difficult. Most important, it is duplicitous, reducing the actual work 
standard states have to meet far below what TANF claims to the world. 
The case for the credit is also weak. When PRWORA was drafted in 1995-
6, some states feared that rapid caseload fall might drive the most 
employable cases off the rolls first, making it impossible to meet the 
new work participation levels on the rolls. The credit allowed states, 
in effect, to get work credit for the decline itself. This was 
plausible in TANF's early years, when massive diversion occurred and 
work levels soared off the rolls. It is less plausible today, when the 
caseload has changed little for several years and work levels off 
welfare have drifted down. The main task now is no longer to divert 
people from welfare but to make cases already on the rolls more active. 
To do that, TANF's original activity norms must finally be enforced.
    To that end, H.R. 240 would replace the current credit benchmarked 
on 1995 with one based on the four previous years. The Senate bill has 
an employment credit. While both versions improve on current law, they 
are still complicated and misleading. I would rather omit the credits 
and offset this by keeping, rather than raising, the 50 percent work 
participation norm (see further below).

            Sanctions
    Another major limitation of TANF is that it allowed states to 
sanction cases only partially if they failed to fulfill work 
requirements. A dozen states fail to end grants even in the face of 
open-ended noncompliance. Among these are California and New York, 
which have the largest caseloads, comprising 31 percent of the national 
caseload in 2002.\9\ In these states, reform cannot be fully 
implemented because much of the caseload is allowed to defy the work 
test. In New York City, 31 percent of the employable cases cannot be 
engaged because they are tied up in sanction status or in adjudication 
that may lead to sanctions.\10\
---------------------------------------------------------------------------
    \9\ 2004 Green Book, pp. 7-8, 7-33 to 7-34.
    \10\ Data for February 13, 2005, from the Human Resources 
Administration, New York, NY. Not all these sanctions, of course, are 
for work offenses.
---------------------------------------------------------------------------
    H.R. 240 would mandate a full-family sanction for cases that defied 
activity requirements for two months or more. The Senate bill, I am 
told, has no such clause. It is essential, in the eventual conference, 
that the House insist on its provision.

            Child-only cases
    An emerging crisis in welfare is that more and more of the caseload 
is made up of ``child-only'' cases. These are cases where the children 
receive assistance but not the caretaker. The share of AFDC/TANF cases 
including no adult was under 10 percent in 1988, but by 2001 it had 
soared to 37 percent.\11\ While there is little applicable research, 
many of the caretakers in these cases are thought to be aliens. Their 
children are American-born and thus eligible for aid, but they are not, 
either because they are legal aliens disqualified by PRWORA or because 
they are illegal. By this route TANF helps to finance illegal 
immigration. That is reason enough to address the problem. But what is 
relevant here is that these cases are not subject to TANF's time limits 
or work requirements.
---------------------------------------------------------------------------
    \11\ 2004 Green Book, p. 7-88.
---------------------------------------------------------------------------
    Under AFDC, the caretaker in a child-only case could not be the 
biological parent; commonly, it was another relative who took charge of 
children when the parent was incarcerated or incapacitated. But this 
restriction ended with TANF. Recently, some states have begun to 
classify some cases as child-only even when the biological parent is 
still present. This allows them to exempt these cases from the work 
test or time limits and still draw TANF funding for them.
    The child-only ``out'' must be ended. One option is to restore the 
AFDC ruling that excluded biological parents as caretakers in such 
cases. This would force these parents back into regular TANF, where 
they would face the usual work test and time limits. Another option 
would be to expand eligibility to cover some alien caretakers, who in 
turn would face normal work tests and time limits. A third option is to 
bring these cases under the work tests indirectly, by including them in 
the denominator for the work participation rate calculation. This would 
put force states either to limit child-only cases or to enforce work 
more strongly on the rest of TANF.
    The idea that only the children receive support in these cases is a 
fiction. Now that family welfare is a work-based program, it is 
inappropriate for TANF to fund cases where no adult shares 
responsibility for the family through employment. In Wisconsin, such 
reasoning led the state to exclude from TANF (the state's W-2 system) 
cases where the adult was unemployable or not legally responsible for 
the child. These families were diverted to separate programs based on 
SSI or kinship care. Those programs still draw TANF funding but are 
closely controlled and have not undercut W-2. Through reauthorization, 
TANF must work toward the same outcome nationwide.

            Separate state programs
    Similar abuses have arisen in connection with separate state 
programs (SSP). These are programs that states run for cases that they 
cannot support on TANF. Of these cases, 64 percent are in California. 
That state and some others use SSP mainly to support two-parent cases. 
The reason is to escape the very high work participation standard--
currently 90 percent--that TANF demands for these families. Other 
states use SSP to support aliens ineligible for TANF. New York uses SSP 
to support the many cases that go beyond TANF's five-year limit due to 
the state's weak sanctions. In New York City, these cases comprise 40 
percent of family aid.\12\
---------------------------------------------------------------------------
    \12\ Data for January 2005 from the Human Resources Administration, 
New York, NY.
---------------------------------------------------------------------------
    SSP is another ``out'' from the work test. The problem is smaller 
than with child-only. Just 84,697 families were on SSP in 2001, or 4 
percent of the TANF caseload in that year, \13\ although the programs 
have grown recently by some accounts. SSP is also less abusive than 
child-only, because the programs do not draw TANF funding directly. 
However, states' SSP spending counts toward their maintenance of effort 
(MOE) requirements, so the programs are indirectly part of TANF.
---------------------------------------------------------------------------
    \13\ 2004 Green Book, pp. 7-31 to 7-32, 7-35.
---------------------------------------------------------------------------
    One solution is to end the special work participation target for 
two-parent cases, as H.R. 240 proposes. This would remove the largest 
impetus behind SSP. Another choice, as with child-only, would be to 
include these programs in the denominator for the work participation 
rate calculation. This again would force states to limit the programs 
or else enforce work more seriously in TANF.

            Waivers
    A final out is the waiver programs run by some states. These were 
experimental approaches to aid that many states initiated prior to 
PRWORA, and then were allowed to continue afterward. In the AFDC era, 
these programs usually toughened work requirements beyond what was then 
permitted by normal federal rules. Since PRWORS, however, they have 
done the opposite. Typically, the programs exempt more of the caseload 
and expect less effort to fulfill the work test than would be allowed 
under TANF. Massachusetts, for instance, exempts parents with children 
under age 6, allows indefinite job search to count as a work activity, 
and demands only twenty hours of activity weekly. In contrast, TANF 
exempts only parents with children under 1 at state option, limits job 
search to six weeks a year, and demands thirty hours of effort a 
week.\14\
---------------------------------------------------------------------------
    \14\ Douglas J. Besharov and Peter Germanis, ``Toughening TANF: How 
Much? And How Attainable?'' (College Park: University of Maryland, 
School of Public Affairs, March 23, 2004), p. 25.
---------------------------------------------------------------------------
    In 2002, fifteen states ran waiver programs, and in every case the 
program recorded higher work participation rates than they would have 
under regular TANF rules. Only one of these states would have met 
TANF's original 50 percent norm for 2002 (in advance of the caseload 
fall credit) without its waiver. Seven others met that standard only 
with the waiver. The remaining seven fell below 50 percent even with 
the waiver.
    The solution is to phase out waiver programs. H.R. 240 would forbid 
their renewal. I understand the Senate bill is unclear. Again, the 
House should insist on its provision.
Raising Work Standards
    I would be more cautious about raising TANF's formal work standards 
than in fixing the above problems. The Bush Administration's proposals 
and H.R. 240 embody some good ideas, but in some case they overreach.
Full engagement
    Both the Administration and H.R. 240 require'' universal 
engagement,'' and I support this, but the meaning has to be clear. The 
basic idea is that recipients cannot ignore the work test. They must 
enroll in the work program and enter its activities when they first go 
on aid. What that requires has to be defined clearly in the law or, 
perhaps, in regulations. H.R. 240 would require that each case have a 
``self-sufficiency'' plan, but this might easily become mere paperwork. 
More meaningful might be to require actual participation in some 
activity such as orientation or job search.

            Work participation standards
    The Administration has recommended raising the all-family work 
participation target from 50 to 70 percent of the caseload. H.R. 240 
and the Senate bill would both do so. On its face, this is too 
ambitious. Seventy percent is more than double the national 
participation rate actually achieved in 2002, only 33 percent. A real 
activity rate of half the caseload is probably as much as most states 
can achieve, given the practical difficulties of getting welfare 
mothers out of their homes and into programs or jobs. Wisconsin's W-2 
program achieves rates above 60 percent only through intense case 
management and lavish support services. Most other states are not yet 
capable of this.\15\
---------------------------------------------------------------------------
    \15\ Mead, Government Matters, chs. 5-8, 11.
---------------------------------------------------------------------------
    As if realizing the difficulties, the current bills would offset 
the 70 percent target with many credits and exemptions, including the 
modified caseload fall or employment credits. These would reduce the 
effective rate that states had to achieve to something like the current 
50 percent. I would rather keep the 50 percent, phase it in over 
several years, and omit the credits and exemptions. That would be more 
honest and also more effective, because it would make clearer what was 
expected.

            Required hours
    The Administration and H.R. 240 would also raise the weekly hours 
of activity required to qualify a case as active from the current 30 
(35 for two-parent cases) to 40. Hours required of actual work within 
this total wold rise from 20 to 24. As above, however, the rise would 
be more apparent than real because the activities that count as work 
would also be broadened. The hours between 16 and 40 would now be more 
loosely regulated, with previous curbs on vocational education 
eliminated. And for three months out of every 24, clients could go into 
full-time substance abuse treatment or other remediation. States would 
also get pro rata credit for hours worked short of 40.
    Again, it would be better to expect fewer hours but have the 
demands be real. It is unrealistic to expect an actual work week of 40 
hours from poor single mothers. Even Wisconsin, with its intense 
administration, could not achieve this. In W-2., in practice, for most 
of the caseload the demand fell to 30 hours of actual work, usually in 
a community service job, with perhaps some education or training on the 
side.\16\ New York City has constructed an effective program combining 
20 hours of public service employment with 15 hours of job search or 
training for most recipients. While most localities will prefer 
unsubsidized employment to government jobs, this general approach is 
sound.
---------------------------------------------------------------------------
    \16\ Mead, Government Matters, pp. 120, 147.
---------------------------------------------------------------------------
    I would keep TANF's current 30- or 35-hour standard for overall 
activity, its 20 hours for actual work, and its current rules for 
``creditable'' work activities. Omit the pro rata credit. To raise 
expected hours simply generates unjustified demands for increased child 
care funding (see below).
    H.R. 240 would calculate a state's work participation rate using 
the total number of countable hours worked per month, rather than the 
number of families meeting the participation standard. This would 
simplify the calculation of the pro rata credit, but it would probably 
concentrate hours worked on fewer cases. The number of families 
actually participating could be reduced. Since the goal of 
reauthorization should be to broaden the reach of the work test, this 
would be a step backwards.

            Permissible work activities
    Under existing law, recipients can go to school and receive work 
participation credit for no more than one year, and the share of 
recipients meeting the work test this way is capped at 30 percent. H.R. 
240 would restrict educational programs to four months but remove the 
30 percent cap. The Senate bill would allow longer educational programs 
than before, in some cases even four-year college. Both of these 
changes would probably lead to a higher share of the caseload meeting 
the work test through education than before.
    This would be a mistake. It would take welfare work policy back 
toward the era of the Family Support Act and JOBS, when most recipients 
were allowed to substitute school or training for actual employment. 
Evaluations demonstrated that ``work first'' was a better strategy.\17\ 
The fact that many recipients today are more disadvantaged than those 
who left the rolls earlier does not change this verdict; they, too, are 
likely to profit most from actual work. To allow recipient to turn 
welfare into a college scholarship also offends equity, since many of 
the taxpayers who pay for welfare lack the same opportunity. On both 
grounds, TANF should continue to stress work first. I would keep 
current rules on permissible work activities.
---------------------------------------------------------------------------
    \17\ James Riccio, Daniel Friedlander, and Stephen Freedman, GAIN: 
Benefits, Costs, and Three-Year Impacts of a Welfare-to-Work Program 
(New York: Manpower Demonstration Research Corporation, September 
1994); Gayle Hamilton, Stephen Freedman, Lisa Gennetian, Charles 
Michalopoulos, Johanna Walter, Diana Adams-Ciardullo, Anna Gassman-
Pines, Sharon McGroder, Martha Zaslow, Surjeet Ahluwalia, and Jennifer 
Brooks, with Electra Small and Bryan Ricchetti, National Evaluation of 
Welfare-to-Work Strategies: How Effective Are Different Welfare-to-Work 
Approaches? Five-Year Adult and Child Impacts for Eleven Programs (New 
York: Manpower Demonstration Research Corporation, November 2001).
---------------------------------------------------------------------------
            Performance standards
    H.R. 240 would have states define their own performance measures 
for TANF. I find this unrealistic. Not all states can do this well. The 
resulting measures would also not be comparable across the country, 
making holding states accountable more difficult. The dangers are 
illustrated by school reform, where No Child Left Behind has allowed 
states to define their own tests for student performance. Coupled with 
tough federal standards, the result has been chaos.
    Welfare reform should do the opposite: Let states choose goals, but 
control measures centrally. The objectives could include employment 
outcomes, such as job entries, wages, or job retention, but also 
reduction in poverty or nonmarital births. Up a point, states could 
state their own mix of objectives. But the definitions and indicators 
themselves should be developed nationally. It would then be clearer 
what states were doing and how they compared to one another. To draft 
indicators may require a regulatory process, but the new TANF 
legislation should authorize it.

