    [House Hearing, 112 Congress]
    [From the U.S. Government Publishing Office]

                            IMPROVING WORK AND OTHER
                              WELFARE REFORM GOALS

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

                                    HEARING

                                   before the

                        SUBCOMMITTEE ON HUMAN RESOURCES

                                     of the

                          COMMITTEE ON WAYS AND MEANS
                         U.S. HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 FIRST SESSION

                                   __________

                               SEPTEMBER 8, 2011

                                   __________

                               Serial No. 112-HR6

                                   __________

             Printed for the use of the Committee on Ways and Means

                      U.S. GOVERNMENT PRINTING OFFICE
    70-891                    WASHINGTON : 2011
    -----------------------------------------------------------------------
    For sale by the Superintendent of Documents, U.S. Government Printing
    Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC
    area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC
    20402-0001

                          COMMITTEE ON WAYS AND MEANS

                        SUBCOMMITTEE ON HUMAN RESOURCES

                             GEOFF DAVIS, Kentucky

    PERIK PAULSEN, Minnesota             LLOYD DOGGETT, Texas
    RICK BERG, North Dakota              JIM MCDERMOTT, Washington
    TOM REED, New York                   JOHN LEWIS, Georgia
    TOM PRICE, Georgia                   JOSEPH CROWLEY, New York
    DIANE BLACK, Tennessee
    CHARLES W. BOUSTANY, JR., Louisiana

                           Jon Traub, Staff Director

                      Janice Mays, Minority Staff Director

                                C O N T E N T S

                                   __________
                                                                       Page

    Advisory of September 8, 2011, announcing the hearing............     2

                                   WITNESSES

    Gary Alexander...................................................
      Secretary, Pennsylvania Department of Public Welfare Testimony.     7
    Kay E. Brown.....................................................
      Director, Education, Workforce, and Income Security, U.S.
        Government Accountability Office Testimony...................    17
    Douglas Besharov.................................................
      Professor, School of Public Policy, University of Maryland
        Testimony....................................................    40
    Scott Wetzler, Ph.D..............................................
      Vice Chairman and Professor, Department of Psychiatry and
        Behavioral Sciences, Montefiore Medical Center Testimony.....    62
    LaDonna Pavetti, Ph.D............................................
      Vice President for Family Income Support Policy, Center on
        Budget and Policy Priorities Testimony.......................    74

                 IMPROVING WORK AND OTHER WELFARE REFORM GOALS

                                  ----------

                          THURSDAY, SEPTEMBER 8, 2011

                 U.S. House of Representatives,
                           Committee on Ways and Means,
                               Subcommittee on Human Resources,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 2:10 p.m., in
    Room B-318, Rayburn House Office Building, the Honorable Geoff
    Davis [chairman of the subcommittee] presiding.
        [The advisory of the hearing follows:]

    HEARING ADVISORY

    FROM THE
    COMMITTEE
     ON WAYS
    AND
    MEANS

     Chairman Davis Announces Hearing on Improving Work and Other Welfare
                                  Reform Goals

    Thursday, September 08, 2011

        Congressman Geoff Davis (R-KY), Chairman of the Subcommittee on
    Human Resources of the Committee on Ways and Means, today announced
    that the Subcommittee will hold a hearing on the reauthorization of the
    Temporary Assistance for Needy Families (TANF) program, including how
    States engage recipients in work activities that move them toward self-
    sufficiency. The hearing will take place at 2:00 P.M. on Thursday,
    September 8, 2011, in Room B-318 of the Rayburn House Office Building.
        The hearing was originally scheduled for 9:00 A.M. on Thursday,
    August 4, 2011, in Room B-318 Rayburn House Office Building, but was
    postponed.

        In view of the limited time available to hear from witnesses, oral
    testimony at this hearing will be from invited witnesses only.
    Witnesses will include experts on the engagement of TANF recipients in
    work activities and other issues. However, any individual or
    organization not scheduled for an oral appearance may submit a written
    statement for consideration by the Committee and for inclusion in the
    printed record of the hearing.

    BACKGROUND:

        The purposes of the TANF program include providing assistance to
    needy families and ending dependence on government benefits by
    promoting job preparation, work, and marriage. Adults on TANF may be
    required to participate in up to 30 hours of work or other constructive
    activities per week to be eligible for benefits, and States must ensure
    that 50 percent of work-eligible families satisfy this requirement.
    Since it replaced the New Deal-era AFDC program in 1996, TANF has
    resulted in reduced welfare dependence as cash assistance caseloads
    declined 57 percent through December 2010. The work-based 1996 reforms
    also played a substantial role in reducing child poverty, and even in
    the recession year of 2009, both African American and Hispanic child
    poverty remained below 1996 levels despite an unemployment rate 50
    percent higher than the pre-reform level.
        While TANF has resulted in increased work and reduced dependence
    and poverty among many low-income parents, current pro-work policies
    may not reach all or even most adults in families on welfare. States
    may exempt individual adults on welfare from work requirements or
    otherwise adopt policies that reduce the 50 percent share of households
    expected to include an adult participating in work or other activities
    in exchange for benefits. For example, an increasing number of States
    have used ``excess maintenance of effort (MOE) credits,'' among other
    measures, to significantly reduce the share of current welfare
    recipients expected to work or participate in other activities while
    receiving benefits, undermining a key welfare reform goal. The TANF
    program is currently authorized through September 30, 2011, and the
    President called for a one-year extension of the current program in his
    Fiscal Year 2012 budget proposal.
        In announcing the hearing, Chairman Davis stated, ``TANF is
    designed to help low-income adults prepare for, find, and stay in jobs
    instead of spending year after year on welfare. Despite significant
    success since welfare reforms were enacted in the 1990s, in Fiscal Year
    2010, over four-in-ten TANF families faced no work requirement at all,
    and less than a third of families facing work requirements actually met
    them in Fiscal Year 2009. With TANF requiring an extension before the
    end of this year, now is the right time to review the program to ensure
    that States are taking the necessary steps to help TANF families move
    up the economic ladder, as the 1996 welfare reform intended.''

    FOCUS OF THE HEARING:

        The hearing will focus on oversight of the TANF program along with
    proposals to improve work and other TANF goals as part of upcoming
    legislation to extend TANF and related programs.

    DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

        Please Note: Any person(s) and/or organization(s) wishing to submit
    for the hearing record must follow the appropriate link on the hearing
    page of the Committee website and complete the informational forms.
    From the Committee homepage, http://waysandmeans.house.gov, select
    ``Hearings.'' Select the hearing for which you would like to submit,
    and click on the link entitled, ``Click here to provide a submission
    for the record.'' Once you have followed the online instructions,
    submit all requested information. Attach your submission as a Word
    document, in compliance with the formatting requirements listed below,
    by the close of business on Thursday, September 22, 2011. Finally,
    please note that due to the change in House mail policy, the U.S.
    Capitol Police will refuse sealed-package deliveries to all House
    Office Buildings. For questions, or if you encounter technical
    problems, please call (202) 225-1721 or (202) 225-3625.

    FORMATTING REQUIREMENTS:

        The Committee relies on electronic submissions for printing the
    official hearing record. As always, submissions will be included in the
    record according to the discretion of the Committee. The Committee will
    not alter the content of your submission, but we reserve the right to
    format it according to our guidelines. Any submission provided to the
    Committee by a witness, any supplementary materials submitted for the
    printed record, and any written comments in response to a request for
    written comments must conform to the guidelines listed below. Any
    submission or supplementary item not in compliance with these
    guidelines will not be printed, but will be maintained in the Committee
    files for review and use by the Committee.

        1. All submissions and supplementary materials must be provided in
    Word format and MUST NOT exceed a total of 10 pages, including
    attachments. Witnesses and submitters are advised that the Committee
    relies on electronic submissions for printing the official hearing
    record.

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

        3. All submissions must include a list of all clients, persons,
    and/or organizations on whose behalf the witness appears. A
    supplemental sheet must accompany each submission listing the name,
    company, address, telephone, and fax numbers of each witness.

        The Committee seeks to make its facilities accessible to persons
    with disabilities. If you are in need of special accommodations, please
    call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four
    business days notice is requested). Questions with regard to special
    accommodation needs in general (including availability of Committee
    materials in alternative formats) may be directed to the Committee as
    noted above.

        Note: All Committee advisories and news releases are available on
    the World Wide Web at http://www.waysandmeans.house.gov/.