Child Care
    Whether child care funding is adequate for welfare reform has 
become a major issue in TANF reauthorization. Advocates contend that 
funding is insufficient to achieve the higher work participation rates 
contemplated in both the House and Senate bills. As now written, 
neither bill would raise those levels as much as appears.\18\ If my 
recommendations were followed, work levels would rise somewhat more, 
but I still think planned funding would be sufficient.
---------------------------------------------------------------------------
    \18\ This is the main point of Besharov and Germanis, ``Toughening 
TANF.''
---------------------------------------------------------------------------
    Federal funding for child care across all programs rose from $8.9 
billion to $14.1 billion from 1994 to 1999, or by 60 percent.\19\ And 
this increase occurred in the face of sharply declining welfare 
caseloads. I have seen no systematic evidence that lack of child care 
has impeded states' ability to move recipients off welfare and into 
jobs. Arguments to the contrary are unpersuasive.
---------------------------------------------------------------------------
    \19\ Douglas J. Besharov with Nazanin Samari, ``Child Care after 
Welfare Reform,'' in New World of Welfare. ed. Blank and Haskins, pp. 
463-4.
---------------------------------------------------------------------------
    Critics charge that only a minority of families leaving welfare 
have claimed the subsidized child care that is offered to them. But 
this is probably because they do not need or want it, not because they 
cannot get it.\20\ Critics also note that there are long waiting lists 
for subsidized care, and only 15 percent of eligibles received 
subsidized care under the Child Care and Development Block Grant 
(CCDBG) in 1999.\21\ But child care is a normal market good. Most of it 
is bought and sold privately, not provided through government. To 
provide a subsidy lowers the cost to consumers and raises demand; hence 
the waiting lines. But the fact that people seek a subsidy does not 
establish that they cannot afford child care without it, let alone that 
they cannot find care at all.
---------------------------------------------------------------------------
    \20\ Besharov with Samari, ``Child Care after Welfare Reform,'' pp. 
464-7.
    \21\ 2004 Green Book, p. 9-28.
---------------------------------------------------------------------------
    It is true that states have found CCDBG funding insufficient to 
meet demand. In 2002, $3.7 billion in federal TANF money was spent 
either directly on child care or transferred to CCDBG for that purpose. 
On the other hand, over 1997-2001, states spent only $62 billion of $81 
billion in total federal TANF grants.\22\ It is thus implausible to say 
that they have done all they can to fund child care and that large 
funding increases are needed.
---------------------------------------------------------------------------
    \22\ 2004 Green Book, pp. 7-48, 9-29.
---------------------------------------------------------------------------
    While certainty is elusive, the $1 billion increase in funding 
contemplated by H.R. 240 is probably enough to cover the child care 
needs of single mothers leaving welfare. One can argue for more money 
only if one posits other goals, such as providing more subsidized care 
to families already off welfare or improving child care quality. Those 
aims might be valuable, but they go well beyond the needs of welfare 
reform. Reauthorization should not be held hostage to them.

Conclusion
    Welfare reform has succeeded largely by enforcing work requirement 
on more of the caseload than under previous law. Reauthorization should 
expand the reach of the work test until, in every state, aid to needy 
families is closely tied to employment by the parents.\23\
---------------------------------------------------------------------------
    \23\ This would include additional measures to achieve greater work 
levels and child support payments by absent fathers, but I do not 
address these here.
---------------------------------------------------------------------------
    The main challenge now is not to raise formal work demands but to 
overcome the weaknesses in TANF that have allowed much of the caseload 
in some states to escape the work test entirely. If we do that, there 
will be little need to raise work standards. The logic is the same as 
in tax reform: Broaden the base to which requirements apply, and what 
is demanded can be quite modest.
    To make work standards more transparent is also important. The 
caseload began to fall in 19994, well before TANF was even enacted, let 
alone implemented. It was driven as much by politics as by formal 
requirements. Due to the debates over welfare, recipients got a message 
that work would now be expected of them. Many then went to work and 
left the rolls before welfare told them to.\24\ But to maintain that 
pressure, recipients and the public alike must understand what welfare 
demands. The rules under TANF are already complicated. H.R. 240 as now 
written would make them more so. Let us instead seek simplicity and 
clarity. Let us seek a more definite and more certain work test rather 
than a tougher one.
---------------------------------------------------------------------------
    \24\ Mead, Government Matters, ch. 9.
---------------------------------------------------------------------------
                                 ______
                                 
    Chairman McKeon. Thank you.
    Ms. Fallin.

  STATEMENT OF CASANDRA FALLIN, EXECUTIVE DIRECTOR, BALTIMORE 
         CITY CHILD CARE RESOURCE CENTER, BALTIMORE, MD

    Ms. Fallin. Chairman McKeon, Congressman Kildee, and 
Members of the Subcommittee, thank you for inviting me to speak 
to you about quality child care and the important legislation 
you have before you today.
    My name is Casandra Fallin. I an executive director of the 
Baltimore City Child Care Resource Center in Baltimore City.
    I am also chair of the Public Policy Committee for NACCRRA, 
the National Association of Child Care Resource and Referral 
Agencies.
    At the Baltimore City Child Care Resource Center, we 
provide a variety of services designed to improve the quality, 
availability, and affordability of child care.
    There are over 850 child care resource and referral 
agencies located in every state in most communities. We assist 
over 5 million parents each year with information on child care 
in their communities.
    We also help over 500,000 child care providers improve the 
quality of their care through basic training on health, safety, 
and child development.
    Each day in the United States, over 12.5 million children 
under the age of five from families across the economic 
spectrum are in the care of someone other than their parents.
    According to a report released in November, 50 percent of 
all children are in some form of child care by the age of 9 
months, nearly 2 million babies. The number goes up as children 
get older, and according to the National Research Council, most 
children spend an average of 40 hours per week in child care.
    Whether we like it or not, child care is where most of our 
youngest children are getting their early education and 
preparation for school. As a result the quality of their care 
must be a key Federal issue.
    Child care keeps parents working. In 2003, 78 percent of 
children receiving child care assistance were in care because 
their parents were working.
    Child care is vital for low-income working families. We 
support additional increases in funding to support working 
families.
    You have asked me to comment on the proposed revisions to 
the Child Care and Development Block Grant, or CCDBG.
    First, I applaud the Committee for its commitment to making 
quality child care a national priority. It is widely reported 
that only 9 percent of family child care homes, 14 percent of 
child care centers, and a dismal 8 percent of infant/toddler 
child care is of good quality.
    Adding quality as a Federal goal is a critical first step 
we enthusiastically support.
    However, we also urge the Committee to commission a 
national study on the quality of care.
    This study would establish a national baseline that would 
support other provisions in the bill and set the state for hire 
levels of accountability.
    Second, we applaud the increase in the quality set-aside 
from 4 percent to 6 percent.
    Research shows that the education and training of child 
care workers are the biggest single indicators of quality. 
There are over 2.3 million child care workers in the United 
States, most of whom have little or no formal education, yet 
studies show that caregivers who have completed even a 120-hour 
training program exhibit higher levels of sensitivity and are 
more involved with the children for whom they care.
    Despite this, most child care workers are required to have 
no previous training before they begin work and only minimal 
training after they begin caring for children.
    We also recommend that the Committee maintain current law 
regarding the use of quality funds so all children can benefit 
from improvements.
    Third, H.R. 240 encourages better--I'm sorry.
    We support the provisions of H.R. 240 that require states 
to focus on training, education, and professional development 
of the child care workforce.
    Third, H.R. 240 encourages better coordination between 
early childhood programs, something I personally support and 
promote daily.
    My agency, Baltimore City Child Care Resource Center, is a 
delegate Head Start agency involved in a Head Start child care 
demonstration program for more than 100 years.
    We partner our Heat Start teacher trainer with a child care 
teacher in existing child care programs and provide Head Start 
services to eligible children.
    This collaboration creates a full-day, year-round 
programming for Head Start eligible children enrolled in child 
care programs and creates unique quality improvement 
opportunities for child care staff.
    We're now seeking approval to expand that model by 
including family child care programs.
    Fourth, H.R. 240 also supports public-private partnerships. 
These partnerships are critical and can leverage the assets and 
strengths of many organizations.
    For example, NACCRRA has established a partnership with the 
Department of Defense to share lessons learned from the 
nationally recognized military child care program.
    Through this partnership, local child care resource and 
referral agencies will gain access to materials and trainings 
developed by the Department of Defense and military families 
will gain access to higher-quality care in civilian programs.
    Finally, we support requirements in H.R. 240 that emphasize 
the need for child care for certain hard-to-reach populations. 
Access to infant and toddler child care, care for children with 
special needs, and care for children whose parents work 
nontraditional hours has reached a crisis.
    We also know high-quality child care for those 2 million 
babies mentioned earlier can cost from $8,000 to $13,000 per 
year, well beyond the financial means of families served by 
CCDBG.
    In conclusion, your efforts to improve the quality of child 
care through changes to CCDBG have been, and will continue to 
be, supported by the child care resource and referral 
community. With over 12 million children under age five in 
child care each day, it goes without saying that the quality of 
the care matters.
    Thank you again for the opportunity to speak before the 
Subcommittee.
    [The prepared statement of Ms. Fallin follows:]

Statement of Casandra Fallin, Executive Director, Baltimore City Child 
                  Care Resource Center, Baltimore, MD

    Thank you, Chairman McKeon, Congressman Kildee, and members of the 
Subcommittee for inviting me to speak to you about child care and the 
important legislation you have before you today.
    My name is Casandra Fallin and I am the Executive Director of the 
Baltimore City Child Care Resource Center, in Baltimore, Maryland. I am 
also Chair of the Public Policy Committee for NACCRRA--the National 
Association of Child Care Resource and Referral Agencies. NACCRRA is a 
membership organization that represents over 850 state and local Child 
Care Resource and Referral agencies, such as mine, from across the 
country. In addition, I am a former program manager for the Maryland 
Department of Human Resources. I have seen first hand the impact of 
federal legislation on children and families, especially the Child Care 
and Development Block Grant.
    At the Baltimore City Child Care Resource Center, we provide a 
variety of services designed to improve the quality, availability, and 
affordability of child care. Services include help for parents looking 
for child care, recruitment and training of child care providers, data 
collection, and community education designed to increase public 
awareness of child care issues. At Baltimore City Child Care Resource 
Center, we serve over 5,200 children annually.
    Child Care Resource and Referral Agencies like mine are located in 
every state and most communities in the United States. These agencies 
provide a critical link between parents looking for child care and 
licensed or legally operating child care providers. We assist over 5 
million parents each year with information on the cost, quality and 
availability of child care in their communities. We also help over 
500,000 child care providers improve the quality of their care by 
providing basic training on health, safety, child development and other 
important topics.
    Each day in the United States, over 12.5 million children under the 
age of five are in the care of someone other than their parents. 
According to a report released by the U.S. Department of Education in 
November 2004, 50 percent of children are in some form of non-parental 
child care by the age of 9 months. This is nearly 2 million babies. The 
number increases as children get older. And, according to the National 
Research Council, children spend an average of 40 hours per week in 
child care.
    Whether we like it or not, child care is where most of our youngest 
children are getting their early education and preparation for school. 
As a result, the quality of that care must be a key federal issue.
    Child care helps parents work and contributes to our economy. The 
child care industry generates almost $9 billion in tax revenue and 
enables Americans to earn more than $100 billion annually. Child care 
is a vital support for low-income working families. In 2003, over 1 
million families and 1.75 million children were served by the Child 
Care and Development Block Grant. Almost 90 percent of the children 
receiving child care assistance were in care because their parents were 
working, in school, or in training (78 percent because their parents 
were working; 12 percent while their parents were in training or 
school).
    Child care provides the stability needed to keep families working. 
Research has found that former welfare recipients are 82 percent more 
likely to keep a job after two years if they receive child care 
assistance. As a result, we support increased funding to help working 
families meet the daily demands of work.
    You have asked me to comment on the proposed revisions to the Child 
Care and Development Block Grant or CCDBG. I would like to address five 
key provisions of the bill:
      First, establishing quality care as a federal goal;
      Second, increasing the amount of the quality set aside;
      Third, the call for better collaboration at all levels of 
government,
      Fourth, encouragement of Public-Private Partnerships; and
      Fifth, access to care for certain populations such as 
children with special needs.
    First, keeping in mind that so many of our young children are 
getting their preparation for school in child care programs, I applaud 
the Committee for its commitment to making quality child care a 
national priority. It is widely reported that only 9 percent of family 
child care homes, 14 percent of child care centers and a dismal 8 
percent of infant/toddler child care is of good quality. Adding 
``quality'' as a federal goal is a critical first step, and one that we 
enthusiastically support. However, we also urge the committee to 
commission a national study of the quality of child care in all 
settings. The data on the quality of child care is limited in scope and 
dated. This study could establish a national baseline that would 
support other provisions in HR240 that require states to use funds to 
improve the quality of care. Such a study would set the stage for 
better measurements and higher levels of accountability.
    Second, we applaud the Committee's proposal to increase the quality 
set-aside from 4 percent to 6 percent. Research shows that both the 
education and training of child care workers are the biggest single 
indicators of quality. There are over 2.3 million child care workers in 
the United States, most of whom have little or no formal education. Yet 
studies show that caregivers who have completed even a 120 hour 
training program exhibit higher levels of sensitivity and are more 
involved with the children they care for. Despite this, 30 states 
require no previous training before child care workers begin work and 
only minimal training after they begin caring for children.
    We must do more to hold the states accountable for training of the 
child care workers. We support the provisions of HR240 that require 
states to focus on training, education and professional development of 
the child care work force.
    In addition, we support the provision of HR240 that allows States 
to use the quality set-aside to fund tiered reimbursement and other 
provider retention initiatives. If training and education programs are 
to have a lasting impact on child care quality, these efforts must be 
combined with initiatives to retain well-trained providers. In a market 
where the median hourly wage is $8.37, high turnover is a consistent 
problem. Child care is ranked second in turnover rates only to the fast 
food industry. Tiered reimbursement rates encourage high-quality 
providers to remain in the child care field and provide incentives for 
other providers to work towards State-defined quality standards.
    Child Care Resource and Referral Agencies believe in accountability 
for public funds. Such measures include tiered reimbursement rates as 
well as quality rating systems for consumers, rated licensing and other 
tiered quality strategies. In addition to retaining skilled providers 
and increasing the quality of care, tiered quality strategies improve 
consumer education by making information on quality care easy for 
parents to use and understand. Thirty-six States have implemented 
tiered quality strategies and eight States currently operate pilot 
programs.
    We commend your efforts to increase accountability measures to 
ensure that the child care supported by CCDBG funds promotes school 
readiness goals. Child Care Resource and Referral Agencies are strong 
supporters of the quality improvement initiatives highlighted in this 
proposed legislation.
    Third, HR240 encourages better coordination between early childhood 
programs, something Child Care Resource and Referral Agencies across 
the country are involved with, and something I personally support and 
promote daily. More than 65 percent of Child Care Resource and Referral 
Agencies work with city government, public schools, the media and 
colleges. In addition nearly 60 percent serve on community planning 
councils to help find solutions for the ever-increasing demand for 
care.
    My agency, Baltimore City Child Care Resource Center, is a delegate 
Head Start agency and has been involved in an innovative Head Start/
Child Care demonstration program for more than 11 years. This 
partnership is mutually beneficial to both the Head Start and the child 
care communities and to families by partnering a Head Start teacher-
trainer with a child care teacher in existing child care programs. It 
creates full day, year round programming for Head Start eligible 
children enrolled in child care programs and creates unique quality 
improvement opportunities for its child care partners. Benefits of the 
collaborative include:
      full day programming for Head Start eligible families;
      ability to serve Head Start eligible families whose needs 
are not met by the part day programming found in traditional Head 
Start;
      expansion of Head Start's services to children and 
families in the child care setting;
      extensive on-site training for child care staff;
      quality improvement for the child care programs; and
      cost-effective approaches that maximize the resources of 
both Head Start and the child care partners.
    We are now seeking approval to expand the model into family child 
care programs.
    Fourth, HR240 also supports public-private partnerships. These 
partnerships are critical and can leverage the assets and strengths of 
many organizations. For example, NACCRRA has established a partnership 
with the Department of Defense to share lessons learned from the 
nationally recognized military child care program. Through this 
partnership, NACCRRA is developing projects to provide quality care for 
military personnel who are not living on or near bases, but still need 
help finding the same high quality child care service members have on 
base.
    Through this partnership, local Child Care Resource and Referral 
Agencies will gain access to materials, technology and trainings 
developed by the Department of Defense and military families will gain 
access to higher quality care in civilian programs.
    One of the projects NACCRRA is working on with the United States 
Air Force seeks to improve the quality of training for family child 
care providers through use of the military's professional development 
model. We anticipate that this project will prove to be a viable model 
for professional development nationally. This is a real win--win 
partnership and one of which we are especially proud.
    Finally, we support requirements in HR240 that emphasize the need 
for child care for certain hard to serve populations.
    Access to care for infants and toddlers, children with special 
needs, and children whose parents work nontraditional hours has become 
a crisis in many communities. According to our latest figures, 45 
percent of all child care referrals were for parents with infants and 
toddlers. We know the demand for quality care for infants and toddlers 
far outweighs the supply. We also know that high quality child care for 
those 2 million babies mentioned earlier can cost from $8,000 to 
$13,000 per year, well beyond the financial means of families served by 
CCDBG. We support the requirements in this bill that will ensure that 
states collect and analyze data on the types and quality of care 
parents need.
    We also applaud the requirements in HR240 to collect and utilize 
data to inform child care planning and policies on the local, state and 
national level. These provisions will help ensure that data aggregated 
on child care supply and demand will direct our progress in improving 
parents' access to quality child care.
    Further, we support the mention of Child Care Resource and Referral 
Agencies' child care data as a source for this local, state, and 
national data. Child Care Resource and Referral Agencies are unique in 
their ability to gather detailed child care supply and demand 
information through relationships with both sides of the child care 
market: parents and child care providers. Over 70 percent of Child Care 
Resource and Referral Agencies conduct studies on the supply and demand 
to allow state and local decision-makers to better target specific 
needs of the community. Child Care Resource and Referral Agencies also 
derive statistics using local data to produce market rate surveys and 
child care worker salary surveys.
    In conclusion, your efforts to improve the quality of child care 
through changes to the CCDBG have been, and continue to be, supported 
by the Child Care Resource and Referral community. All of the research 
demonstrates that the earliest years set the stage for success in life. 
With over 12 million children under five in child care each day, it 
goes without saying that the quality of the care matters.
    Thank you again for this opportunity to speak before the 
Subcommittee.
                                 ______
                                 
    Chairman McKeon. Thank you.
    Mr. Greenberg.

STATEMENT OF MARK GREENBERG, DIRECTOR OF POLICY, CENTER FOR LAW 
               AND SOCIAL POLICY, WASHINGTON, DC

    Mr. Greenberg. Mr. Chairman, Members of the Subcommittee, 
thank you for inviting me to testify today.
    Since 1996, we've spent a lot of time following closely 
developments around TANF and child care implementation in the 
states. Over the next few minutes, I'd like to talk about the 
context for reauthorization and then offer some thoughts on the 
work and child care provisions of the pending bills.
    First, for the context.
    Since 1996, our nation really has seen an unprecedented 
growth in employment among single-parent families. We've also 
seen an unprecedented decline in the welfare caseload. Most of 
the caseload decline probably is due to employment, though 
certainly not all of it.
    At the same time, families leaving welfare have typically 
entered low-wage jobs with considerable employment instability 
and very limited upward movement over time.
    In the first years after 1996, we did see significant drops 
in child poverty, even though a large share of the families who 
leave welfare are still poor or near poor.
    We've also seen a significant group of families leave 
welfare without finding work.
    Welfare reform, by numerous studies, did play an important 
role in the employment growth over this period. It wasn't the 
only factor, but it was a significant one.
    The economy played a role. The large expansion of the 
Federal earned income tax credit played a role. Broadening the 
availability of health care outside of welfare played a role, a 
stronger child support enforcement system, the minimum wage 
increases, and child care.
    As a result of the 1996 law, both the increased child care 
funding at the time and the ability of states to redirect TANF 
funds to child care, we saw a dramatic increase in child care 
funding in the late 1990's. It tripled in a very short period 
of time, and that meant that at the same time that welfare 
caseloads were falling by half, the number of children 
receiving child care subsidies increased from about a million 
to 2.4 million.
    For many states, the ability to expand the availability of 
child care outside of welfare was a critical part of their 
strategy, because it made it possible for them to say to 
families, ``You don't need to come into the welfare system in 
order to get child care. We will support child care for low-
income working families so that you never need to turn to 
welfare.''
    Over the last 3 years, while reauthorization has been 
pending, several of the key indicators have turned less 
positive. Employment for single mothers has fallen, though 
their employment rates are still more than that of married 
mothers and still much more than they were in the mid-1990's. 
Child poverty has grown for the last 3 years.
    At the same time, welfare caseloads have stayed essentially 
flat, which raises concerns that the system is not as 
responsive as it should be in times of increased need, and 
Federal child care funding has been flat, and the number of 
children receiving subsidy assistance has fallen.
    Reauthorization over this period has been largely stalled 
over the details of TANF participation rates--what the rates 
should be, what the hourly requirements are, what activities 
should count, how long they should count.
    We've criticized the bill that came out of the House on 
several grounds.
    We've criticized it for being detailed and prescriptive in 
a way which frankly seems unnecessary.
    We've criticized it for making it harder for states to do 
education and training if that's what they choose to do in 
their programs.
    We've criticized shifting to a 40-hour requirement because 
there is no research evidence that suggests that that will lead 
to states running better employment programs.
    And we've expressed concern that the Congressional Budget 
Office estimates some significant costs in meeting these 
requirements. At a time when TANF funding is flat, that raises 
major concerns for states.
    Finally, another reason for criticizing the overall 
approach on the participation rate has been that a 
participation rate fundamentally measures process, not 
outcomes.
    I think the goal that many people share is that the best 
outcome is families getting jobs, and getting jobs so that they 
don't need welfare, and that would be the key thing that one 
would want to see focused on in the system.
    There's a serious risk, though, that if you build in a 
detailed prescriptive participation rate, the thing that states 
most focus on is not how do you link families with jobs, but 
rather, how do we manage to meet the Federal requirements. It 
shifts the whole focus of program administration to managing to 
meet participation rates.
    So based upon this, we have two principal recommendations.
    First, give states an option to be held accountable for 
outcomes. That's the approach the Committee takes in relation 
to the Workforce Investment Act, focus on earnings gains, 
employment entries, employment retention, the outcomes that 
matter, and give states that option.
    Second, for the participation rate itself, ensure, as you 
design it, that states are never put at a disadvantage when a 
family leaves welfare because they've got a job. Don't reward 
them simply for cutting their caseload if families aren't 
getting jobs. Don't set the hourly requirements so high that 
meeting participation rates becomes the central mission of the 
system, and be sure that states have the flexibility to read 
the research themselves and make their own judgments over time 
about what are appropriate activities.
    Finally, let me just underscore the critical importance of 
child care funding.
    As I suggested before, in the initial years, a big part of 
the story really was states' ability to expand child care 
funding and expand it outside welfare. It was an enormously 
positive story until the last several years.
    Over the last several years, Federal child care funding 
from the Child Care and Development Block Grant has stayed 
flat. Initially, states were able to redirect substantial sums 
of their TANF money to child care. That peaked in 2000, and for 
the last 3 years, they've been able to devote less of TANF 
funds to child care than they were in the year 2000.
    Furthermore, at this point, for the last 3 years, states 
are spending more in TANF funds than they're receiving from the 
Federal Government each year, so they've got a structural 
deficit built in.
    That means necessarily that whatever they're doing now, 
they're not going to be able to sustain it over the next 5 
years. They're going to have to make cuts in other benefits and 
services just to manage in this structure, and so it means that 
in all likelihood, the funding from TANF to child care is going 
to wind up being less, not more.
    So if the Committee wants to ensure that the progress that 
we did see after the 1996 law continues, it is crucial to 
address the need for sustained ongoing child care funding, not 
one-time funding from simply shifting funds out of state 
reserve funds and leaving them with nothing in reserve, but 
sustained funding over time.
    Thank you very much.
    [The prepared statement of Mr. Greenberg follows:]

  Statement of Mark Greenberg, Director of Policy, Center for Law and 
                     Social Policy, Washington, DC