        Chairman DAVIS. Good afternoon. I would like to welcome
    everybody here. I would also thank our panelists and also our
    guests in the audience for their patience. Votes have made us a
    little bit tardy in the beginning, but we are looking forward
    to having this discussion with all of you, have a chance to
    hopefully share afterwards, and appreciate you coming in.
        Today we will be reviewing ideas for reauthorizing the
    Temporary Assistance for Needy Families program. Since it
    replaced the New Deal-era AFDC program in 1996, TANF has been
    successful at cutting welfare caseloads by 57 percent through
    last year. Even more importantly, by promoting work among
    single parents who are the most common welfare recipients, it
    has helped reduce child poverty in female-headed families by 10
    percent, even with the deep recession.
        But despite such progress, TANF can and should be
    strengthened to help more low-income families support
    themselves in the years ahead. Unfortunately, the
    Administration has called for only a straight one-year
    extension of current law, which expires at the end of September
    2011. Given that position it seems unlikely that significant
    changes to TANF will happen this year. In fact, I expect the
    House will consider a straight short-term extension of TANF
    later this month. But today's hearing will let us start to
    focus on key problems that a straight extension would leave
    unfixed, and help us chart a path toward fixing those issues in
    the coming year. As with any program, we learn and develop as
    time and years go on and we encounter new things and identify
    processes that can be addressed or be improved, and that is
    what this focus is.
        Key concerns involve the fact that not enough adults on
    welfare are working or preparing for work today. For example,
    according to recently-released data from the Department of
    Health and Human Services, in Fiscal Year 2009 only about two
    in ten families on welfare included an adult who met a welfare-
    to-work requirement. The reasons are complicated, including
    because a rising number of welfare payments do not include an
    adult benefit, called ``child-only'' payments. But as a
    testimony of the nonpartisan Government Accountability Office
    discusses, many States are also using an obscure accounting
    technique known as ``excess MOE credits'' to weaken work
    requirements and avoid engaging adults in work or training, as
    they should. Instead of the State helping more adults prepare
    for and begin work, they scour their books to uncover more
    spending they can credit to the TANF program and thereby reduce
    the number of people they have to engage in work activities.
    This compounds underlying concerns that too few current
    recipients are actually engaging in constructive activities to
    prepare for work and life off of welfare. And that does a
    disservice to all poor families who want and need help to
    become self-reliant.
        Other concerns involve outright abuse of taxpayer trust,
    such as when adults on welfare spend taxpayer funds on liquor,
    gambling, tattoos, or even visits to strip clubs. As recent
    exposes have revealed, too many welfare recipients have
    accessed taxpayer funds at cash machines and casinos, liquor
    stores, strip clubs, and even on cruise ships. Some States,
    including California, have already taken action to plug this
    so-called ``strip club loophole.'' Senators Hatch and Baucus,
    our colleagues on the Senate Finance Committee, have proposed
    we do the same on the Federal level. We should consider that as
    well.
        A number of States have either enacted or are considering
    measures that try to ensure parents on welfare are not using
    drugs which stand in the way of their getting off benefits and
    into work. Our colleague, Mr. Reed, raised this issue at our
    last hearing and it is one attracting a lot of attention. In a
    world where many employers require drug testing to ensure
    workers are clean and sober, neither taxpayers nor welfare
    recipients are helped if we have a lower standard for those
    collecting welfare benefits designed to help them enter work.
        Finally, in addition to work and personal responsibility,
    another key driver of welfare dependence involves family
    formation, especially whether children are raised in married,
    two-parent households, in which they are most likely to thrive
    and avoid poverty. In 2009 the poverty rate for married
    families with children was 8.3 percent, while the poverty rate
    for households headed by unmarried mothers was 45.3 percent,
    almost five and a half times as high. Yet current welfare rules
    create marriage penalties by expecting a greater share of
    married parents to be working and for more hours. States have
    responded by in effect opting out of such requirements
    altogether. It is time to ask whether the underlying rules
    should be reformed in favor of treating all families the same.
    This is one of several questions we should ask about how we
    remove marriage penalties and encourage stronger families in
    the next round of reform.
        We have an excellent panel of witnesses with us today to
    discuss these issues and more, and we look forward to all of
    their testimony.
        Without objection, each Member will have the opportunity to
    submit a written statement and have it included in the record
    at this point.
        Chairman DAVIS. And now I would like to defer to my friend
    and colleague, the ranking Member, Mr. Doggett, to make his
    opening statement.
        Mr. DOGGETT. Thank you so much, Mr. Chairman. As we take up
    this question of how to reauthorize the Temporary Assistance
    for Needy Families program I think we should focus on two
    goals: helping able-bodied recipients find the work that they
    need, while protecting the safety net for struggling families
    who are unable to do work because of disability, family crisis,
    or the fact that there is not a job available. I believe much
    work needs to be done on both counts.
        We are caught up in the millions and the billions, quite
    appropriately. But this is about looking into the face of one
    child who is left homeless on the streets because there is no
    protection, or is one of the four children in this country who
    wakes up not knowing whether there will be food at the end of
    the day for their family.
        We should be concerned about strip clubs or any abuse of
    this system and see that those who abuse these programs do not
    receive assistance, whether they are a pharmaceutical
    manufacturer or an individual welfare recipient. But I think
    our concerns must be much broader. We should be concerned about
    protection that is stripped from the many needy families across
    this country.
        Even though the number of eligible poor families has
    increased substantially with these hard economic times, the
    participation in TANF has not increased by a similar amount. In
    2009, only one of every five children in poverty across America
    received any direct Temporary Assistance for Needy Families
    assistance. It is the lowest level of poor children receiving
    cash assistance since 1965.
        And in Texas, of course, matters are worse. We only have
    about 1 out of every 20 poor children receiving assistance; and
    when assistance is received, a family of three could expect to
    get about $244 a month, or less than 20 percent of the
    generally accepted poverty line.
        TANF has become, I believe, more hole than safety net,
    protecting fewer and fewer families as more and more have
    fallen deeper into poverty. We all want to see more families
    advance from TANF into full employment and the middle class,
    but so many are just struggling to stay in the situation that
    they have now and have lost their chance to participate in the
    middle class. The goal is not achieved when caseloads decline
    due to a lack of access for poor families rather than a decline
    in the number of poor families. With fewer poor children and
    their families receiving Temporary Assistance for Needy
    Families, now is not the time to do even less with significant
    spending reductions.
        I am pleased to hear the chairman indicate that we might
    move forward with an extension, even if temporary, and I am
    hopeful that that extension will include the TANF Supplemental
    Grant program that has already expired this summer. That is
    what Texas and 16 other States rely upon. They would see up to
    a 10 percent reduction in TANF funding without it.
        Over 15 years ago, as part of the 1996 reform of the
    welfare laws, a reform that I personally supported, TANF
    Supplemental Grant funds were set aside to help the States that
    were negatively affected by the Federal formula. Ever since,
    Texas and a number of other States have depended on these
    monies in order to provide assistance that their families need,
    even at the relatively low levels that Texas funds.
        Without action on this issue, States will lose about $3
    billion over the next ten years; $500 million of that will be
    in my State of Texas. The loss of these grants would place at
    risk a range of vital services, including efforts to ensure
    that children are cared for in their own homes, child-care
    assistance for working families and job training. With funding
    for TANF having expired, or will expire at the end of this
    month, it seems unlikely that Congress will design
    comprehensive legislation to reauthorize it. I do hope we can
    come together on a bipartisan temporary extension.
        Unless, Mr. Chairman, I direct all of my concerns at
    Republicans, which I have many, I must concede that the
    Administration has largely been missing in action on this issue
    which impacts the lives of so many of our most vulnerable
    neighbors. And I would urge the Administration to provide more
    leadership on improving the TANF program as we approach the
    current authorization expiration at the end of the month. Thank
    you.
        Chairman DAVIS. Thank you very much. I look forward to
    working with you on this as we move forward. It is going to be
    an interesting discussion over the intervening months, and
    hopefully we will come up with a good solution to that.
        Chairman DAVIS. Before we move on to our testimony, I would
    like to remind witnesses that we are limiting the opening
    statements, the oral statements, to 5 minutes. However, without
    objection, all of the written testimony will be made part of
    the permanent record.
        On our panel this afternoon we will be hearing from a
    number of folks. First, Gary Alexander, the Secretary of the
    Pennsylvania Department of Public Welfare. He gets a
    persistence award today for coming, despite flooding in his own
    State, a lengthy commute, and driving rain. And as such, he may
    need to leave us a little bit early to attend to some other
    matters, but we really appreciate you taking the time to come
    down here and share from your experience and the things that
    you have done in Pennsylvania.
        We have back with us Kay Brown from Education Workforce and
    Income Security with the U.S. Government Accountability Office,
    who has been with us before to share very critical information
    as we are beginning to address a range of issues under
    jurisdiction of the committee.
        Doug Besharov, Professor at the School of Public Policy at
    the University of Maryland, who has worked for many years in
    this area and whom I have gotten to know through work with the
    subcommittee as well.
        Scott Wetzler, Vice Chairman and Professor at the
    Department of Psychiatry and Behavioral Sciences at the
    Montefiore Medical Center.
        And LaDonna Pavetti, Vice President for Family Income
    Support Policy for the Center on Budget and Policy Priorities.
        Thank you all again for being here. Secretary Alexander,
    please proceed with your testimony.