    Mr. Chairman and Members of the Subcommittee:
    Thank you for inviting me to testify. I am the Director of Policy 
for the Center for Law and Social Policy (CLASP). CLASP is a nonprofit 
organization engaged in research, analysis, technical assistance, and 
advocacy on a range of issues affecting low-income families. Since 
1996, we have closely followed implementation of the work and child 
care provisions of the Personal Responsibility and Work Opportunity 
Reconciliation Act. This testimony will discuss background for 
reauthorization of the work and child care provisions of the 1996 law, 
pending reauthorization proposals, and our recommendations. This 
testimony reflects ongoing work with CLASP colleagues including Nisha 
Patel, Hedieh Rahmanou, Danielle Ewen, and Hannah Matthews.
The Role for this Subcommittee
    The jurisdiction of the Subcommittee on 21st Century 
Competitiveness includes the work provisions of the Temporary 
Assistance for Needy Families (TANF) Program and the Child Care and 
Development Block Grant (CCDBG), along with workforce and education 
programs including the Workforce Investment Act (WIA) and the Higher 
Education Act (HEA). Thus, it is appropriate and important that this 
Subcommittee consider reauthorization within the broader context of 
workforce development, training, early education, and higher education 
policies. As discussed below, this focus is needed because the 
reauthorization bill previously adopted by the House and under 
consideration this year is, in important respects, inconsistent with 
key provisions of WIA and with efforts to expand access to training and 
higher education. Moreover, the child care funding level under the 
House bill would not be sufficient to sustain current levels of child 
care assistance for working families, meet the bill's new TANF 
mandates, or adequately address the goals this Subcommittee has 
established for CCDBG reauthorization.
The Background for Reauthorization
    In 1996, Congress enacted TANF and restructured federal child care 
funding. Generally, the legislation gave each state annual TANF block 
grants with broad discretion in use of funds; sought to place a strong 
emphasis on linking families receiving public assistance with work; 
established time limits for providing federally-funded assistance; and 
significantly expanded federal child care funding while giving states 
broader discretion in use of child care funds.
    In the years after enactment of the 1996 law, there were dramatic 
changes in employment, child poverty, welfare and child care 
participation. While there were some troubling aspects, much of the 
experience was strikingly favorable in the initial years of 
implementation. However, in the last several years, several of the most 
positive indicators have slowed or reversed. Thus, reauthorization 
should be a time to build on the successful aspects of the 1996 law, 
while addressing problems that have become apparent over time.
    Starting in the mid-1990s, there was a historically unprecedented 
increase in employment among single parents. The growth began before 
enactment of the 1996 welfare law, but continued after that time. The 
employment rate for single mothers grew from 57.3 percent in 1993 to 
63.5 percent in 1996, and then rose to 73 percent by 2001.\1\ Many 
factors likely contributed to this employment growth, including the 
strong economy, state and federal welfare reforms, the large expansion 
of the Earned Income Tax Credit in 1993, increased child care spending, 
increases in the minimum wage in 1996 and 1997, broadening of access to 
health care outside of welfare, and a stronger child support 
enforcement system.
    During this period, both the TANF assistance caseload and the 
nation's child poverty rate fell. Welfare caseloads fell from 5 million 
in 1994 to 4.4 million by the time the 1996 law was enacted, and then 
to 2 million by 2001. Child poverty fell from 22.7 percent in 1993 to 
16.2 percent in 2000. Welfare participation fell much more than did 
child poverty, with the share of poor children receiving assistance 
falling from 62 percent in 1994 to 35 percent in 2001.\2\
    Numerous studies found that most families leaving welfare (in the 
range of 50 to 60 percent) were working, but typically in low-wage jobs 
without access to benefits, such as employer-sponsored health insurance 
and paid vacation/sick leave.\3\ The families still receiving 
assistance were a heterogeneous group, but generally had more serious 
barriers to employment (e.g., health and mental health issues, domestic 
violence, substance abuse, limited English proficiency, severe basic 
skills deficits) than those who had left assistance. And, some of the 
families that left welfare without finding employment were among those 
with the most severe barriers to employment, with weaker work 
histories, less education, and higher rates of disabilities.
    During this early period, declining welfare caseloads freed up 
resources for states. States were able to use TANF funds to broaden 
services for working families outside the traditional welfare system. 
Initially, the single biggest redirection of TANF funds was to increase 
child care for working families. In 2000, states committed $4 billion 
of TANF funds to child care.\4\
    Between 1996 and 2000, combined federal and state funding for child 
care tripled. Most of the growth was attributable to federal funds, and 
the single biggest factor was the ability of states to redirect TANF 
funds. As a result of this increased funding, the number of children 
receiving subsidies grew from an estimated 1 million in 1996 to 2.4 
million in 2001, and states were able to improve child care payment 
rates to providers, reduce required family copayments to make child 
care more affordable, and expand quality initiatives.
    Thus, there was much that was positive in the early experience 
after 1996, but also areas of concern. There had been dramatic growth 
in employment and a decline in child poverty, but many families who 
left welfare for work were still poor, and many families with 
significant barriers had left welfare without finding work. While the 
child care experience had been strikingly positive, there was still 
much to do: only an estimated one in seven children eligible for 
federal child care subsidies were receiving them; payment rates to 
providers in half or more of the states were below local market rates; 
and quality initiatives were often limited and uneven.
    During the last three years, several key indicators have become 
less positive. The economy entered into a recession, after which 
initial job growth was slow. States entered into a period of large 
budget deficits, placing strains on TANF funds and other state 
resources, and forcing cutbacks in child care and other services. The 
pressures resulting from the economy and state budget crises are 
apparent in indicators of employment, child poverty, child care and 
welfare participation. Specifically:
      Since 2001, employment has declined among both single and 
married mothers. Employment among single mothers fell from 73 percent 
in 2001 to 69.7 percent in 2004. Employment among married mothers 
showed a similar decline, from 68 percent to 65.3 percent, during the 
same period. Single mothers are still more likely to be employed than 
married mothers and much more likely to be employed than before the 
1996 law.\5\ Since the recession, the industries most likely to employ 
welfare recipients and large proportions of single mothers have either 
lost jobs or are experiencing slower job growth.\6\ Thus, there is 
little reason to attribute the decline in employment to state TANF 
performance. Reflecting the decline in employment, the Urban Institute 
has reported that employment among welfare leavers fell from 50 percent 
in 1999 to 42 percent in 2002.\7\ Similarly, the share of families 
engaged in employment for enough hours to meet TANF work rates dropped 
from 22 percent in 2001 to 18 percent in 2003 (while the share of 
families participating in other activities remained relatively 
unchanged).
      The decline in employment has generally not resulted in 
increased welfare caseloads, but child poverty has risen. Between 2001 
and the 2003, the number of families receiving assistance (including 
those in separate state programs) rose at least somewhat in 31 states, 
while the national caseload fell by 0.5 percent.\8\ The continued 
national caseload decline occurred despite the fact that child poverty 
increased from 16.2 percent in 2000 to 17.6 percent in 2003.\9\ The 
fact that employment fell and child poverty increased while TANF 
caseloads remained flat or declined raises significant concerns that 
the program has not been sufficiently responsive to increased needs. 
The share of poor children receiving TANF assistance dropped to 33 
percent in 2002.\10\
      The share of families without welfare or work has grown. 
Urban Institute research indicates that the share of all families that 
have left welfare, but are not employed, do not have an employed 
partner, and are not receiving income from Supplemental Security Income 
(SSI) rose from 10 percent in 1999 to 14 percent in 2002.\11\
      For the last three years, state TANF spending levels have 
exceeded annual block grants, and state reserves have fallen sharply. 
As long as welfare caseloads were falling rapidly, TANF was, in effect, 
a source for ``new'' funds each year. Once caseload decline slowed or 
stopped, states have increasingly faced the pressures resulting from a 
block grant set at mid-1990s funding levels and not adjusted for 
inflation. In each of the last three years, states' use of TANF funds 
has exceeded their basic block grants, and states have increasingly 
resorted to drawing down carryover (reserve) funds to pay for current 
services. In fiscal year 2003, states used $1.8 billion more than they 
received. Between the end of 2002 and the end of 2003, the amount of 
carryover TANF funds dropped by one-third, to $3.9 billion. This 
represented the lowest level for carryover funds since 1997, the first 
year of TANF implementation.\12\ Some states now have no carryover 
funds, and for most states, the amount of carryover funds represents 
less than one-quarter of the state's annual block grant funding level.
      Federal child care funding under CCDBG has been flat 
since 2002, and the number of families receiving child care assistance 
has fallen, with the greatest impact on low-income working families not 
receiving welfare. The Administration estimates that the number of 
children receiving subsidy assistance remained in the range of 2.4 
million from 2001-2003, declined in 2004, and will fall to 2.2 million 
2005. CCDBG funding has been flat since 2002, and the use of TANF for 
child care peaked in 2000, and has now stayed at or near $3.5 billion 
for the last three years.\13\ Child care curtailments have particularly 
hurt working families not receiving welfare: In April 2003, the 
Government Accountabilty Office (GAO) reported that, since January 
2001, nearly half the states (23) had made policy changes that reduce 
the availability of child care subsidies for low-income working 
families.\14\ Between 2002 and 2003, eighteen states and the District 
of Columbia cut total spending on child care (TANF and CCDBG).\15\
Implications for Reauthorization
    As the above discussion outlines, there has been dramatic growth in 
single-parent employment since 1996, but often in low-wage jobs without 
employer-provided benefits. Many families still receiving assistance 
have serious employment barriers, and a group of families with serious 
barriers is now not in work and not receiving welfare. A well-
functioning TANF program would assist needy families while connecting 
those who are able to work with sustainable employment; however, there 
are clear indications that the current program makes it difficult for 
needy families to receive assistance and serves a steadily declining 
share of poor children. The expansion of supports for working families 
outside welfare has been a critical contributor to the employment 
growth, but those supports are increasingly at risk because TANF and 
child care funding have remained flat. The sharp decline in reserve 
funds underscores that at current funding levels, states will find it 
difficult or impossible to sustain current service levels over the 
coming years.
    Based on this experience, CLASP has urged that the work-related 
provisions of reauthorization focus on efforts to improve job quality 
and encourage a stronger focus on employment retention and advancement, 
expand child care and other supports for working families outside 
welfare, and ensure that states have incentives to work with, rather 
than terminate assistance to, families with the most serious employment 
barriers.
    We have also urged that reauthorization promote TANF-WIA 
coordination. While H.R. 27, the WIA reauthorization bill passed by 
this Subcommittee and by the House, and H.R. 240 both contain 
provisions intended to promote coordination, \16\ Congress could do 
more. We do not advocate broad cross-program waiver authority, such as 
is provided for under H.R. 240; nor would we support a proposal like 
the Administration's WIA Plus Consolidation proposal, which would give 
Governors the option for broad authority to consolidate funds intended 
for targeted populations. Rather, we believe Congress and relevant 
federal agencies should work together to identify the principal areas 
of statutory and regulatory differences between TANF and WIA; examine 
whether there are strong policy justifications for maintaining those 
differences; and either harmonize or allow states to harmonize each 
area for which there is not a strong underlying federal policy basis 
for a different approach across programs. And, at the same time, 
Congress should ensure that new TANF provisions do not impose detailed 
and prescriptive requirements that make it more difficult to coordinate 
TANF strategies with those under WIA.
    Over the least three years, much of the reauthorization debate has 
centered around the mechanics of the participation rate calculation for 
families receiving TANF assistance: the required rates; how those rates 
should be adjusted based on caseload reduction, employment, or other 
factors; the number of hours to fully count as a participant; which 
activities should be allowed to count, for how many hours and how many 
months. While there are better and worse ways to resolve each of these 
issues, this Subcommittee should appreciate the striking contrast 
between the approach in TANF and the approach in the rest of the 
workforce system. In WIA legislation, this Subcommittee has not sought 
to dictate which activities should count for how many hours or months; 
rather, it has kept its focus on state and local accountability through 
the performance indicators of importance to the system: employment 
entries, earnings gains, employment retention, acquisition of 
credentials. Moreover, historically, this Subcommittee has sought to 
promote access to education and training. The same philosophy ought to 
apply to TANF.
    The remainder of this testimony will discuss TANF work 
participation rates and child care funding. On a number of key 
provisions, the approach taken by the Senate Finance Committee 
represents a more reasonable, balanced approach than that reflected in 
H.R. 240.\17\ While we continue to urge improvements in the Senate 
bill, we think the Senate provisions reflect efforts to be responsive 
to the principal goals of the Administration's proposal, while still 
allowing states significant flexibility in designing effective work 
programs. We also urge the Subcommittee to give serious consideration 
to the provisions of H.R. 751, the Work, Family and Opportunity Act, 
introduced by Congressman McDermott.
    Reauthorization should encourage states to focus on employment and 
job quality and should not reward caseload reduction in itself. H.R. 