     STATEMENT OF GARY D. ALEXANDER, SECRETARY OF PUBLIC WELFARE,
                      COMMONWEALTH OF PENNSYLVANIA

        Mr. ALEXANDER. Thank you. Chairman Davis----
        Chairman DAVIS. You are in Washington. Things don't always
    work very well here.
        Mr. ALEXANDER. Not as lucrative as Pennsylvania.
        Chairman Davis and subcommittee members, thank you for the
    opportunity to speak today. My name is Gary Alexander and I am
    currently the Secretary of Public Welfare for the Commonwealth
    of Pennsylvania. This committee is well familiar with the
    fundamental changes in the social contract between the
    taxpayers and recipients of income and services under the
    Personal Responsibility and Work Opportunity Reconciliation Act
    of 1996. For the first time, the stated objective of the
    program explicitly emphasized self-reliance, but equally and
    importantly, expectations were imposed in exchange for
    temporary assistance. With this central element in place, the
    legislation that once brought into alignment the interests of
    all parties--recipients, taxpayers and government bodies--
    recipients were motivated to move into jobs at the earliest
    opportunity because of time limits and TANF work obligations.
    Taxpayers could see that those that they were temporarily
    supporting were making real efforts to earn their own income,
    and government agencies were no longer bought out from the
    consequences of rising caseloads, but instead had every reason
    to encourage family self-sufficiency so that block grant funds
    could be saved or reprogrammed.
        This alignment of incentives, and not just the work program
    changes alone, was responsible for the 60 percent reduction in
    the national caseloads experienced soon thereafter 1996.
        When TANF was reauthorized in 2006, certain adjustments and
    updates were made, but the essential social bargain set forth
    in the original legislation remained intact. I would encourage
    Congress to keep that alignment of incentives intact as we move
    forward.
        There is no reason that other benefit programs should not
    encourage self-reliance incorporating a version of a work
    requirement. Although not all benefit programs are under the
    jurisdiction of this committee, it is important for the
    Congress as a whole to consider the nature of the social
    welfare system as recipients experience it, and to consider the
    adaptations of the early TANF success to other related
    programs.
        Large assistance programs such as food stamps, Medicaid,
    housing assistance, and unemployment insurance should
    incorporate a universal work or preparation and obligation to
    work for all able-bodied recipients.
        To be specific to Pennsylvania, Pennsylvania possesses a
    vast social welfare network that has become a way of life to
    many. Generally, lifetime benefits are limited to 60 months on
    the TANF program, but there are many exceptions, as you know,
    to receive extended TANF.
        Pennsylvania has approximately 18 percent of its caseload
    on after 60 months. With billions of dollars spent over the
    past decade, Pennsylvania only puts 5 percent of its clients in
    a 30-hour per week job, yet it touts a work participation rate
    of approximately 50 percent. Half of those leaving TANF for a
    job return to TANF within 1 year. Pennsylvania and most States
    meet their work participation rate with everything but a real
    30-hour a week job. The welfare state in Pennsylvania is
    growing by 13 percent year over year.
        We and you in Congress know that our current welfare system
    does not work for America. As in all Federal programs, the
    rules of TANF are complicated, cumbersome, onerous and
    convoluted. For TANF the current measures and outcomes, while
    important to the Federal establishment, fail to accurately
    measure work, and they allow States to inflate numbers and not
    be held responsible for performance. Only a program that values
    and encourages work first, across all Federal programs, will
    increase accountability and empower individuals and families to
    self-sufficiency and independence.
        How do we solve this dilemma? One, create a performance-
    driven system across the board where contractors are paid for
    job placement and retention only. Simplify the rules and create
    simple performance measures for States, like work attainment
    and retention and healthy lifestyles; retain the current block
    grant, but do not penalize States for saving money; and ensure
    that States measure real job placement and retool the work
    participation rate to reflect real employment and do not allow
    States to pad participation rates by shifting caseloads into
    State-only programs.
        Thank you.
        Chairman DAVIS. Thank you very much.
        [The prepared statement of Mr. Alexander follows:]

        Chairman DAVIS. Ms. Brown, you may proceed with your
    statement.

    STATEMENT OF KAY E. BROWN, DIRECTOR, EDUCATION, WORKFORCE, AND
                            INCOME SECURITY

        Ms. BROWN Chairman Davis, Ranking Member Doggett, and
    Members of the Subcommittee, thank you for inviting me here
    today to discuss our work on the TANF program, a key program
    intended to assist women and children living in poverty.
        I will cover two issues: first, changes in the welfare
    caseload and spending; and second, State actions to meet work
    participation requirements.
        First, regarding caseload and spending changes. Following
    welfare reform, the number of families receiving TANF cash
    assistance dropped by almost 50 percent as States focused on
    moving parents quickly into jobs. This was followed by a slight
    uptick since the beginning of the recession. By 2008, about
    half of these cases still receiving cash assistance were what
    we called child-only cases. In these households only the child
    receives benefits because he or she is living with a parent or
    caregiver who is not eligible to receive cash assistance. The
    parent may receive supplemental security income, may be an
    immigrant, or may have been sanctioned for noncompliance with
    program requirements, or the child may be living with a
    nonparent caregiver, often a relative. These adults in the
    child-only cases are generally not subject to work
    requirements.
        As the number of families receiving cash assistance
    declined, so did TANF-related State spending for cash
    assistance from about 73 percent of all TANF expenditures in
    fiscal year 1997 to 30 percent in 2009. Instead, States shifted
    spending to meet other purposes consistent with the program
    goals, such as child care and child welfare. However, States
    primarily report to HHS on families receiving cash assistance,
    the traditional welfare caseload, and not on these other forms
    of assistance. As a result, we don't have a complete picture of
    the families that may be benefiting from TANF funds and the
    services that they receive.
        My second point is about how States have met their work
    participation requirements. Because of the program's focus on
    job preparation and employment, States' performance is measured
    in large part by their success in ensuring at least 50 percent
    of their work-eligible cash assistance families are working or
    engaged in other specified work activities; yet our work shows
    that approximately one-third of TANF families participated in
    these work activities for the required number of hours each
    year from 2001 to 2009.
        States have been able to engage less than 50 percent of
    participants in work without incurring penalties by taking
    advantage of allowable program flexibilities. For example,
    States can receive a credit that reduces their required
    participation rate by the same percentage as their caseload
    decline. In 2009, 38 of the 45 States that met their required
    work participation rate did so in part because of caseload
    declines.
        Many States also took advantage of a provision that factors
    in State spending. States are required to spend a certain
    amount of their funds every year to receive their federal TANF
    block grant. In recent years when States have spent above the
    required amount, they were permitted to correspondingly
    increase their caseload reduction credits. In 2009 32 States
    claimed this excess spending, and 17 States would not have
    otherwise met their participation rates.
        And finally, States made policy changes that helped ensure
    they met their participation rates. Some States made changes to
    ensure that families complying with work requirements continued
    to receive cash assistance. States also opted to provide cash
    assistance to some families completely outside of their TANF
    program, particularly those families that have the most
    difficulty meeting the TANF work requirements. These families
    were not counted in the State's work participation calculation.
        In conclusion, although a central feature of the TANF block
    grant is the flexibility it provides to the States to design
    and implement their own programs, the lack of information on
    how noncash assistance funds are used and who benefits,
    combined with the limited usefulness of the work participation
    rate as the key performance measure, hinder our ability to
    fully understand how the program has been implemented and
    whether it is reaching its goals.
        This concludes my prepared statement. I am happy to answer
    any questions.
        Chairman DAVIS. Thank you very much.
        [The prepared statement of Ms. Brown follows:]

        Chairman DAVIS. Professor Besharov, if you could give your
    testimony.