240's caseload reduction credit creates incentives to terminate 
assistance rather than help families find jobs. We recommend replacing 
it with an employment-based credit.
    The ultimate goal of the work provisions of any TANF bill should be 
to improve employment outcomes. Participation rates measure the share 
of families involved in activities while receiving assistance, but they 
do not capture the outcome of greatest concern: the number of families 
getting jobs and earning enough that they no longer need assistance.
    CLASP has urged that states be given the option to be held 
accountable for employment outcomes in lieu of participation rates. 
Last year, a bipartisan group of Senators (Alexander, Voinovich, 
Carper, and Nelson [of Nebraska]) proposed an amendment to allow up to 
ten states to be accountable for outcomes relating to employment; 
success in activities designed to improve employment and related 
outcomes; job retention; entry earnings and earnings gains; and child 
well-being. H.R. 751 would allow states to be accountable for 
improvements in job entries and jobs with higher earnings. We recommend 
that the Subcommittee consider approaches such as these. Ultimately, we 
recommend that all states should have the option to be accountable for 
common performance measures across TANF and WIA.
    So long as there is a participation rate structure, it is important 
that a state not be disadvantaged in the participation rate calculation 
when a family gets a job and leaves welfare. This can happen under 
current rules, because as long as the parent is receiving assistance 
and participating in an activity, the family counts toward the rates, 
but if the parent gets a job and leaves assistance, the family stops 
counting.
    Under current law, rates are adjusted downward by a caseload 
reduction credit, calculated as the number of percentage points by 
which the state's caseload has fallen since 1995 for reasons other than 
changes in eligibility rules. The current structure has been criticized 
for lowering effective participation rates to zero for many states.
    The other problem with a caseload reduction credit is that it 
rewards a state if its caseload falls, whether or not families are 
working, and even if the decline occurred simply because the state has 
made it harder to receive assistance. H.R. 240 would make this problem 
worse by maintaining a caseload reduction credit, adjusted so that 
states only get ``credit'' for recent caseload declines. Moreover, 
under H.R. 240's ``superachiever'' credit, a group of states would be 
rewarded for having had large caseload declines between 1995 and 2001, 
without regard to employment or other outcomes. It is difficult to see 
any conceivable policy justification in 2005 for arbitrarily rewarding 
states simply based on caseload decline that occurred years ago.
    In 2002, the Administration recommended eliminating the caseload 
reduction credit, and providing instead that families leaving 
assistance due to employment could count as participants for 90 days. 
The Senate Finance bill uses an ``employment credit'' instead of a 
caseload reduction credit, providing adjustments based on the numbers 
of families leaving assistance due to employment, the number leaving 
with higher earnings, the number of families working after receiving 
diversion assistance, and the number of families receiving TANF-funded 
child care and transportation benefits. H.R. 751 also provides for an 
employment credit.
    A credit or adjustor for employment would communicate the 
importance of focusing on whether families leaving assistance are 
working, and communicate to states that the goal is the promotion of 
employment, not simply cutting caseloads.
    Raising the number of hours needed to count as a participant to 40 
will make it harder for states to run effective programs to connect 
families with employment. It would be better to maintain current law 
hourly requirements.
    Under current law, single parents with children under age 6 can 
count toward TANF participation rates through 20 hours a week of 
countable activities; all other families must meet a 30-hour 
requirement. H.R. 240 would raise the requirement to 40 hours for all 
families. The Senate Finance bill would raise the requirements to 24 
hours for single parents with children under six, 34 for other single-
parent families, and 39 hours for two-parent families. H.R. 751 would 
maintain the hourly requirements of current law.
    In our view, it is unfortunate that much time over the last three 
years has been devoted to arguments about the ``right'' number of hours 
to require for participation, because there is no evidence that 
increasing hours of participation beyond current law requirements would 
lead to more effective programs. The welfare-to-work research 
consistently finds that the most effective programs provide a mixed 
menu of activities, combining job search, training, and other work-
related activities, but these programs do not typically combine 
multiple activities for the same individual at the same time.\18\ None 
of the highest-impact programs routinely imposed 40-hour requirements. 
Nothing in the research suggests that restructuring programs to make 
them require 40 hours instead of 30 hours would make them more 
effective.
    Moreover, raising the hourly requirement to 40 runs the risk of 
resulting in less effective programs, for three reasons. First, it 
creates the danger that program administrators will need to shift their 
focus from efforts to promote employment to efforts to ``manage'' 40 
hours of participation. Second, the need to generate activities, even 
low-cost ones, and pay attendant child care costs, will force a 
misallocation of scarce resources at a time when states are struggling 
to sustain current services. Third, many observers have recognized the 
need to do more to engage families with the most serious employment 
barriers. These families are likely to have the greatest difficulties 
in meeting 40-hour requirements. If any individual who has difficulty 
consistently participating at a 40-hour level will become a ``drag'' on 
the state's ability to meet participation rates, there will be an 
increased risk that such families are sanctioned and terminated from 
assistance rather than provided needed assistance to move toward 
employment.
    While the Senate's approach to hours is more moderate, the best 
resolution here would be to maintain current law. Every state would be 
free to increase hourly requirements if it wished to do so. But, there 
is no reason to compel all states to adopt an approach that has no 
basis in research, and that is contrary to the best judgment of many 
program administrators.
    The list of countable activities should give states flexibility to 
make their own judgments about effective ways to promote employment. 
States should be free to use education and training and barrier removal 
activities, and not be compelled to use unpaid work experience.
    H.R. 240 sharply limits the activities that can count toward the 
first 24 hours of participation each week. After a three- to four-month 
period, the only activities that could count for adults would be 
unsubsidized or subsidized work, or unpaid work experience or community 
service. Thus, the bill would make it impossible to count full-time 
education or training for more than four months, and would impose 
similar restrictions on participation in barrier removal and 
rehabilitative services. Given the costs of subsidized employment, the 
bill would, in effect, create strong pressure on states to use unpaid 
work experience or community service for those individuals unable to 
get unsubsidized jobs within four months.
    The H.R. 240 approach is not consistent with relevant research. 
There is encouraging non-experimental evidence from transitional jobs 
programs that provide highly structured, paid subsidized employment 
experiences for individuals with multiple employment barriers, \19\ and 
other research suggests favorable impacts for on-the-job training 
programs.\20\ However, the available research has not suggested strong 
effects on employment and earnings for unpaid work experience programs. 
There is only limited recent research on the employment impacts of 
unpaid work experience; however, in a review of research conducted in 
the 1980s, the Manpower Demonstration Research Corporation (MDRC) 
concluded, ``there is little evidence that unpaid work experience leads 
to consistent employment or earnings effects.'' \21\
    From the welfare-to-work research, the clearest guidance is that 
states should avoid the extremes of focusing exclusively on job search 
or on adult basic education unconnected to employment. Instead, the 
most effective welfare-to-work programs use a ``mixed strategy''--
focusing on employment; including job search, education, job skills 
training among program activities; and structuring activities on an 
individualized basis.\22\ There is clear evidence that a strong skills 
training component can lead to improved employment outcomes, and that 
postsecondary education is increasingly crucial in efforts to improve 
earnings.\23\
    In fact, as of June 2002, at least 40 states allowed more access to 
postsecondary training or education services than would be countable 
under H.R. 240.\24\ If H.R. 240 were to become law, a large number of 
states would feel pressure to reduce access to these services for TANF 
recipients in order to avoid penalties. And, the restrictions on 
education and training in H.R. 240 would pose increased barriers to 
TANF-WIA coordination because full-time participation in WIA-funded 
training for more than three or four months would not be able to count 
toward TANF work participation requirements.
    The approach taken by the Senate Finance Committee is more balanced 
than that in H.R. 240, though still restrictive in certain ways. The 
Finance bill maintains the current law 12-month restriction on counting 
vocational educational training toward core participation hours, while 
creating a new option for states to count participants in postsecondary 
education under certain circumstances. The Finance bill also allows 
participation in certain rehabilitative services to count for up to six 
months, and allows continuation of individualized activities beyond six 
months for individuals with disabilities under limited circumstances.
    H.R. 751 would also broaden the countability of a set of 
activities, counting up to 24 months of participation in education and 
training, and counting up to 18 months of participation in 
rehabilitative services, if the last 12 months are combined with work.
    Our principal recommendation here is that federal law should not 
seek to narrowly restrict which activities can count toward 
participation rates. In the TANF fiscal structure, a state has no 
incentive to place individuals in activities unless the state believes 
the activities are likely to be effective, and state perspectives on 
effective activities will continue to evolve over time based on 
research and experience. Thus, we recommend that participation rate 
rules not compel states to use unpaid work experience, not restrict the 
ability of states to use education and training, and allow for 
individualized determinations about participation in rehabilitative and 
barrier removal activities.
    Reauthorization should ensure that states have incentives to work 
with families with serious employment barriers, rather than incentives 
to cut off assistance to these families. Accordingly, the bill should 
build safeguards into the sanction process, and not mandate full-family 
sanctions.
    Under federal law, states must reduce or terminate assistance when 
a family does not comply with program rules without good cause. There 
are essentially no safeguards in current federal law beyond a provision 
saying that states may not terminate assistance to a single parent of a 
child under six who fails to participate due to lack of needed child 
care. Sanctions have not been the principal reason for caseload 
decline, but it is clear that they are used extensively in some states. 
Research confirms that families with the most barriers to employment 
and the most difficulty succeeding in the labor market are the most 
likely to be sanctioned. Moreover, families who leave assistance due to 
sanctions are less likely to be employed and more likely to return to 
welfare than families who leave for other reasons.\25\ Testimony 
submitted to the Human Resources Subcommittee of the House Ways and 
Means Committee by Dr. Deborah Frank of the C-SNAP project describes 
the harm that can occur to children in sanctioned families.\26\
    H.R. 240 would require all states to use full-family sanctions 
(i.e., terminate all TANF assistance for failing to meet program 
requirements). We urge that this provision be dropped. There is no 
research evidence that programs that cut off all assistance are more 
effective in moving families to employment or economic independence, 
and, as noted, there is clear evidence of potential harm. Moreover, in 
the context of high participation rates and scarce resources, there is 
considerable risk that when a parent with employment barriers is unable 
to meet program requirements, states will perceive a much stronger 
incentive to terminate assistance than to actively work with the family 
to resolve barriers to participation.
    The Senate Finance bill does not mandate full-family sanctions. 
Instead, it contains a provision requiring that, prior to imposing 
sanctions, states must, to the extent determined appropriate, review 
the family's plan and make a good faith effort to consult with the 
family. A provision such as this, and additional safeguards, could help 
communicate that the goal of federal policy is to work with families to 
promote employment, not simply terminate assistance. H.R. 751 would not 
require full-family sanctions, and would provide for new safeguards in 
the sanction process.
    Reauthorization should provide states with enough child care 
funding to sustain current service levels, meet new work requirements, 
and make progress in addressing access for all low-income working 
families and quality in the next five years. The current House bill 
would accomplish none of these goals. We recommend increasing child 
care funding.
    In the initial years after enactment of the 1996 welfare law, 
states made dramatic progress in expanding child care assistance for 
low-income families. Child care is critical to helping parents find and 
keep jobs. Compared with mothers on waiting lists for child care 
assistance, mothers receiving subsidies for their child's care were 
more likely to be employed, spent half as much of their income on child 
care, and were less likely to be very poor.\27\ Data from the 1990s 
shows that single mothers who receive child care assistance were 40 
percent more likely to still be employed after two years than those who 
did not receive any help paying for child care, and that former welfare 
recipients with young children were 82 percent more likely to be 
employed after two years if they received help paying for child 
care.\28\
    States were able to increase child funding for two principal 
reasons. First, the 1996 law provided for steadily increasing amounts 
of dedicated child care funding through 2002. Second, when TANF 
caseloads declined, states were able to redirect TANF funding to child 
care. In 2000, states redirected $4 billion in TANF funds to child 
care, an amount larger than the entire child care block grant. However, 
child care funding through TANF has fallen to about $3.5 billion in 
each of the last three years, and it is doubtful that states will be 
able to sustain this funding level, in light of the fact that states 
are currently spending TANF funds at a level above their block grants 
and drawing down reserve funds to pay for current service levels.
    It has been suggested that reauthorization could ``unlock'' as much 