     STATEMENT OF DOUGLAS J. BESHAROV, PROFESSOR, SCHOOL OF PUBLIC
                     POLICY, UNIVERSITY OF MARYLAND

        Mr. BESHAROV. Chairman Davis, Ranking Member Doggett, and
    other Members of the Subcommittee, it is a pleasure to be here
    to testify on this very important topic. I teach at the
    University of Maryland, and I teach courses on program
    evaluation and poverty alleviation. More importantly, I think,
    for today's session, I also lead a project called Learning from
    Abroad where we look at programs in other countries, especially
    other OECD countries. And essentially my message to you today
    is going to be that we can no longer say the Europeans are not
    very serious about labor force participation and that we are so
    good at it.
        In my testimony is a figure that shows that the percentage
    of Europeans working is now about the same as the U.S. Two
    things have happened. U.S. labor force participation has gone
    down. It was going down before the recession. I think this is a
    long-term problem that ought to be addressed by the committee.
        Secondly, the Europeans have, I think, gotten much better
    at enforcing participation requirements in their programs,
    whether it is unemployment programs, disability programs, or
    social assistance, and I think those are lessons for us as
    well.
        When I first met Chairman Davis, he said, I knew a
    professor would have some charts, so in my testimony are some
    charts. I notice that the testimony as we gave it to you does
    not have page numbers, but figure 1 picks up on, I think, part
    of what is the main interest of the committee. And that is, we
    have seen since 2009 a major increase in unemployment, one of
    the largest increases and most sustained periods of
    unemployment in our history, at least since we have been
    counting this, and yet TANF has hardly gone up. TANF
    participation, the caseload is about 14 percent up,
    cumulatively, in those years.
        As the prior two speakers mentioned, there are a lot of
    things that States can do to distort recipiency rates so that
    we don't get exactly an accurate number, but there is rough
    agreement that the TANF numbers haven't risen that much. If you
    look at figure 1, you can begin to see some of the reasons.
    Number one, the Congress has been extremely generous about
    unemployment benefits. From a time when about 30 or 35 percent
    of the unemployed received benefits, we have been running at
    about 70 percent of the unemployed receiving benefits. They
    won't go on TANF. If you look at this chart, also you will see
    that SNAP or food stamp benefits have really increased. And a
    surprising part of this is disability payments.
        If you look at figure 2 in my testimony, you will see the
    relationship between unemployment and SSDI applications.
        Now, I could not find a chart, and I couldn't create a
    chart that quickly that had the approved applications, but I
    can tell you that they reflect these numbers. Which is to say
    that a substantial number of the people who are unemployed,
    especially in their fifties, are turning to the disability
    programs and going on disability, which is another reason why
    the TANF caseloads are not rising and another reason why I
    think, as Secretary Alexander said, many of us are coming to
    the conclusion that, as we move beyond this recession, that
    something be done to consolidate the pro-work provisions of all
    of these programs. Because in a post-welfare reform, and, I
    hope, a post-recession environment, if we don't fix disability,
    if we don't fix unemployment, we will continue to fall behind
    even the Europeans on labor force participation.
        Is this doable and is it doable in a time of a recession?
    Figure 4 is I think a demonstration of that. This is how the
    Dutch, when they saw that their disability caseload was
    increasing many times faster than their population--in 1980
    they had three times as many people as we did as a percentage
    of the population on disability--reformed their system. And now
    the percentage of Americans on disability and the percentage of
    the Dutch on disability are the same. These reforms that are
    possible.
        There are many recommendations made from the Democratic
    side and the Republican side by academics all over this country
    and actually all over western Europe about what to do.
        In my testimony I summarize the major changes that have
    been made. Tightened eligibility rules, a mandate which
    includes, for example, physical examinations.
        Whoops, I am out of time. I have the list there. I hope the
    committee will consider this kind of consolidation of programs.
    This is the time to worry about labor force participation, not
    after the recession and unemployment pass.
        Chairman DAVIS. Thank you, Professor.
        [The prepared statement of Mr. Besharov follows:]

        Chairman DAVIS. Dr. Wetzler.

       STATEMENT OF SCOTT WETZLER, VICE CHAIRMAN AND PROFESSOR,
     DEPARTMENT OF PSYCHIATRY AND BEHAVIORAL SCIENCES, MONTEFIORE
          MEDICAL CENTER, ALBERT EINSTEIN COLLEGE OF MEDICINE

        Mr. WETZLER Chairman Davis, Ranking Member Doggett, and
    Members of the Committee, thank you for having me. I want to
    talk to you about the specialized issue of substance abuse as
    it relates to welfare reform.
        As you know, the law stipulates that people are allowed to
    be exempted from the work participation requirements for 4
    consecutive weeks up to 6 weeks per year to engage in intensive
    substance abuse treatment. And as a result, I actually run a
    program in the Bronx, New York, which really has some of the
    highest rates of substance abuse and poverty in the Nation,
    where we do evaluate welfare recipients in terms of their
    substance abuse disorders to determine whether they are
    employable or not, and refer them for various sorts of
    substance abuse treatment that is appropriate to the level of
    care that is needed.
        What we found over the years of running this program, we
    have evaluated more than 20,000 people, is that the vast
    majority of people with substance abuse are in fact able to
    participate in a work program and don't even require the
    exemption at all. About 70 percent of the people at the initial
    evaluation are eligible for work, and another 20 percent of
    people after a brief period of intensive treatment are able to
    work.
        So the real main message I would like to leave you with, as
    I have said in my written testimony, is that just because
    somebody has a substance abuse disorder doesn't mean that they
    can't work.
        Now, having said that, I think it is important to emphasize
    the importance of treatment for these folks. And what we do is
    we refer them for treatment and work at the same time,
    simultaneously. So we take if not a rigid work-first approach,
    certainly a work-early approach. Because the treatment referral
    is a mandated appointment, in a sense we are putting pressure
    on people, a kind of coercive pressure on them to do something
    which they might not otherwise do voluntarily. But one of the
    things I would like you to know also is that treatment under
    that sort of circumstance, coercive treatment, is as effective
    as people who went through treatment voluntarily . . . and it
    actually helps to increase people's motivation and attendance
    in treatment.
        In New York we have in addition, a case management program
    where we try to help people attend treatment. And this I guess
    is part of the flexibility that was discussed before of how the
    funds can be spent. In New York it is called customized
    assistance. And these folks have lots of different problems
    that make it difficult for them to work, make it difficult for
    them to attend treatment. They have housing issues, psychiatric
    problems, medical problems, legal issues. Obviously, they also
    have lack of job skills. And the comprehensive case management
    program really develops a customized assistance program to help
    them attend treatment, and we have been very successful in
    getting people to attend as a result of that.
        The other point that I want to make with you is that
    actually as the caseloads have dropped so much in New York, I
    would say only one out of eight people with substance abuse
    disorders is on cash assistance. And in fact, I think that this
    issue is a much bigger problem, as referenced before, for the
    people on Medicaid-only population.
        There is a famous case in New York of one man who was on
    Medicaid who was in in-patient substance abuse detoxification
    for 270 days in one year, and the next year he was in in-
    patient detox for 272 days. This was a man who never followed
    up with outpatient treatment and he was free to enter the
    hospital as much as he wanted and there weren't any leverage
    that was brought to bear on him.
        One thing I would suggest is that in thinking about the
    responsibilities attached to various sets of benefits, we think
    about Medicaid just like we do about the temporary assistance.
    Thank you very much.
        Chairman DAVIS. Thank you, Dr. Wetzler.
        [The prepared statement of Mr. Wetzler follows:]

        Chairman DAVIS. Dr. Pavetti.

      STATEMENT OF LADONNA PAVETTI, VICE PRESIDENT, FAMILY INCOME
         SUPPORT POLICY, CENTER ON BUDGET AND POLICY PRIORITIES

        Ms. PAVETTI. Chairman Davis, Ranking Member Doggett, and
    Subcommittee Members, thank you for inviting me, for giving me
    this opportunity to testify today.
        In my capacity as a researcher I have observed firsthand
    how States have implemented TANF work requirements over the
    last 15 years. What started as an income maintenance program
    with a very tiny work program attached to it is now a program
    that is almost entirely focused on work. The cash assistance
    the program provides is minimal, accounting for only about a
    quarter of all State and federal dollars.
        While this shift to a work program has been remarkable, it
    has not served all poor families well. And with a weak economy
    we now face an entirely new set of challenges. As we prepare
    for TANF's reauthorization, we need to remember that TANF was
    created with a balanced approach in mind, to both create an
    expectation of work, and to provide a safety net when work
    isn't available. So both aspects are important and we need to
    focus on both of those.
        In order to make improvements in both of these areas I make
    three key recommendations. One is that we need to redefine
    TANF's work requirements to better reflect the characteristics
    of the caseload. Second, we need to redefine how performance is
    measured. And third, we need to provide adequate funding to
    States so that they can do the job that they have been asked to
    do.
        Now, what I would like to do is tell you how I arrived at
    those recommendations. First, the TANF caseload today is very
    different than it was 15 years ago, and it really does demand a
    different approach to work requirements. We have evidence that
    many who receive TANF today face significant barriers to
    employment, it doesn't mean that there shouldn't be
    expectations and they shouldn't be encouraged to work, but it
    does mean that the assistance they need is quite different than
    when we started TANF.
        We know little about how to serve people with a lot of
    barriers, and it will take time and targeted resources to
    identify the most cost-effective approaches.
        As people have noted, we have minimal data available to
    actually assess what TANF has accomplished and how that has
    changed over time. As Chairman Davis noted, only about 24
    percent of TANF recipients are meeting their TANF work
    participation rate standard. And while that number may seem
    low, it really tells us very little about whether TANF is
    succeeding or failing as a work program.
        From the work I and other researchers have done, we know
    that when families apply for assistance they are quickly
    referred to a mandatory work activity. Individuals that don't
    comply are sanctioned for noncompliance, which in almost every
    State means that they lose their cash assistance after a few
    months. The assumption that States have failed to impose a work
    mandate or that they have stopped focusing on work, either
    because of changes in the DRA or because the economy weak, is
    simply not an accurate reflection of reality.
        The question we should be asking is if States have imposed
    stricter mandates, why are so few meeting the work
    requirements? I believe that many of those answers can actually
    be found in the data that you have from HHS on work engagement.
    First, about a quarter are participating, but they don't meet
    the standard, so they are actually doing something, they are
    trying, but they are not quite at the level where they count.
        Second is about half have no hours of participation, but
    most of those can be explained and are understandable and, I
    would say, even appropriate. The largest share is exempt from
    participation by the State, mostly because their family or the
    individual herself or a family member is disabled. And only 8
    percent have no hours because the State has actually failed to
    engage them in work activities.
        When evaluating how well States are doing we should ask
    ourselves what is it that we want States to do that they are
    not doing. Will stricter mandates result in better outcomes or
    just a greater abandonment of the most vulnerable families? Or
    is it time to give States more flexibility so they can take
    risks, be innovative, and discover what works best for families
    who are left on the caseload?
        The reality is the TANF participation rate is an inadequate
    measure of whether or not a State has implemented an effective
    work program. As Mr. Alexander noted in his testimony, TANF's
    success should be judged on how well States do at getting
    recipients into jobs that last. The work participation rate
    measures process, it doesn't measure outcomes. A State that
    moves recipients off TANF into jobs quickly could easily fare
    far worse than a State that keeps people on the rolls. We can
    do better, and we can start simply by giving States the option
    to measure outcomes instead of process.
        The last thing I would like to say is I think that a work-
    based system can't be held as a success when it doesn't provide
    assistance to vulnerable families when the economy fails. TANF
    has responded only modestly to the recession. And what we know
    from looking at the evidence is that TANF did well at getting
    people into the labor market when the economy was strong, and a
    strong economy has to be a part of everything that we do or we
    will fail.
        I think that the other thing that is important is we don't
    have evidence that people have failed and don't want to take
    jobs. In fact, we have the opposite. So I think that we need to
    think about how we can again make sure that the labor market is
    strong and that the resources are there to actually help TANF
    recipients and others to actually take advantage of those.
        And finally, the last thing I want to say is that we really
    do need to make sure the resources are there. Mr. Doggett
    mentioned about the supplemental grants. And that really means
    that for 17 States they really don't have the same amount of
    resources that they had when TANF started, and they are being
    asked to do more with less. And then the other thing is that we
    also have a contingency fund.
        Chairman DAVIS. Excuse me. Your time has expired.
        Ms. PAVETTI Okay. I am sorry. I missed that. I was watching
    that go. I didn't notice they kept going up. Sorry.
        Chairman DAVIS. No problem. It just continues in the other
    direction. But I appreciate your thoughts and comments.
        [The prepared statement of Ms. Pavetti follows:]