as $2 billion in unobligated prior-year TANF funds, which can currently 
only be used for ``assistance,'' but which could be used for any 
allowable TANF purpose under the pending bill. We support the proposal 
to broaden allowable uses of reserve funds, but enacting this proposal 
will not free up significant new resources for child care, for two 
reasons:
      First, the vast majority of states can already 
effectively use their unobligated funds for child care by rearranging 
how current and carryover funds are spent (i.e., spend prior year funds 
for assistance to free up current year funds to spend for child care). 
Based on 2003 spending data, forty-seven states could already, in 
effect, spend every penny of their unobligated funds on child care this 
year, but if they did so, they would have no reserve funds for the 
future. The remaining four states could, in effect, spend all of their 
carryover funds for child care within two or three years, if they 
wished to exhaust their reserve funds.
      Second, as noted above, for the last three years, states 
have spent more for TANF-funded benefits and services than they have 
received in their annual block grants, and have drawn down prior year 
funds to help pay for current service levels. This strategy cannot be 
sustained indefinitely; reserves for most states are likely to be 
depleted within a few years unless states make significant cuts in 
current levels of services. Thus, most states cannot simply use reserve 
funds to expand child care services without creating deeper deficits 
for future years.
    When child care funding was expanding, it resulted in dramatic 
improvements in the availability of child care assistance for low-
income families. For many states, a key part of the strategy to promote 
work and reduce the numbers of families receiving TANF assistance was 
expansion of child care outside welfare. In recent years, as child care 
funding has been flat or declining, it has become increasingly 
difficult or impossible to provide continued access for working 
families that are not receiving or leaving TANF assistance. The 
Administration now estimates that flat funding levels will cause the 
number of children receiving child care to fall from 2.4 million in 
2003 to 2 million by 2009.
    Although funding levels have not changed since 2002, the cost of 
child care has continued to rise because the wages and salaries of 
child care workers, the cost of renting space, and the cost of supplies 
increase over time. A September 2004 report from the National Women's 
Law Center documented the specific impacts for families as states 
struggle to meet increasing costs with flat funding levels. NWLC found 
that between 2001 and 2004, the income eligibility cutoff for a family 
to qualify for child care assistance declined as a percentage of the 
poverty level in about three-fifths of the states. NWLC also found that 
the number of states that had waiting lists or had frozen intake 
altogether for low-income working families not receiving welfare rose 
to 24 states by 2004. The NWLC study also found that increases in 
copayments are further limiting access to child care help for many 
families. In about half the states, the copayment for a family with an 
income at 150 percent of poverty increased as a percent of income 
between 2001 and 2004 or the family became ineligible for help at this 
income level due to a decrease in the income cutoff. Copayments also 
increased in about half the states for families at 100 percent of 
poverty, those least able to make adjustments in their budgets to pay 
for higher child care costs.\29\
    The Administration has proposed no increase in mandatory child care 
funding for the next five years; H.R. 240 provides for $1 billion; last 
year, the Senate voted, 78-20, to provide for $7 billion in child care 
funding over five years, and the Senate Finance Committee bill would 
provide for $6 billion. H.R. 751 would increase mandatory funding by 
$11 billion over five years. How do these amounts compare to need?
    In essence, the Senate Finance Committee's bill would address 
inflation and the projected costs of the Senate work requirements; 
under the House bill, there would be about an $11 billion shortfall. 
Congressional Budget Office (CBO) staff has preliminarily estimated 
that $4.8 billion in total funding (federal and state) would be needed 
to sustain 2005 service levels over the next five years.
      CBO estimates that the combined work and child care costs 
of meeting the House work requirements through increased participation 
would be $8.3 billion. After allowing for overlap, the resulting 
preliminary staff estimate is that the additional cost of sustaining 
current service levels and paying for the work and child care costs 
would be $12.5 billion.
      CBO staff has preliminarily estimated that the cost of 
meeting the Senate Finance work requirements through increased 
participation would be $1.8 billion, and that the combined cost of 
meeting such requirements through increased participation and 
sustaining current service levels would be $6.3 billion.
    While the Senate Finance figure is near the projected costs of 
inflation and meeting new work requirements, even this figure would not 
provide for access to child care for additional working families 
outside welfare or for expanding quality investments. At the same time, 
the CCDBG reauthorization bill approved by this Subcommittee in 2002 
and 2003 (and contained in H.R. 240) clearly signals the need for 
expanded quality initiatives by states. The bill increases the required 
child care quality set-aside; adds CCDBG goals of improving quality and 
promoting school readiness; requires an annual strategy for the use of 
quality funds; and describes a set of potential quality activities for 
states. Yet, if funding is not sufficient to sustain current service 
levels and meet new requirements, it is difficult to see how states can 
at the same time make significant progress in improving child care 
quality in the coming years.
    We understand the difficulties in urging additional child care 
funding at a time when there is a need to address the federal deficit. 
However, child care funding is an essential support for work and a 
crucial way of addressing the well-being and developmental needs of 
children in working families. Providing for increased funding will be 
crucial to sustain progress in the coming years.
Conclusion
    While we urge a number of changes in the House's approach, we share 
the view that it is important for Congress to resolve outstanding 
issues and complete TANF reauthorization. During the last three years, 
there has been a significant cost to the uncertainty and instability 
resulting from lack of reauthorization and repeated short-term 
extensions. We urge the Subcommittee to work for enactment of a final 
bill that is responsive to the need for state flexibility and that 
addresses issues of better jobs, employment retention and advancement, 
helping families with the most serious barriers, and providing adequate 
funding for child care and other supports to help working families both 
on and outside welfare.
Endnotes.
    \1\ Burke, V. et al. (December 2004). Children in Poverty: 
Profiles, Trends, and Issues. Table A-3. Washington, DC: Congressional 
Research Service.
    \2\ U.S. Department of Health and Human Services. (2004). 
Indicators of Welfare Dependence: Annual Report to Congress, Table TANF 
2. Washington, DC: Author. Available at: http://aspe.hhs.gov/hsp/
indicators04/
    \3\ Richer, E. et al. (November 2001). Frequently Asked Questions 
about Working Welfare Leavers. Washington, DC: Center for Law and 
Social Policy. Available at: http://www.clasp.org/publications/faq--
about--working--welfare.pdf
    \4\ Administration for Children and Families. (2001). Fiscal Year 
2000 TANF Financial Data. Washington, DC: US Department of Health and 
Human Services. Available at: http://www.acf.dhhs.gov/programs/ofs/
data/tanf--2000.html
    \5\ Burke, V. et al. (December 2004). Children in Poverty: 
Profiles, Trends, and Issues. Table A-3. Washington, DC: Congressional 
Research Service.
    \6\ Boushey, H., and Rosnick, D. (April 2004). For Welfare Reform 
to Work, Jobs Must be Available. Washington, DC: Center for Economic 
and Policy Research. Available at: http://www.cepr.net/labor--markets/
welfarejobshit-2004april01.htm
    \7\ Loprest, P. (August 2003). Fewer Welfare Leavers Employed in 
Weak Economy, Snapshots of America's Families III, No. 5. Washington, 
DC: The Urban Institute. Available at: http://www.urban.org/
url.cfm?ID=310837
    \8\ Falk, G. (March 2004). Caseload Trends. Washington, DC: 
Congressional Research Service.
    \9\ U.S. Census Bureau. (August 2004). Income, Poverty, and Health 
Insurance Coverage in the United States: 2003 (P60-226). Table 3. 
Washington, DC: Author. Available at: http://www.census.gov/prod/
2004pubs/p60-226.pdf
    \10\ U.S. Department of Health and Human Services. (2004). 
Indicators of Welfare Dependence: Annual Report to Congress, Table TANF 
2. Washington, DC: Author. Available at: http://aspe.hhs.gov/hsp/
indicators04/
    \11\ Loprest, P. (August 2003). Disconnected Welfare Leavers Face 
Serious Risk. Snapshots of America's Families III, No. 7. Washington, 
DC: The Urban Institute. Available at: http://www.urban.org/
url.cfm?ID=310839
    \12\ Greenberg, M. and Rahmanou, H. (February 2005). TANF Spending 
in 2003. Washington, DC: Center for Law and Social Policy. Available 
at: http://www.clasp.org/publications/fy2003--tanf--spending.pdf
    \13\ Matthews, H. and Ewen, D. (2005). President's Budget Projects 
300,000 Low-Income Children to Lose Child Care By 2010. Washington, DC: 
Center for Law and Social Policy. Available at: http://www.clasp.org/
publications/cc--2006--budget.pdf
    \14\ U.S. General Accounting Office. (2003). Child Care: Recent 
State Policy Changes Affecting the Availability of Assistance for Low-
Income Families. Washington, DC: Author. Available at: http://
www.gao.gov/new.items/d03588.pdf
    \15\ CLASP unpublished analysis of ``State Spending Under The 
Fiscal Year 2003 Appropriation For
    Child Care And Development Fund (CCDF) as of 9/30/2003'' available 
at http://www.acf.hhs.gov/programs/ccb/research/03acf696/overview.htm
    \16\ For example, H.R. 27 and H.R. 240 would each make TANF a 
mandatory partner in the one-stop system unless the Governor opted out. 
In addition, H.R. 240 would require TANF state plans to describe the 
extent to which TANF employment and training services are provided 
through the one-stop system and the extent to which former TANF 
recipients have access to additional core, intensive, or training 
services. Finally, H.R. 240 requires that the Secretary of Health and 
Human Services and the Secretary of Labor jointly submit a report to 
the Congress describing common or conflicting data elements, 
definitions, performance measures, and reporting requirements in TANF 
and WIA.
    \17\ The descriptions of the Senate Finance Committee bill are 
based on the description of the bill available at: http://
www.senate.gov/?finance/sitepages/leg/030905mrkup.pdf
    \18\ Martinson, K., and Strawn, J. (May 2002). Built to Last: Why 
Skills Matter for Long-Run Success in Welfare Reform. Washington, DC: 
Center for Law and Social Policy and the National Council of State 
Directors of Adult Education. Available at: http://www.clasp.org/
publications/BTL--report.pdf ; Michalopoulos, C., Schwartz, C., with 
Adams-Ciardullo, D. (August 2000). National Evaluation of Welfare-to-
Work Strategies, What Works Best for Whom: Impacts of 20 Welfare-to-
Work Programs by Subgroup. New York: Manpower Demonstration Research 
Corporation. Available at: http://aspe.hhs.gov/hsp/NEWWS/synthesis-
es00/index.htm; Strawn, J., Greenberg, M., and Savner, S. (February 
2001). Improving Employment Outcomes Under TANF. Washington, DC: Center 
for Law and Social Policy. Available at: http://www.clasp.org/
publications/improving--employment--outcomes--under--tanf.pdf
    \19\ Kirby, G. et al. (April 2002). Transitional Jobs: Stepping 
Stones to Unsubsidized Employment. Princeton, NJ: Mathematica Policy 
Research.
    \20\ Orr, L. et al. (1996). Does Training for the Disadvantaged 
Work? Evidence from the National JTPA Study Washington, DC: Urban 
Institute Press; Plimpton, L. and Nightingale, D. S. Welfare Employment 
Programs: Impacts and Cost-Effectiveness of Employment and Training 
Activities, unpublished paper; U.S. Department of Labor. (January 
1995). What's Working (and what's not).Washington, DC.
    \21\ Thomas, B., Butler, D., and Long, D. (September 1993). Unpaid 
Work Experience for Welfare Recipients: Findings and Lessons from MDRC 
Research. New York: Manpower Demonstration Research Corporation.
    \22\ See, for example, Gueron, J. and Hamilton, G. (April 2002). 
The Role of Education and Training in Welfare Reform. Policy Brief No. 
20. Washington, DC: The Brookings Institution. Available at: http://
www.brookings.edu/dybdocroot/wrb/publications/pb/pb20.htm; Martinson, 
K., and Strawn, J. (April 2003). Built to Last: Why Skills Matter for 
Long-Run Success in Welfare Reform. Washington, DC: Center for Law and 
Social Policy. Available at: http://www.clasp.org/publications/BTL--
report.pdf; Mathur, A. et al. (May 2004). From Jobs to Careers: How 
California Community College Credentials Pay Off for Welfare 
Participants. Washington, DC: Center for Law and Social Policy. 
Available at: http://www.clasp.org/publications/Jobs--Careers.pdf
    \23\ From Jobs to Careers: How California Community College 
Credentials Pay Off for Welfare Participants. Washington, DC: Center 
for Law and Social Policy; see also, Duke, A. ``Provide Post-Secondary 
Education and Training to Low-Income Parents.'' in McNichol, L. & 
Springer, J. (December 2004). State Policies to Assist Working Poor 
Families. Washington, DC: Center on Budget and Policy Priorities. 
Available at: http://www.cbpp.org/12-10-04sfp.pdf
    \24\ Center for Law and Social Policy. (June 2002). Forty States 
Likely to Cut Access to Postsecondary Training and Education Under 
House Welfare Bill.. Washington, DC: Author. Available at: http://
www.clasp.org/publications/doc--Postsec--survey--061902.pdf
    \25\ See: Pavetti, L. et al. (April 2004). The Use of TANF Work-
Oriented Sanctions in Illinois, New Jersey, and South Carolina. 
Washington, DC: Mathematica Policy Research. Available at: http://
aspe.hhs.gov/hsp/TANF-Sanctions04/; Wu, C. et al. (June 2004). How Do 
Welfare Sanctions Work? Institute for Research on Poverty. Discussion 
Paper No. 1282-04. Madison, WI: Institute of Research on Poverty. 
Available at: Available at: http://www.ssc.wisc.edu/irp/pubs/
dp128204.pdf; For a summary of earlier research, see: Goldberg, H. and 
Schott, L. (October 2000). A Compliance-Oriented Approach to Sanctions 
in State and County TANF Programs. Washington, DC: Center on Budget and 
Policy Priorities. Available at: http://www.cbpp.org/10-1-00sliip.htm.
    \26\ See Statement of Dr. Deborah A. Frank, Boston Medical Center 
(February 10, 2005), available at: http://waysandmeans.house.gov/
hearings.asp?formmode=view&id=2498
    \27\ Fred Brooks, Ed Risler, Claire Hamilton and Larry Nackerud. 
(2002) ``Impacts of child care subsidies on family and child well-
being.'' Early Childhood Research Quarterly 17 (2002) 498 511. (See 
also Errata to ``Impacts on child care subsidies on family and child-
well-being,'' Early Childhood Research Quarterly, Volume 18, Issue 1, 
Spring 2003, Page 159).
    \28\ Heather Boushey, ``Staying Employed After Welfare: Work 
Supports and Job Quality Vital to Employment Tenure and Wage Growth'' 
(Economic Policy Institute Briefing Paper), Washington, DC: Economic 
Policy Institute 10 (2002).
    \29\ Karen Schulman and Helen Blank (2004) Child Care Assistance 
Policies 2001-2004: Families Struggling to Move Forward, States Going 
Backward. Washington, DC: National Women's Law Center.
                                 ______
                                 
    Chairman McKeon. Thank you.
    Mr. Austin, in your testimony you discuss leveraging 
additional resources, including the private sector resources.
    Mr. Austin. Yes.
    Chairman McKeon. How has integrating the TANF work services 
in the one-stop delivery system enhanced your ability to 
leverage these resources?
    Mr. Austin. It gives me another bucket of money.
    Let me tell you what we have done.
    We've actually gone out and said, who benefits each time? 
The concept of welfare in many of these programs are that we 
have one individual who walks into an office and asks for 
resources.
    If you work with an employee and say, ``Let me deal with 
all of your people''--the gentlelady from North Carolina made a 
point. She talked about people who don't ever access these 
resources.
    Fifty percent of the people who, for example, qualify for 
food stamps never access them. There are a lot of people who 
could be able to have TANF cash assistance, but never access 
it.
    And we said, let's look at all that whole population, the 
working poor, and say, when I walk in, can I deal with anybody 
who is TANF eligible, not just people who have signed up for 
cash assistance, but TANF eligible, with an employer?
    If they can tell me, ``Here are your top 25 percent of your 
people right here that are in this category that I think 
tomorrow, with 3 months worth of training will be making 
significantly more,'' I can be able to partner with that 
employer and say, ``Now, look, part of the benefit goes to the 
individual, part of it is to the state of Florida, because I 
keep that skilled person in here, but part of it's to that 
businesswoman or that businessman who I'm dealing with.
    If I can be able to get them to say, ``I will pay $3 for 
every dollar you put into the training piece here,'' I leverage 
that fund significantly.
    So whatever--I'm not going to be able to meet all the 
supposed needs. I don't know what the word ``needs'' means, 
because I have a hard time with that one.
    If we have--if we've got programs out there, people will 
sign up, but if I've got somebody out there who I know is not 
making as much money as at least we think they should to be 
able to be self-sufficient, I've got to be able to find enough 
money to be able to spread that around.
    That employee benefits for having a better-skilled person, 
and they will be willing to pay. They have been in Florida. 
They paid $400 million to the $100 million we put in for the 
last 4 years on training just on state-level projects.
    We're right now working on how we do that at the local 
level. We've got a lot of money sitting at the local level, 
saying, OK, how do I be a little bit more sophisticated 
negotiating? How can I negotiate with the community college and 
say, ``Won't you train 30 rather than 20 if I'm going to be 
your provider here, and we'll make a deal?''
    And that's what it is. When we get those resources in here, 
it allows us to be able to expand that base and to deal not 
just with the person who walks in the office, but be able to do 
that with the employer.
    And being able to do that, we've also done that 
competitively. We'll say, who will play with this? Maybe one 
part of the state won't play. Maybe we have an office there 
where people have done things traditionally and they're not 
going to be able to deal with it.
    That's fine. There will be enough pressure on that 
community eventually that they will come together and find a 
solution.
    And we'll say we'll put all of our money into Jacksonville, 
and then we will go down and tell the business leaders, ``We 
didn't put a nickel into Ocala, because Jacksonville came 
through.''
    And those people then kind of beat the system and say, ``I 
need a solution, because we don't want you to leave us 
behind.''
    Chairman McKeon. Thank you.
    The Workforce Investment Act, we had the jurisdiction for. 
The welfare reform goes to, I think, seven Committees, so we 
have a small part of it.
    But our goal on the Workforce Investment and on welfare 
reform is to get everything into the one-stop, and we haven't 
quite been able to do all of that yet.
    The reauthorization that we passed last week goes a little 
bit further, but I think--I think in a bipartisan way, if you 
can have that one-stop where people can go in, whatever their 
situation, and find out what resources are available and where 
they should go, and if they're out of work they can help get a 
job, help get the resources that they need to tide them over, 
if they have a job, but it's not a good one, or not what 
they're capabilities are, to help upgrade them--we're not quite 
there yet, but it sounds like you are down there.
    Mr. Austin. Well, you've given us great leadership, Mr. 
Chairman, on this issue.
    And Florida, our statute specifically require them to be a 
mandatory partner in the one-stop, so that we don't have this 
fighting over resources, because if we want to develop capacity 
to be able to place people in employment, we should be 
developing that capacity one time, not multiple times in 
multiple agencies.
    Chairman McKeon. The 40 hours and the 30 hours, you know, I 
guess our thinking was that eventually people, most people now 
work more than 40 hours, and it's kind of realistic thinking 
that if you're going to move somebody from welfare to full 
employment, productive employment, at some point they're going 
to be working at least 40 hours, and how do we get them 
transitioning there; and that's why we put the 40 hours in 
there.
    Mr. Mead. That's the goal, and I accept that they will have 
to work 40 hours to get off welfare.
    But I don't think that's the best way to mandate the states 
to move toward an effective work test, which is a different 
question.
    Chairman McKeon. We required 24 hours of work and then 16 
hours, they could--
    Mr. Mead. I understand that.
    Chairman McKeon. OK.
    Mr. Mead. But just to reach 40 hours at all, on any basis, 
with no stipulations at all about hours, is beyond the capacity 
of any state in this country, including Wisconsin.
    They had to move away from 40 hours toward more like 30 
hours, most of which is work, to be sure, but--and with some 
other things added in. They simply can't get to 40 hours, and I 
don't think they have to get to 40 hours to have an effective 
work test.
    Much more important is to have the work test cover 
everybody in the caseload, and we're not covering everybody in 
the caseload now, not even close to it, because of the caseload 
fall credit and the partial sanction, and above all, the child-
only programs that nobody has mentioned, that's more than a 
third of the entire caseload now. They're not subject to any 
work test or any time limit.
    Why don't we talk about that? That's the elephant in the 
room. That's a big, big problem.
    And then you've got, I didn't mention this before, the 
waiver programs, some of which, like Massachusetts, have the 
effect of excluding most of the caseload.
    Now, the bill, as I understand it, does not allow those to 
be continued after they expire. That's the very least you could 
do. You might talk about ending them early. I mean, I don't 
know whether that's legally possible or not.
    But again, the contrast here, you can look at tax reform, 
where we need to broaden the base of the tax system, and then 
we can lower the rate.
    Same thing here. If you broaden the base of the work test, 
you won't have to go to 70 hours, or 40 hours. You would be 
able to have something feasible, which will nonetheless have a 
dramatic effect on the caseload, particularly in the big states 
like New York and California, where these problems with the 
state-only and the partial sanction are prohibitive.
    It really isn't possible to implement welfare reform in New 
York City because of systematic violation of the work test, 
which the state can do nothing about, and that has also meant 
that the community groups and democratic politicians in the 
city do not really accept welfare reform. They see it as 
something that might be rolled back if they can just elect a 
different mayor, and so they don't really come to terms with 
it.
    Whereas, because you had a truly universal requirement in 
Wisconsin, everybody came to terms with it, not just the 
politicians, the bureaucrats, the recipients, and that's why 
you have a virtual extinction of traditional cash welfare in 
that state, because there's no going back, and because there's 
no escape.
    In New York, there is still escape. In California, there is 
still escape.
    So let's worry about closing the escape hatches, rather 
than raising the titular work participation rate and the number 
of hours, when you don't really require it, because there are 
these exemptions and offsets and so on that in fact make it 50 
percent.
    Let's enforce the 50 percent. Right now we have 33 percent. 
It's going to be tough enough to get to 50 percent. And if you 
do that, that will have a transforming effect, all by itself.
    Chairman McKeon. Thank you very much.
    My time has expired.
    Mr. Kildee.
    Mr. Kildee. Thank you, Mr. Chairman.
    Dr. Greenberg, Dr. Horn said that research shows that a 
mixed approach is the best way to move people out of welfare 
and into jobs.
    Do you agree with this? And should H.R. 240 help states 
accomplish this?
    Mr. Greenberg. Thank you.
    The research that I believe Dr. Horn was referring to is 
the research from what's known as the NEWWS evaluation, the 
National Evaluation of Welfare-to-Work Strategies, and in the 
NEWWS evaluation, they tested a range of different approaches, 
and as Dr. Horn indicated, some of the approaches were ones 
which largely focused on job search; some of the approaches 
were ones which largely focused on basic education.
    The program that by far performed most strongly of any of 
them was the one out of Portland, Oregon, and it's become known 
as a mixed services approach.
    I think where there's some confusion, though, is mixed 
services doesn't mean do a whole bunch of things all at one 
time. What it means is, instead of treating everybody the same 
way, that the program itself has a range of services available, 
and so what was distinctive about the program in Portland is, 
for those who were able to enter into jobs right away, the 
program emphasized job search but also emphasized trying to 
help them get the best jobs they could, not just the first job 
they could.
    The program also placed significant emphasis on access to 
education and training. It built in access to GED completion, 
to vocational training.
    Of all the programs that were evaluated as part of the 
NEWWS strategy, the NEWWS evaluation, it had the strongest 
record in both increasing GED completions and increasing 
occupational certificates.
    So it was a mixed strategy approach that emphasized looking 
at people as individuals, figure out what makes sense, include 
education and training along with other components, and keep a 
strong focus on linking families with employment.
    So to answer, just in summary on this, the kind of approach 
that Portland took and the kind of approach that a very large 
number of states now take could not be able to be sustained 
under H.R. 240, and the reason for that is because H.R. 240 
only allows vocational training to count toward full-time 
participation for three to 4 months.
    Anything that couldn't be done in that three-to-four months 
couldn't be a full-time activity, and even for that three-to-
four months, it's essentially, this is the flexible period, so 
this is the competition between vocational training and job 
search and anything else preparatory to being involved in a 
program.
    So the bottom line is, as we suggest in our testimony, when 
we looked at this and gathered data from states from their 
policies in 2002, at that point there were 40 states that 
currently allow more access to education and training than 
would be allowed under the H.R. 240 approach.
    Mr. Kildee. So you would find that to be a significant 
deficiency in H.R. 240?
    Mr. Greenberg. I do, and the thing that I would most 
emphasize here is, in the block grant structure, a state has no 
reason to put a family in a vocational training program unless 
the state thinks it's a good thing to do.
    There is no sense in which somehow the state is able to 
circumvent something or play some games. From the state's 
perspective, this is a fixed block grant. It's a flat amount of 
funding that the state has to work with.
    States understand that the goal of this process is to link 
people with jobs and they understand that in the political 
process, when their caseload goes down, things are better for 
them.
    So a state has no interest to put an individual in a 
vocational training program unless it's the state's judgment 
that that is going to help that person in the long run be able 
to earn enough to not need TANF and to not need other forms of 
public assistance.
    Mr. Kildee. Thank you.
    Ms. Fallin, can you describe from your experiences in 
Maryland how working parents are affected by difficulties in 
finding affordable, stable, high-quality child care?
    Ms. Fallin. I think that right now in Maryland I'll begin 
by saying that we currently have a wait list for child care of 
19,000 children.
    Mr. Kildee. 19,000?
    Ms. Fallin. 19,000. When you think of 19,000 children on a 
wait list, you must wonder, where are those children, have 
concerns about where they're staying, who is caring for them.
    And when you also think about the issue of school 
readiness, then you have to be concerned about what they're 
receiving, wherever they're being cared for.
    I think that this whole issue of welfare reform is not just 
one of getting parents to work, but we have to think in terms 
of our future workers, as well, and those are their children.
    So our difficulty is, in Maryland, that we have the ability 
to provide a subsidy for those families that are on TANF, but 
we do not have the ability right now to provide services for 
those who are the working poor.
    We know that 82 percent of parents who are still working 
after 2 years have been able to do so because of the fact that 
they had a child care subsidy, and as you yourself mentioned 
earlier, that movement along that line to a place where you 
might not need that kind of assistance takes time. You move 
along in order to increase your income.
    So that in Maryland, I think we continue to struggle, as 
others do, to try to get to a place where families have an 
adequate amount of subsidy to assist them.
    And we also have the additional issue of co-payments. Many 
of our families are now required to pay an additional co-
payment that also creates a situation in which many of them 
cannot afford that.
    We talk about quality and we talk about the need for 
quality for all children, but I think we all recognize that the 
low-income family is the family that is least able to succeed, 
if quality care is not available to them.
    Mr. Kildee. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman McKeon. Ms. Davis.
    Mrs. Davis. Thank you, Mr. Chairman.
    If we could just continue a little bit more on the child 
care area, because I actually, in sitting here and thinking 
about those one-time funds that were suggested earlier, I was 
concerned, and actually I hadn't read your testimony, Mr. 
Greenberg, at that time, and the concerns that you raised.
    But what is important here is the sustainability, and the 
messages, I think, in addition, that we send about how 
important this is.
    And I believe it was stated that, to the knowledge of the 
witness, all children who are receiving TANF are--all families 
that are TANF, generally speaking, are in a child care program, 
and perhaps I think you just said that, also, but that those 
families who have left TANF, who need to have child care 
support as well to continue not just in part-time jobs but 
hopefully getting into a full-time job which is really the 
critical element in moving out of poverty, that they don't 
necessarily have that kind of care.
    Is there any kind of other model that we've seen that would 
allow more credits to states that have more families that move 
into that situation, the subsidy is not adequate?
    How can we try and address this, then? Because this is so 
critical, and we may argue for additional funding, we may argue 
for additional help, that may fall on some deaf ears down the 
line.
    Is there some other way that this can be addressed? And I'm 
also concerned, as I think we all should be, about the quality 
of the care, because clearly, kids who are not exposed to as 
much in those early years are not going to be as successful, 
but child care can, just as I think a public education system 
can, can mitigate that to a certain extent.
    So what should we be doing? What else is critical here?
    Mr. Greenberg?
    Mr. Greenberg. First of all, let me just say a little bit 
more about the current picture, and then directly respond to 
you.
    Assistant Secretary Horn indicated that currently sort of 
the most typical situation is child care available for families 
receiving TANF assistance and leaving TANF assistance, at least 
for some period of time.
    The biggest issue really involves low-income working 
families that don't have any recent connection with the TANF 
system.
    I think that description is right. I should say I wish we 
had better Federal data on this, and if the Committee--there 
are things that could be done for us to have better data than 
we have, but I think that overall picture is right.
    It is a huge problem, and it is a huge problem because it 
does mean that in community after community, families are now 
told that if you're a working family and you don't have any 
recent connection to the welfare system, that the only way you 
can get access to child care is by going through welfare, which 
is the opposite of what states want to do.
    So the National Women's Law Center, in a study they 
released last year, estimated that there are now 24 states in 
which either there are waiting lists or intake has been frozen 
for low-income working families outside the welfare system, and 
that's really what's at stake in the issues around child care 
funding.
    I wish that there were a helpful answer I could give on 
your direct question about what we can do to better reach out 
and improve services to those families who right now can't be 
reached. It really is a resource problem.
    When one looks at the patterns over time in participation 
in the program, when money was going up, more families were 
getting help.
    When money has stayed flat, fewer families are getting 
help, and the picture threatens to get worse over time.
    So on the one hand, I do commend the Committee for the 
emphasis on quality that is shown in a number of features of 
the reauthorization provisions of the Committee for increasing 
the set-aside for quality, for urging states to be more 
purposive in how they think about the use of their quality 
funds, and being more strategic in that. I think that's a 
positive thing.
    And I would say that states are struggling across the 
country with how they can do a better job in a situation where 
the resources really are strapped.
    Ms. Fallin. I would just add to that that I'm not so sure 
that I can tell you something different to do, but I do know 
that for many states, eligibility requirements have actually 
been lowered, which makes fewer people eligible for subsidies, 
for example.
    So that if we use some of the existing kinds of programs 
that we have in a better way, like lowering the co-pay, for 
example, like raising the eligibility level so that more people 
qualify, I think that would go a long way in improving 
accessibility for families to child care that they need.
    And I also agree that a quality issue on the other side is 
that poor people, just like any other people, want their 