        Chairman DAVIS. And we will proceed now to questions. I
    would like to start now with Secretary Alexander. In 1996,
    welfare reform implemented a newer approach to helping low-
    income families. And in exchange for benefits, recipients were
    expected to work or prepare for work. While it was not the only
    policy to encourage work among low-income families, welfare
    reform played a substantial role in increasing employment and
    earnings of single mothers and also reducing child poverty.
        Yet according to HHS data and the testimony we heard today,
    relatively few families face a work requirement as a result of
    receiving welfare, and even fewer actually meet work
    requirements. What keeps States from engaging more welfare
    recipients in activities leading to self-sufficiency and what
    can we do to ensure the TANF program doesn't support this
    dependency but really focuses to work more effectively to end
    it?
        Mr. ALEXANDER. Well, first of all, we operate a vast
    welfare system that encompasses much more than just TANF. And
    unfortunately, I think in our other programs like food stamps
    and Medicaid, there is scant--there is a scant work requirement
    or no work requirement at all. I think what we have learned
    from TANF from 1996 is that there was a focus on self-reliance,
    personal responsibility, the focus on work, it was time-
    limited, and that there was a focus on bringing families
    together in a healthy marriage. And I think that if we are
    going to proceed in the future and end dependency, we are going
    to have to work harder at encompassing all of our programs
    across the welfare spectrum and bring all of these together.
        In all of these families that we touch, if they are on TANF
    they are on Medicaid; generally, they are on food stamps. So we
    have separated families. And we give them an EBT card, we put
    benefits on an EBT card, we separate things out. We have to
    approach this holistically with these families, with a life
    coach to try and bring them to self-reliance and personal
    responsibility.
        So I think we can learn from TANF, but we have to move on
    from TANF and really do much much more. We have got to reach
    out to the business communities in a better way to engage them.
    And I think it can be done, but I think that the current
    requirements, the current TANF requirements are not conducive,
    as all of the speakers have said, to really measuring personal
    responsibility and self-reliance because we are not measuring
    real work participation.
        Chairman DAVIS. Thank you. Professor Besharov, do you have
    any thoughts on this?
        Mr. BESHAROV. Well, I think, first of all, having all the
    means-tested programs work in concert is tremendously
    important, as I indicated in my testimony. If there is no
    serious work requirement in food stamps, if it is relatively
    easy to go on disability and then have no work requirement, if
    the unemployment program doesn't enforce work or job-looking
    requirements, then we have only used one in four, or whatever,
    of the programs to encourage job-related activities. And I want
    to emphasize here that it doesn't have to be just looking for
    jobs. We have a population that also needs different forms of
    job training, transitional training, work preparation. Much of
    that is going by the board in this period, in part because we
    haven't mobilized all these other programs. So it is not just
    job search, it is also job training that ought to be part of
    this program.
        Chairman DAVIS. Anybody else like to share?
        Ms. PAVETTI. I think that one thing that is important when
    we think about this is to distinguish the difference between
    whether people meet the work requirement and whether people are
    mandated to work. Because I think in TANF most people are
    mandated to work. They may not be meeting that requirement and
    I think that is important to consider about where we go.
        The other thing that I think is important is that in all of
    our programs, if you look at data from when people come into
    the program and a year later, the vast majority do work, so it
    is really a temporary situation; it is not that people are on
    for long periods of time without working. Most people on food
    stamps or Medicaid work within a year. So I think we need to
    really think about what the portion of the population for which
    work is not working. A huge portion has to do with not being
    able to find jobs, not that they are not willing to take them
    when they are available.
        Chairman DAVIS. Would Dr. Wetzler or Ms. Brown like to
    comment?
        Ms. BROWN As part of our recent work on program overlap and
    duplication that we have been doing across the government, we
    have also looked at the types of activities that not
    necessarily focus on means-tested programs, but thinks like the
    WIA program and other employment and training programs. That is
    another example of where resources could be combined and
    perhaps reach a broader range of needs.
        Chairman DAVIS. It would seem that the lack of data
    standardization and data matching across the States that we
    have talked to--several of us have had discussions on this in
    prior meetings--is going to be one key component to eliminating
    improper payments or dealing with some of the challenges that
    we have, I think, that would streamline and significantly
    reduce costs. And I appreciate your answers.
        And I now would like to recognize the ranking member, Mr.
    Doggett from Texas, for 5 minutes.
        Mr. DOGGETT. Thank you very much. And thank you for all of
    your testimony.
        Dr. Pavetti, you discussed the TANF Supplemental Grant
    program. It is really a misnomer because these are not
    supplemental grants, but they are a crucial part of the way
    that Texas, Tennessee, Georgia, a total of some 17 States,
    address the problems that they face, and they were part of the
    reform in 1996. Isn't it true that these 17 States who had
    their assistance cut when the TANF Supplemental Program was
    allowed to expire this summer, that these are the same States
    that are already receiving less funding through TANF per person
    than most of the other States in the country?
        Ms. PAVETTI Yes. The reason why the supplemental grants
    were included as a part of the TANF block grant was that there
    were a group of States that really fit two characteristics. One
    is that they had less spending per poor family, and the other
    is that there was some adjustment for our changes in
    population, so that it really was just a different way of
    getting funding to those States, but they have always been
    perceived as part of the original deal. I don't know where the
    name ``supplemental'' came from, but it is part of what they
    think of as their block grant, and for them it is a cut. And
    again, it is to the poorest States in the country.
        Mr. DOGGETT. Well, I think the important point, we may have
    differences on the committee and among our witnesses about
    where the priorities ought to be in making changes here;
    whether they ought to be on marriage or work, or both, or the
    substance abuse issues that are so critical that you obviously
    have some creative ways of handling and note some of the
    problems within the current system. But whatever your priority
    is, in these 17 States, if this program is not renewed, if the
    expiration continues and they get shortchanged in the funds
    that they have to do any of the things--new, old, wrong, right,
    high priority or low priority--and that is why I think it is so
    critical that any extension include this Supplemental Grant
    program.
        Dr. Pavetti, you were about to comment as your time ran out
    about a contingency fund. Would you like to elaborate on that?
        Ms. PAVETTI. One of the other parts of the original deal
    was the contingency fund, which was really intended to help
    States during poor economic times. There was a recognition that
    with a block grant you needed to have some mechanism to provide
    additional assistance to States.
        And there are two problems with the contingency fund, two
    main problems. One is there is no money, so there really is no
    money for States to draw on to provide extra help. And the
    other is the contingency fund is very poorly designed. And Mr.
    Alexander mentioned this in his testimony. It is very difficult
    for States to access that fund, and when they do access it,
    there is no guarantee that they actually use those resources
    for countercyclical activities.
        So I think there are two things that need to happen. One is
    we need to fund it, and the second is we really need to think
    of a redesign that will allow it to do some of the
    countercyclical things that we know are successful, like
    subsidized employment, emergency assistance, things that really
    do help families who are looking for work and can't find it.
        Mr. DOGGETT. And, Ms. Brown, if I understand correctly,
    this Governmental Accountability Study concluded that 90
    percent of almost all of the decline in the TANF caseload is
    due to fewer eligible families receiving cash assistance?
        Ms. BROWN Yes. That is a study we did where we actually
    looked at the time that the program changed, up until about
    2005-2006. And at that time it was about 87 percent of the
    decrease in the caseload was caused--was related to families
    who were eligible but, for whatever reason, chose in their
    decision-making process not to participate.
        Mr. DOGGETT. Thank you. And Dr. Pavetti, is one of the
    reasons for that low rate of participation that some of the
    States are diverting eligible families away from TANF?
        Ms. PAVETTI They are. One of the things States did,
    particularly after the Deficit Reduction Act, was they made it
    much more difficult for families to get onto TANF. One of the
    ways a State can meet their work participation rate is to make
    sure that the only families who get on TANF are families who
    can meet that rate, so they just increased the standards. And
    so it means that the front door is closed to many families.
        Mr. DOGGETT. What type of family would be excluded?
        Ms. PAVETTI Well, you know, any family--like in one State
    that I visited, any family who cannot participate for 30 hours
    a week. So a family--I can give you an example of a woman whose
    case I reviewed in a study I did who had a very serious anxiety
    problem to the point that she could not leave her house, and
    she had sores throughout her head because she would pick her
    head, so that there was no way she could show up at the agency.
    That kind of--that person with those issues would not be able
    to receive assistance in a State that requires people to show
    up for 30 hours before they get assistance.
        Mr. DOGGETT. Thank you. Thank you.
        Chairman DAVIS. Thank you very much. I would like to
    recognize the gentleman from North Dakota, Mr. Berg, for 5
    minutes.
        Mr. BERG. Thank you, Mr. Chairman. And thank you all for
    being here. I appreciate the input from the witnesses, and
    obviously a scenario that needs a lot of review, it needs a lot
    of thoughtful debate.
        Mr. Besharov, our last authorization, North Dakota, was
    part of trying to develop some new and innovative ways, and we
    came up with a program called Pay After Performance. In essence
    what it says is, during the first 4 months the TANF portion
    goes to the children, but the other portion is kind of held for
    that 4 months to ensure that that work requirement is
    fulfilled, and then the participant would receive their portion
    of that after that period. And quite frankly, it has shown in
    our State; we have had over a 50 percent participation rate.
        And I guess my question is how can we use what we have done
    successfully in North Dakota and some of these other States to
    apply to a national level to create positive incentives within
    the program?
        Mr. BESHAROV. Thank you very much, Mr. Berg. I think
    throughout the program the incentives have become skewed since
    its original passage in 1996, as Dr. Pavetti said, as a number
    of us have said. As the rules have gotten more complicated, as
    there is this footnote rule and that footnote rule. But many of
    the States, I think most or a vast majority, in fact, game the
    system. I think Gary even talked about his own State and how it
    does it. These participation numbers don't really reflect the
    level of nonparticipation that happens in a State.
        So the short answer is the kind of innovation that you
    described has to be encouraged by the law, not discouraged. And
    my sense about that is to simplify the participation
    requirements so that the States have an easier way of
    explaining how they are going to show participation.
        Mr. BERG. Mr. Chairman, just in a nutshell, how would you
    simplify them? If there was like one statement--you said, well,
    do this, it will simplify and make it easier--what would that
    be?
        Mr. BESHAROV. Thank you very much because I do have a view
    about that. Forget about all this other stuff and say 15
    percent of the caseload has to be in a work experience program,
    everything else falls into place. You can't have 15 percent, or
    make it 10 or whatever number you make; you can't get any
    percentage of the caseload into an actual work experience
    program without doing all the other things we want the State to
    do. That is all you would have to do, and the States I think
    would be pretty honest about fulfilling that requirement.
        Mr. BERG. Thank you. Dr. Wetzler, a lot of organizations
    believe TANF's recipients with substance abuses should be
    exempted. We kind of talked about that and you kind of in your
    testimony kind of addressed that, and I guess kind of almost
    got the impression that to some degree people with drug abuse
    would benefit from the activity. And I just want to know how
    participating in a work program will help people who are
    recovering from substance abuse?
        Mr. WETZLER Yes, thank you, Mr. Berg. It is true that there
    are many people that seem to believe that somehow--that going
    to work is somehow going to be so stressful that it will lead
    people to not participate in treatment, or to actually relapse.
    But our experience over the last ten years has been that
    actually work has a very positive effect when it is done
    conjointly with treatment; that it helps people, it gives them
    a structure, it gives them a focus for their daily activities,
    it actually can increase self-esteem. And I think, most
    importantly, it actually increases expectations for what they
    should do and really combats a culture of dependency. And even
    if it is done, as we said before, about coercively or it is
    mandated in some way, it really does--people do participate and
    they do benefit from it, from the treatment.
        Mr. BERG. Do you have like some specifics in your case
    management where again there is financial incentives or
    consequences in addition? How is that working?
        Mr. WETZLER So in New York there are all sorts of sanctions
    that occur if people don't attend these mandatory appointments.
    For the person who is going to work and going to treatment
    simultaneously, they have a heavy schedule, they have to do
    both; and if they miss either one, they will be sanctioned and
    that will have some problems.
        On the other side of it, we also have some positive
    incentives for people who actually do obtain employment. There
    are what we call performance milestones that people get for
    obtaining employment at the end of the day.
        Mr. BERG. Thank you. I yield back.
        Chairman DAVIS. Thank you. The chair now recognizes Mrs.
    Black from Tennessee for 5 minutes.
        Mrs. BLACK. Thank you, Mr. Chairman. And Mr. Besharov,
    pronounce----
        Mr. BESHAROV. Besharov.
        Mrs. BLACK. Yes. Thank you very much. I will not kill your
    name.
        So let me go back to a statement that you made, and in your
    testimony you talked about European countries and how many now
    have a larger portion of their population working than we do.
    Do you have a sense for why is that? Is that by policy or is it
    more employment availability, or what is it that makes that
    difference?
        Mr. BESHAROV. I think those countries looked at the trend
    lines of a greater and greater proportion of their citizens not
    working and became frightened, as we should in this country.
    And whether it was Germany, the Netherlands the U.K., even now
    France, they said what levers does policy have to increase
    labor force participation? And actually one of the things they
    did is they looked at TANF, and they took the ideas from TANF
    and applied them to the other social assistance programs that
    they ran. I think that is a large explanation for why their
    labor force participation is increasing while ours decreases.
        I should add a footnote here. Someone is going to say,
    well, you know, you have to control for demographics and so
    forth, but I think that is the story line. And I think it was
    policy, and I think it was policy because the European
    countries saw what was coming and knew they couldn't afford
    that many people on, in effect, welfare.
        Mrs. BLACK. Thank you.
        Mr. Alexander, I want to come to you and ask you--or excuse
    me, it was Ms. Brown. In your testimony you note that over half
    of the current TANF caseloads consist of child-only cases,
    meaning that children are living with an adult who is not
    subject to the work requirements. And from your research, do
    you know if these families receive any assistance from TANF
    agencies in becoming self-sufficient? And second, is this like
    the old AFDC program, where these families receive benefits
    year after year until the child turns 18, without the family
    moving forward in independence from welfare benefits?
        Ms. BROWN Regarding the question about whether they receive
    assistance for self-sufficiency, many don't. The types of
    families that are receiving the assistance, the child-only
    assistance, include families like where a parent may be SSI-
    eligible and determined that they were unable to work, so they
    are not able to participate in the TANF program, they are not
    eligible, but the child would be eligible for the benefits.
        Another example would be if a caretaker, like a grandmother
    was taking care of their grandchild, that in many cases would
    not be an expectation that they work in some States, not even a
    means test. But there are also cases where there certainly
    would be opportunities to encourage work. And the flip side of
    that example of the caregiver is if a child were living with a
    caregiver that was of the age where they would be eligible for
    work and unable to work, there is--right now most of them are
    not required to do that.
        Mr. BESHAROV. Could I add one outrageous example here to
    this? I don't know the exact number. The last time I looked,
    though, it was over 25 percent of the child-only cases involved
    the children of immigrants; immigrants not being eligible for
    TANF, therefore, they are not on TANF, but the child is
    eligible. So here is the irony.
        Mr. BESHAROV. If you are a noncitizen, TANF's requirements
    don't apply to you but they do apply to citizens.
        Mrs. BLACK. So in that case you might have a child then
    from birth until 18 years old is continuing to get the services
    without the parent ever being required to work?
        Mr. BESHAROV. Sure. But the great thing about this country
    is most of those people are on the up escalator for work and
    they eventually get jobs and do better. But yes, that is a
    technical possibility and I am sure it happens in some number
    of cases.
        Mrs. BLACK. Are there others that wanted to speak to that?
    I yield back my time.
        Chairman DAVIS. I thank you.
        With that I would like to recognize the gentleman from
    Washington State, Mr. McDermott for 5 minutes.
        Mr. MCDERMOTT. Dr. Pavetti, I do casework in your office;
    it is always interesting and I have a case for you. It is a
    couple. He is 47, she is 45, high school education, they had a
    combined income of 90,000 bucks or 84,000 bucks when all this
    started back in 2007. They both lost their jobs. They have
    three kids, 7, 9, and 12. They have drawn on all their
    unemployment benefits, all 99 weeks, so they have nothing left.
    They have been using their 401(k), what little they had, to
    keep their mortgage payments up so they wouldn't lose their
    house, but now they are in foreclosure and they have no house
    and they are going to move into their car.
        What State would you suggest they go to where they could
    find a program that would meet the needs of a middle-class
    couple that is being crushed by this economy of 9.2 percent
    unemployment? You can put them on all the work search you want,
    they can go out every day looking, they have been doing it for
    2 years, they haven't found anything.
        Where should they go? Or is there a State that has a
    program that meets the needs of a family like that that was
    once middle class 2 years ago and is now not?
        Ms. PAVETTI Well, there aren't many. And the one that I
    think--and I mentioned this last time when I was here talking