children in safe, healthy, and developmentally appropriate 
environments, so it's extremely important that they're 
comfortable, too, when they go to work, that they have a 
program that they can send their children to that makes them 
feel able to be at work and to do what they need to do there 
and to be successful with that.
    So I think that the quality side goes hand in hand with the 
resource availability for subsidy.
    Mr. Mead. May I just add one comment?
    The fact that there are waiting lines does not, to me, 
indicate that there's unmet need.
    The reason for the waiting lines could be simply that a 
subsidy is being offered. When you subsidize something, more 
people necessarily would like it. Most of us would like 
something subsidized that we otherwise would have to pay on the 
open market. And so the effect of subsidy is raised demand, so 
people sign up.
    That does not establish that they can't afford the care 
without the subsidy, and it doesn't establish, let alone, that 
they can't get it at all.
    Now, that might be true, but we don't know that, and until 
you find out what they were paying previously and what their 
alternative is to getting the subsidy, you can't conclude that.
    Now, if you find that people have to go back on TANF in 
order to get child care, if that's the effect, I would agree 
with you that's undesirable, but I don't know of any evidence 
for that. I don't know of any study that shows that inability 
to get subsidized care off welfare drives people back on 
welfare. I don't know any evidence to that effect.
    So it's something to look at. I don't mean that it's not an 
issue. But we can't assume, just prima facie, that that is 
evidence of unmet need.
    Chairman McKeon. The gentlelady's time has expired.
    The gentleman from Virginia.
    Mr. Scott. Thank you, Mr. Chairman.
    To follow through on that, what is your income to qualify 
for this subsidy?
    Mr. Mead. For what?
    Mr. Scott. For the child care subsidy.
    Mr. Mead. I don't know the--
    Mr. Scott. I mean, do you have to qualify by having a low 
enough income?
    Mr. Mead. There is some limit to income, and I think it's 
set by the states to some extent, but my point is a more 
general more, that there's--
    Mr. Scott. Let me get this number first.
    Ms. Fallin, is there--
    Ms. Fallin. Yes, I can tell you about Maryland.
    Mr. Scott. OK.
    Ms. Fallin. In Maryland, a family of three that earns a 
little less than $30,000 a year is eligible for a child care 
subsidy.
    Mr. Scott. And how much is the subsidy?
    Ms. Fallin. Well, for an infant, I can tell you this, that 
for an infant care it costs about $10,300 a year for--
    Mr. Scott. OK. So I guess the question is, for a $10,000 
child care bill, the fact that they're in a wait list--you 
know, I guess, whether they need it or not, the subsidy is 
there.
    You would think anybody making $30,000 a year looking at a 
$10,000 child care expense for the first child, and then if 
they've got two children, you're talking about--they both won't 
be infants--you know, whether they need it or not.
    I mean, can we assume that anybody under $30,000 with these 
kind of bills would need that subsidy, without doing a study?
    Ms. Fallin. I would assume that, and I can tell you my 
locate staff, which helps parents to find child care, every day 
have folks on the telephone who are looking for child care, and 
one of the things that we do as an R&R is to assess their--we 
do sort of a preliminary assessment of their eligibility for 
subsidy.
    Mr. Scott. You mentioned 19,000 people on the waiting list. 
How many people were getting services?
    Ms. Fallin. I'm sorry. Say that again?
    Mr. Scott. How many people were receiving services?
    Ms. Fallin. Oh, how many--I don't have that number, but I 
can certainly--
    Mr. Scott. I mean--
    Ms. Fallin. In Maryland?
    Mr. Scott. Yeah. Well, you said there are 19,000 people on 
the waiting list.
    Ms. Fallin. That are currently on the--these are people 
who, after they put in place a wait list.
    Mr. Scott. How many people--I mean, is that out of how 
many? I mean, do you have 2 million getting services, or 10,000 
getting services?
    Ms. Fallin. There are 21,000.
    Mr. Scott. 21,000. So you have about as many people on the 
waiting list as you're serving.
    Ms. Fallin. That's true. Thank you. That comes back to me. 
Yes, because we're anticipating that if it continues the way 
it's going now, that eventually the number of children on the 
wait list will outrank the number receiving care.
    Mr. Scott. OK.
    Mr. Greenberg, you mentioned that the economy helped get 
people off of welfare.
    What about child support enforcement, food stamps, and the 
earned income tax credit?
    Mr. Greenberg. There are a number of studies that have 
tried to disentangle what helped explain the big growth in 
employment during the 1990's, and the pretty broad consensus 
out of the studies is that a number of factors all mattered.
    It's very hard to ascribe particular percentages to say, 
welfare reform did this much, the economy did this much.
    Mr. Scott. Without percentages, you could say that child 
support enforcement was a major factor, an important factor.
    Mr. Greenberg. It makes a lot of sense that child support 
would have been an important factor, because child support 
plays a critical role in making it possible for a low-wage 
parent to make ends meet.
    There are also, on the earned income tax credit, there are 
a number of studies that do highlight the importance of the big 
earned income tax credit expansion of the mid-1990's as a 
significant factor, and also raising employment in that period.
    Mr. Scott. And food stamps?
    Mr. Greenberg. I'm not aware of studies that concern the 
role of food stamps in this.
    I do think one of the important things that has happened 
during the 1990's is that there was increasing recognition of 
how valuable food stamps can be as a way of helping a low-
earning family make ends meet, that particularly for families 
who are in low-wage jobs who otherwise risk food insecurity, 
that the food stamp program both improves nutrition for the 
family and reduces economic stress for the family.
    And so in a number of states, there's increased emphasis 
now on efforts to try to connect low-income working families 
with food stamps as a way of improving the well-being of the 
families and helping them sustain employment.
    Mr. Scott. Thank you.
    Ms. Fallin, your testimony talks about half-day and full-
day Head Start.
    We've been told that the educational value for the full-day 
Head Start is limited.
    Are you suggesting that there are other significant 
benefits in going to full-day Head Start?
    Ms. Fallin. Absolutely. Absolutely.
    Although our demonstration project is a unique one, the 
children--these are children who have actually entered through 
the child care program, and so they're able to have wrap-around 
services at that particular program, so that it isn't 
specifically Head Start all day, but it's a combination of the 
child care program as well as the Head Start collaboration 
classroom.
    And I think that what it does in addition to providing the 
kind of services that the Head Start family requires, and it 
helps to prepare children for the public school system, but 
what it also does is create an atmosphere in which the child 
care program becomes much more quality, and allows for the 
teachers that are in the Head Start classroom, who come from 
the child care center, to move out and to bring in a new 
teacher.
    So that in addition to the kind of services that are needed 
for Head Start, we're also doing a lot to raise quality for the 
child care community, and without Head Start resources being in 
those child care centers, those child care providers just don't 
have the resources to do it.
    Chairman McKeon. The gentleman's time has expired.
    The gentleman from New Jersey, Mr. Payne.
    Mr. Scott. I cut Dr. Mead off. I didn't know if he had 
completed his--we have 5 minutes, and sometimes we get a little 
rude around here. I don't know if he had a little more to say 
on that, or he had completed his thought. I'd appreciate--
    Mr. Price. I'd yield to the gentleman.
    Mr. Scott [continuing]. If we could give him that 
opportunity.
    Mr. Mead. Your question was, again?
    Mr. Scott. Well, I cut you off in the middle of one of the 
questions earlier, and if you had completed your statement, 
that's fine. I just didn't want you to--
    Mr. Mead. Yeah. No, I'm--
    Mr. Scott. Let me apologize for being rude, then. Thank 
you.
    Mr. Mead. OK.
    Chairman McKeon. You're never rude, Bobby.
    Mr. Payne.
    Mr. Payne. I just wonder when he started apologizing for 
it.
    [Laughter.]
    Mr. Payne. I'm sorry that I missed most of the--all of the 
discussion. I was trying to browse through the testimony. This 
is one of the busier days. When the middle of March comes, it's 
our March madness, because everyone in the world comes to 
Washington.
    But I just wonder, just in general, what the question of 
the so-called welfare reform, and we saw the numbers about the 
number of people who initially had, you know, the 5-year for 
life, and the 2-year and off policy.
    The question of really what happens to people--and I'm sure 
that all of you have done some research on what's been the 
experience of the 2 years you're off, and are people any better 
off?
    I know the governments feel they're better off because they 
feel everyone should work and all that stuff, but are the 
families any better off? Are they working their way out of 
poverty in general? Are children better served?
    If anybody could just deal with how the results in your 
opinion of the Clinton welfare reform as we know it has worked?
    Mr. Mead. Let me just summarize some of the facts that 
there's no dispute about. There are some facts where there is 
dispute.
    But it's clear that the caseload has fallen by about 60 
percent, that work levels for single mothers have risen 
sharply, although they've declined a bit in the last few years, 
probably due to the recession.
    According to surveys of people who have left welfare, at 
the time they 're surveyed, about 60, 65 percent are employed, 
a high percentage at some time since they left welfare; about 
40 percent are not employed. We don't know what happened to 
them.
    There's some evidence to suggest that people who leave 
welfare without working are worse off, at least initially.
    It looks like those who go to work improve their wages if 
they stay working over several years, and eventually escape 
poverty, usually not immediately, but eventually.
    So an emerging issue is whether those who leave welfare are 
working steadily or not.
    As to effects on the families, they appear to be small, but 
mostly positive. These are based on evaluations, now, not 
leaver surveys.
    The evaluations suggest that the effects on young children 
are mostly positive, but small; the effects on older children, 
sometimes negative.
    In the case of teenagers who have less supervision because 
the mothers are now working, they sometimes show negative 
effects in some studies, but again, small.
    So welfare reform is about the adults. It's hard to show 
strong effects on the children. But since many thought there 
would be adverse effects, this is still good news.
    So I think that's the basic picture. There is economic 
improvement. It's not overwhelming. It doesn't mean everyone 
escapes poverty. But if they stay working, they eventually do 
escape poverty.
    In my view, the question of incomes, what people should 
earn after reform, gets to be an issue.
    Precisely because we now have more people working, that 
issue must finally be addressed more than we have done.
    So the poverty goal, and the administration has provided 
for this, the poverty goal gets to be more important after we 
get people off welfare. We have to focus on to what extent they 
can actually escape poverty.
    But that issue becomes more pressing after reform, after 
everyone is working.
    Mr. Payne. What about health care? I mean, we know that 
that's--and I would assume that these people who are leaving 
welfare are not necessarily getting jobs that provide health 
care and--
    Mr. Mead. Not necessarily, but it's--the level is greater 
than many people think. It's about a third to a half in various 
studies I've seen, a third to a half of those who go to work 
get health care.
    Now, it depends what you mean when you say get health care. 
It might mean that they're offered it by the employer, but they 
have to pay something for the premiums, and they may decide 
they don't want to pay, and they'd rather go to an emergency 
room or count on their transitional care that they get from 
Medicaid.
    I have not seen studies suggesting that lack of health care 
is a barrier to leaving welfare. I have not seen that.
    Rather, the lack of health care for some people among low-
wage workers is an ongoing problem that is not really a welfare 
reform problem, it's a general problem for the entire 
workforce, which I think Congress has to address.
    Mr. Austin. Mr. Payne, one of the things that we don't 
think about is that we build a second safety net as those 
workers come off and establish their track record of work.
    When the economy got soft in Florida, after 9/11, we had a 
period of time where we were struggling being able to make sure 
we had enough jobs in an economy that was driven mostly by 
tourism.
    What happened was, we found out that welfare didn't go up 
at all. What went up were our unemployment disbursements.
    OK. So you build a second safety net. You've got one safety 
net, which is TANF. The second safety net is you have 
unemployment insurance which is accumulated, and most of the 
people who came off of welfare who had any type of disruption 
at that point had a second safety net, and they weren't drawing 
upon future TANF payments, but they were drawing upon 
unemployment compensation.
    We view that as a second piece that people don't talk 
about, that you build a second net for low-income families to 
be able to draw upon in times of difficulty.
    Mr. Greenberg. Let me just add several comments on that.
    First, specifically on the health care issue for families 
leaving welfare, there were a number of studies, particularly 
in the earliest years after TANF, by looking at what happens to 
families who leave welfare, and a lot of the story initially 
was that families often got separated from Medicaid.
    It shouldn't have happened, because the children should 
have continued to be eligible. The parent may or may not have 
been eligible, but there were significant drops in Medicaid 
coverage.
    There have been some improvements in connecting children to 
health care over time. There is still clearly a problem for 
parents.
    And the problem that consistently we see is that parents 
are entering into jobs in which either health care is not 
available or there may be premiums or co-pays or things that 
make it difficult to take up the health care on the job at the 
earnings that the individual has.
    There is clear evidence of drops in health care coverage 
for parents after leaving welfare, and that continues to be a 
problem.
    On the particular issue of the caseload falling and then 
the unemployment system, back at the time in the first years 
after welfare reform, a big question for many of us was what 
will happen when there's an economic downturn, and how will the 
system respond at that time?
    What unfortunately now seems pretty clear is when the 
economic downturn hit, that a number of families did lose jobs, 
we do see a decline in employment for single-parent families, 
we don't see an increase, at least at the national level, in 
families receiving welfare.
    There is a small increase in unemployment insurance. There 
has been some increase there, but it's not nearly enough to 
explain the drop in employment and the fact that welfare 
caseloads have basically stayed flat.
    So it does raise concerns that the system has not been as 
responsive as we would want it to be during an economic 
downturn.
    Let me just quickly say that much of the evidence that 
Larry Mead summarized is, I think, consistent with the evidence 
that I summarized in my testimony also.
    The couple of things that I would want to add in addition 
to that are, in the early period, in the late 1990's, the 
studies pretty consistently showed 50 to 60 percent of families 
leaving welfare were employed. The most recent study from the 
Urban Institute shows a lower figure, shows it now down around 
42 percent.
    So there is concern that as the economy got worse, that the 
share of families leaving welfare with jobs went down.
    It's also clear that a group of families has left welfare 
without finding work and without being able to sustain work.
    In some instances, those are situations where families are 
living with other family members, where they may have 
disability benefits, where they may have child support, other 
sources of income.
    But it's also clear that some of those who fell out of the 
system had the biggest problems, were most likely to have 
limited educations, limited work histories, health issues, 
disability issues, things that made it much more difficult to 
work.
    And people sometimes now refer to this group as the 
disconnected, a group that's not in welfare and not in work, 
and that continues to be a significant source of concern.
    Mr. Mead. May I just add one comment, that when you have 
extreme caseload fall--and this definitely occurred in 
Wisconsin--there is a concern that some of those who left maybe 
shouldn't have left, or they should have left later, because 
they do have serious problems.
    What's occurred in Wisconsin is they've developed outreach 
to the community. Many of the agencies running welfare reform 
in Milwaukee have done what I call going into business.
    That is, rather than trying to restrict the caseload, which 
was always our concern, they're now trying to sell welfare to 
the community. They're going out to people who might well need 
aid and saying to them, ``Well, we're going to--we have aid 
available, we're prepared to help you. You also have to work, 
and we want you to take up that bargain. We're offering you a 
deal, basically. You work, and we will help you.''
    And the need to outreach and offer that deal is a part of 
the welfare of the future.
    I don't think we should seek to abolish welfare, but we 
should engage in outreach to people who maybe should take up 
the deal. They need help, and they also need to work, and we 
ought to offer it to them, and we shouldn't be squeamish about 
that.
    That's the system that we want, one in which people work 
and they get help as needed, and that we help them get back on 
their feet and they go back out and they leave welfare.
    We shouldn't expect to undo welfare, but we should expect 
it to be something that people use when they need it, on a 
short-term basis, we hope, and we should be prepared to engage 
in outreach to do that.
    So that's part of a solution to the people who are 
disconnected.
    Chairman McKeon. The gentleman's time has expired. That's a 
good discussion of the Clinton welfare bill.
    [Laughter.]
    Chairman McKeon. It's nice to see President Clinton take 
credit for it. We passed it three times. He vetoed it twice. He 
finally signed it.
    But it was a bipartisan effort, and I'm happy that we were 
all part of it, and I'm happy that you've been here. I think 
it's been a good hearing. I think you've added a lot. And I 
would encourage you to stay involved in the process as we go 
through this reauthorization, because you're all experts that 
we'd love to be able to call on, and appreciate your help.
    No further business, the Subcommittee stands adjourned.
    [Whereupon, at 1:16 p.m., the Subcommittee was adjourned.]