    about program integration--the place where they would probably
    be treated--everybody is treated the same is Utah. So anybody
    that walks in the door in Utah, regardless of whether they are
    middle class or on TANF, goes through the same set of
    employment services, so that they really wouldn't be treated
    any differently there.
        Mr. MCDERMOTT. Would they be able to get a cash grant? AFDC
    was set up in the thirties to deal with children. They need
    food and clothing and housing and medical care. That is what
    AFDC was about. Then in 2006 when we wrote this TANF bill, it
    was at the height of an economy that was booming, the bubble
    around the high-tech industry was going like mad, you could
    find a job anywhere, and now we are in a place where you can't
    find a job anywhere. And in fact people who have been
    unemployed are having difficulty because employers don't want
    somebody who has been unemployed 2 years. They want somebody--
    because you have got a bad credit rating. They have used their
    credit cards, they have got themselves into horrible messes. So
    where is the program, or what needs to be done to make
    something available for those people in what is now a totally
    different economy than 2006?
        Ms. PAVETTI. I think part of what needs to happen is we
    need to acknowledge, one, that the economy is part of the
    problem and that unless Utah has jobs, even if they could get
    services, it is not going to lead to employment. So I think
    what needs to happen is really trying to figure out--and Mr.
    Besharov mentioned this--is that this is a time where it works
    for people to upgrade their skills; but it doesn't work to
    upgrade your skills if you can't work along with that or if you
    can't have some sort of cash support to do that. For that
    reason I would send them to Chairman Davis' State, to Kentucky,
    which does probably one of the best jobs in the country of
    really allowing people to do education and combine that with
    work.
        Mr. MCDERMOTT. Would they let this person, this couple, go
    to community college----
        Ms. PAVETTI. They would.
        Mr. MCDERMOTT. Upgrade and get a welfare grant at the same
    time?
        Ms. PAVETTI Yes. What they would do in Kentucky, what
    generally happens for people is they do encourage people who
    have the skills and interests to go to community college, and
    they provide a cash grant to help them get started. And then
    they basically have used quite a bit of their TANF funds to do
    work study so that they provide work for people after a year
    because of the work participation requirement. So it is one
    place where they probably could be able to figure out a way to
    move forward.
        But I think that our system is not set up to serve that
    group of families. It is really set up on an expectation that
    people don't want to work, and need to be required to work, so
    that all that is generally provided for TANF recipients is job
    search. So they are required to show up and to participate in a
    class to look for jobs. There is not a lot of help that is
    provided beyond that.
        Mr. MCDERMOTT. No help for the children. Will they get onto
    Medicaid for the kids?
        Ms. PAVETTI Yes. I don't know what their assets are and how
    that would play out. I don't know the assets rules as well as I
    probably should. But they should be able to, if they meet the
    asset rules, to be able to get food stamps and Medicaid and,
    depending on the State, a cash grant.
        Mr. MCDERMOTT. So the only thing they are eligible for is
    food stamps.
        Mr. BESHAROV. I would just add that you opened your
    question with a statement that they have been on unemployment
    for 99 weeks. And what I would ask: What did they do, and what
    did we do for them in those 99 weeks? Because that is a long
    time for them to just be looking for a job without getting a
    different set of skills.
        Look, it is very bad out there. I don't want to minimize
    how much unemployment there is. But every day people get jobs.
    There are about 3\1/2\ million available jobs today. I am sure
    the President tonight is going to say that there are jobs
    available for some number of people if we can retrain them.
    Part of that ought to be in that 99 weeks, and we shouldn't be
    asking TANF to do all the work here.
        There are, as the chairman said, a whole set of programs
    that have not been harnessed for this emergency; they have not
    been harnessed, and they ought to be.
        Chairman DAVIS. The gentleman's time has expired, but I am
    going to indulge the panel in continuing this discussion for a
    moment.
        One of the challenges relates to integrating these siloed
    programs that in many cases don't talk to each other. Within
    certain constraints within States they have been able to get a
    degree of integration, but often bump up against the Federal
    statutes, which create additional costs and also has folks fall
    through the cracks.
        But I know Mr. Alexander was chomping at the bit over here
    to share an insight. Since you came through the rain, I thought
    we would just give him a chance to do so.
        Mr. MCDERMOTT. It is on his time.
        Chairman DAVIS. I was looking at this as bipartisan right
    here.
        Mr. MCDERMOTT. We share the extension.
        Mr. ALEXANDER. Could you tell me which State you are from
    again? I am sorry, maybe I missed it.
        Mr. MCDERMOTT. Washington State.
        Chairman DAVIS. Which is usually like the environment you
    drove down in today.
        Mr. ALEXANDER. Yes, absolutely.
        You said they were 47 and 45, had a combined income of
    $84,000. They have three children, so presumably they at least
    have a high school education if they were making 40- to $50,000
    a year. What I would say is that there are jobs available for
    them. The jobs may not pay exactly as much as they were making.
        Part of my job as a welfare director, I have been in this
    business for over 15 years and have served at the head of
    agencies in two States. Every time I go into a store, whether
    it is Target, the Dollar Store, WalMart, I ask--I go up to the
    desk and ask for an application for employment. And nine out of
    ten times they give me the application. And I ask them: Are you
    hiring? They say, yes, we are. And then when I ask them what
    the general requirements are, most times it is basically a high
    school diploma or a GED.
        And I will tell you from my experience that we have a lot
    of people in our programs, especially the food stamp program
    which has no asset test, that have an abundance of an education
    and they have assets and they choose not to go to work because
    they are getting these benefits. And I have questioned some
    people on the program as such.
        What I would say to you is that I would like to speak to
    this couple, if you don't mind, and try and help them find a
    job. And I will tell you this, I was just in Philadelphia.
        Mr. MCDERMOTT. Philadelphia.
        Mr. ALEXANDER. I was in Philadelphia yesterday at what we
    call an ``earn center,'' which is where clients come in to
    actually find jobs. And there was a management job available
    there, I can't remember the company, but it was a management
    track job; not a management job, but a management track job.
    And they were asking me--they were having trouble actually
    encouraging people in the earn center to take the position. So
    there are jobs out there.
        And lastly, I just want to say that I am very interested in
    the discussion of substance abuse because it does present
    barriers to clients.
        But I would like to sit and learn more from you. People
    want to work and can work. And I will give you an example. In
    Luzerne County in Pennsylvania, Lowes, which is a major
    corporation, has a distribution center of 1.5 million square
    feet. We have been working with Lowes to create jobs for
    intellectually disabled and physically disabled individuals.
    They have hired over 70 individuals with either intellectual or
    physical disabilities. Their productivity is as good or if not
    better than folks like you and I. Their tenacity to come to
    work and their enthusiasm to come to work is better than you
    and I, and they are very happy that they have these jobs. Lowes
    happened to do this on its own with very little government
    money.
        We have to do as government workers and as Congress and as
    States, we have to do a much better job of reaching out to the
    business community to try and create jobs. Will there be
    hundreds of thousands? I don't know. But certainly we can start
    to place one individual at a time. And I believe we can do that
    because the opportunities are there.
        Chairman DAVIS. Thank you very much. I would like to
    recognize Dr. Price from Georgia for 5 minutes.
        Mr. PRICE. Thank you, Mr. Chairman. And I want to thank the
    witnesses as well. This is an important topic and I think we
    are beginning to have some interesting conversation now, and I
    appreciate the input.
        The folks that I hear from back home want to make--nobody
    wants anybody to go without help when they need it. And they
    want to know that the individual receiving the help is intent
    upon getting back on their feet and back in the mix.
        And so I want to touch on the incentives that are in place
    right now that, as a couple of you have alluded to, make it
    such that individuals look at the, entry-level job or the down-
    income job from what they had before, and the incentives for
    them not to engage in that position because of the assistance
    that is provided, one. And, two, I want to--I have heard that
    we aren't aligning the work requirement with other programs in
    our system.
        And I would ask kind of a general question: What is keeping
    us from doing that? Is that our ineptitude? Or is that the
    program is written in the wrong way or what? Mr. Alexander,
    would you like to start?
        Mr. ALEXANDER. Yes, I would like to start off. Yes, it is
    the Federal Government. Because there is not a day that goes by
    that I don't get emails from Washington, from the Federal
    establishment, about new rules and regulations. And trying to
    run a 20,000-employee welfare agency, the largest in the Nation
    in Pennsylvania, I don't have time to read all that.
        We need to have a new partnership with the Federal
    Government, with States, so that we have clear and simplified
    rules across all programs with clear performance measures. If
    we had that, States can innovate and achieve excellence, and we
    can work together with you to do that. The Federal Government
    should be there to monitor our progress, incentivize us, and
    pay us for performance. And if you do that, you will start to
    see States work more like private businesses. But we can't. We
    are inundated with the flood of rules and regulations and a
    myriad of programs, myriad of agencies. It is USDA, it is
    Department of Ed, it is HHS, it is CMS. We can't handle all
    this.
        So even--this crosses Democratic and Republican. This is
    not a Republican issue. Most of my colleagues would agree that
    we need a new relationship.
        Now, some people may want more benefits, some people might
    want less benefits. But the bottom line is we have to have
    clear expectations, and we can't be trying to figure out rules
    and regulations on a daily basis.
        So we need to work across programs, start to bring some of
    them together to comport with one another. Most of these
    individuals or families exist in each of those programs, and we
    need a new redesign. And I think working together, if you
    engage the States, I think we can do this.
        Mr. PRICE. Would you recommend that under a waiver of the
    existing programs not being able to meet--or is it a new law?
        Mr. ALEXANDER No. The reason why I would not encourage--
    just by its nature, the word ``waiver'' means that the existing
    program is broken. We need a new redesign of and clear goals
    and performance measures that work: work retention, healthy
    living, children in school, drug-free society. We need to have
    these type of broad performance measures from the Federal
    Government. The Federal Government needs to get out of the
    business of trying to run what is going on in the State. And if
    the Federal Government wants to do that, I will be happy to
    give up my position and let them come in and just run
    everything.
        Mr. PRICE. Mr. Besharov.
        Mr. BESHAROV. This might be the first time I disagree with
    my learned friend here, Gary Alexander. Part of the problem is
    the Congress and the committee structure, because many of these
    programs are in different committees----
        Chairman DAVIS. I would remind the gentleman that has been
    a tradition since 1789. So.
        Mr. CROWLEY. Has TANF been around that long, Mr. Chairman?
        Mr. BESHAROV. I think I have seen the waiver process
    generate knowledge and political support for reform. That is
    what happened in welfare reform and other programs as well.
        So, Gary, yes, if they can get it; but if not, something
    like the super waiver that has been on the table for a number
    of years would be very helpful. And then not to recognize--not
    to not recognize what the chairman mentioned earlier, some
    States are trying to work around this entirely by their IT
    systems, which is to say if you can't fix it from Washington,
    the power of computers now will enable many States to do much
    of what we are talking about; not similar rules across States,
    but will let the States figure out the best way to work the
    programs together internally. And at a minimum, that ought to
    be encouraged in any new legislation.
        Mr. PRICE. My time has expired, but I think you are
    absolutely right. I think that is the direction we should head,
    is to allow the States to be able to have the flexibility and
    then teach us what the heck we need to do to fix this.
        Chairman DAVIS. I thank the gentleman. And now Mr. Crowley
    from New York is recognized for 5 minutes.
        Mr. CROWLEY. Thank you, Mr. Chairman. Thank you for holding
    this hearing today, and I particularly want to thank Dr.
    Wetzler from New York, and from the Bronx in particular, from
    in his day job at Montefiore Hospital. So thank you for being
    here today.
        Dr. Pavetti, research has shown that women leaving the TANF
    program are far more likely to stay employed if they have
    adequate child care and subsidies to pay for the child care. I
    have introduced Child First Act to increase funding for child-
    care subsidies so the parents are better able to access child
    care, which in many States costs more than a college tuition.
    And I don't know about college tuition in New York, but I can
    attest certainly to high school tuition.
        I was wondering if you could discuss the role child-care
    availability plays in helping parents find work, and maybe more
    importantly, help them to keep that work and keep those jobs
    after transitioning out of the TANF program.
        Ms. PAVETTI. What we have learned through the years in TANF
    is that there was an expectation that people would move into
    low-paying jobs and they would move up a ladder, and that is
    really not what we saw. So what happens is people move into
    low-wage jobs and they stay in those low-wage jobs for very
    long periods of time, which means that they cannot afford child
    care, so that the only way they are able to work, particularly
    in low-wage jobs, is to have a child-care subsidy.
        One of the things we have also seen in TANF is States have
    done very different things, so some of States have used a lot
    of their TANF dollars for child care and others have used
    lesser amounts. But what we do know is that you cannot have an
    expectation of work without also having a way for people to
    afford child care. It is not safe for kids, and it means a very
    unstable workforce if parents don't have child care. So I think
    it is a critical need. And I think that without it we can get
    nowhere.
        The other thing I think is important, as you said, you
    increase funding. In many States, the TANF grant is so much
    lower than the cost of child care, without additional funds
    there isn't money to actually pay for the child care that is
    required to go to work.
        Mr. CROWLEY. Thank you.
        Dr. Wexler, I am glad that you highlighted some of the work
    that New York City is doing to make the TANF program work even
    better, particularly with case management.
        Is it fair to say, based on your experience and your
    expertise, that New York has been successful in identifying
    TANF recipients in need of substance abuse treatment without
    requiring every TANF applicant or recipient to be drug tested?
        Mr. WETZLER Well, I am sure there are about--today, about
    12 percent of the caseload in New York City has identified
    substance abuse disorder, and it comes through when they apply
    for welfare. They get a basic screen at the welfare center, in
    a sense they are self-identifying, and then they get referred
    to us for a more thorough clinical evaluation----
        Mr. CROWLEY. My question is, do you think that----
        Mr. WETZLER. So there clearly are many, many more people
    than that that actually have a substance abuse disorder that
    are on the welfare system, but because they actually are
    participating and being referred for the work activities that
    are required, it is obviously not severe enough to interfere
    with that. So even though they are not identifying it, it isn't
    that severe or would ultimately become apparent when they
    actually are on the work site, in which case they would then be
    referred.
        Mr. CROWLEY. I think the country has a lot to learn what
    New York is doing. If New York was required to drug test every
    TANF applicant and recipient, that would most likely leave less
    money for treatment programs like yours.
        Do you think it is a better investment, given the nature of
    the resources that we have, to drug test everyone or to provide
    treatment to those who have been identified as needing
    assistance, as is done now?
        Mr. WETZLER. Well, it would be a huge, huge, practical
    problem to actually drug test everybody. It would be hugely
    expensive. There are two ways of doing drug testing. You can
    either do an oral swab, which is very easy but very expensive;
    you can do urine screens, which is much less expensive but kind
    of difficult to enforce. So it would be very difficult. It
    would be very expensive.
        The other thing I would say is that you would probably
    identify somewhere around 35 to 40 percent of the caseload that
    would test positive in that case, and it is not clear that you
    actually would be able to have the treatment capacity to
    receive all those people into treatment. So it is not clear
    what you would even do with that information if you had it.
        Mr. CROWLEY. Dr. Pavetti, can you comment on that, please?
        Ms. PAVETTI. I think that the evidence we have from other
    programs or studies suggest that that number is too high. I am
    not sure it would be that high at all. And Florida's experience
    of doing drug testing has a very low percentage. So I think
    that the percent who would test positive wouldn't be that high.
        The other thing I think is important about substance abuse
    is that there seems to be an impression that most States exempt
    people who have substance abuse problems.
        I actually did work on substance abuse programs in TANF
    agencies, and that really is not the case. What New York has
    done is very much what other States do except most States don't
    do as much around providing case management or the treatment.
    But they do, if someone has a substance abuse program issue,
    they require them to participate in treatment, or they require
    them to participate in work, and they are sanctioned just like
    everybody else if they do not participate. So I think the idea
    that they are exempted is just a misnomer, and not accurate,
    based on what States actually do in practice.
        Mr. CROWLEY. I thank you both. My time has run out.
        I appreciate again, Mr. Chairman, your giving the
    opportunity for this hearing. I think the Nation has a lot to
    learn in terms of what is happening in New York today in terms
    of TANF and drug treatment, and I appreciate this hearing today
    very much. Thank you.
        Chairman DAVIS. Thank you very much. And I would like to
    thank everybody for taking the time to come here today. I
    appreciate your help and understanding----
        Mr. MCDERMOTT. Mr. Chairman, can I make a unanimous consent
    request?
        Chairman DAVIS. Yes.
        Mr. MCDERMOTT. I ask unanimous consent that an article from
    today's Politico, September 8, by Joe Stiglitz, called ``All
    Roads Won't Lead to Economic Downfall and Doom,'' be entered
    into the record.
        Chairman DAVIS. Without objection, so be it.
        [The information follows:]

        Chairman DAVIS. If members have additional questions, they
    will submit them to you in writing, and we would appreciate
    your responses back to us for the record as well as to them.
    And with that, the committee stands adjourned.

        [Whereupon, at 3:30 p.m., the subcommittee was adjourn]