[Federal Register Volume 60, Number 158 (Wednesday, August 16, 1995)]
[Notices]
[Pages 42574-42576]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20294]



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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families


Aid to Families With Dependent Children Program: Demonstration 
Projects Under Section 1115(a) of the Social Security Act

AGENCIES: Office of the Secretary; Administration for Children and 
Families (ACF), HHS.

ACTION: Public Notice.

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SUMMARY: This public notice invites States to submit demonstration 
project applications under section 1115(a) of the Social Security Act 
to test welfare reform strategies in various areas. It further advises 
that the Department would commit to approving applications that comply 
with the demonstration components within 30 days of receipt.

FOR FURTHER INFORMATION CONTACT: Howard Rolston, Administration for 
Children and Families, Department of Health and Human Services, 370 
L'Enfant Promenade, 7th Floor, West Wing, Washington, DC 20447, (202) 
401-9220.

SUPPLEMENTARY INFORMATION:

I. General

    Under Section 1115, the Department of Health and Human Services 
(HHS) is given latitude, subject to the requirements of the Social 
Security Act, to consider and approve demonstration proposals that are 
likely to assist in promoting the objectives of titles IV-A and B and 
XIX of the Act. The Department believes that State experimentation 
provides valuable knowledge that will help lead to improvements in 
achieving the purposes of the Act. Since January 1993, HHS has approved 
33 welfare reform demonstration projects testing a broad range of 
strategies designed to promote the objectives of title IV.
    The Department has reviewed the provisions of these projects, as 
well as those of prior projects, data from completed and continuing 
projects, other literature evaluating the welfare system, and the 
welfare reform proposals being considered by Congress. Based on this 
review, and our commitment to transform the Aid to Families With 
Dependent Children system into one that provides maximum opportunities 
and incentives for families to achieve financial independence, we have 
identified five strategies for improving the efficacy of the welfare 
system in helping recipients become self-sufficient for which we 
believe additional experimentation would be especially useful. We have 
concluded that demonstrations testing these strategies are likely to 
provide important new information on ways to accomplish the objectives 
of the Social Security Act more effectively and efficiently. This 
information can guide the development of both national and state 
policy.
    These strategies are: (1) Work requirements, including limited 
exemptions from such requirements; (2) time-limited assistance for 
those who can work; (3) improving payment of child support by requiring 
work for those owing support; (4) requirements for minor mothers to 
live at home and stay in school; and (5) public-private partnerships 
under which AFDC grants are diverted to private employers to develop 
jobs and training programs. These areas, and approvable demonstration 
project provisions, are discussed in detail in section II below.
    To date, the Department has approved a number of demonstration 
projects including components using one or more of these strategies. We 
have reviewed comments submitted regarding each of these strategies. 
Our overall judgment is that testing additional demonstrations in each 
of these areas would likely promote financial security for dependent 
children within a stable family and, thus, further the objectives of 
the Social Security Act. (Specific rationales justifying demonstrations 
in each policy area are set out in section II.) Moreover, in view of 
every state's unique circumstances, the Department believes that it is 
critically important that each state be given the opportunity to test 
combination(s) of these strategies that are designed to address the 
needs of the recipients in that state.
    Accordingly, we plan to approve within 30 days of receipt 
demonstration project applications that States submit which would 
implement, on a statewide or substate basis, any (or any combination) 
of the provisions discussed in section II. Further, because such 
projects may incorporate only the provisions already announced in this 
notice, which have been found by the Secretary to further the 
objectives of the Social Security Act, the Department will not apply 
its ``Federal Notice'' procedures generally applicable to demonstration 
projects. 59 Fed. Reg. 49250 (1994). Other policies and procedures 
stated in that notice remain applicable, including state public notice 
requirements, rigorous evaluation, and cost neutrality, except that the 
application and review process with 

[[Page 42575]]
respect to the latter two requirements will be modified to facilitate 
the faster process.

II. Demonstration Project Areas and Techniques
A. Requiring People on Welfare to Work and Providing Adequate Child 
Care to Permit Them To Do It

    Since Congress enacted the JOBS program in 1988, a central goal of 
the AFDC program has been to move recipients into the labor force, 
while ensuring that their children receive necessary child care while 
their parents are in activities that promote self-sufficiency. There is 
a mounting body of evidence that mandatory activities involving a 
connection with the work force can lead to substantial increases in 
employment and earnings among welfare recipients. Studies of various 
welfare-to-work approaches, conducted over the past decade in different 
parts of the country subject to different labor market conditions, have 
consistently shown significant gains in earnings. In the most recent 
results, from three sites in the Department's JOBS Evaluation, an 
approach emphasizing job search, work activity, and short-term 
employment-focused training yielded a 23-percent increase in overall 
employment and a 22-percent reduction in AFDC expenditures at the two-
year point, and a 39-percent increase in employment with earnings 
equivalent to at least $10,000 per year.
    Although much is known in general about the effectiveness of such 
programs, more study is needed concerning what works and which 
approaches are most effective for which individuals. Therefore, we are 
inviting demonstrations that test the effects of requiring recipients 
to work in subsidized or unsubsidized jobs, to perform community 
service, or to engage in rigorous job search and job preparation. 
States can narrow the categories of recipients that are exempt from 
work requirements. They also can test the effects of progressively 
increasing the sanctions for non-compliance, so that work requirements 
have more teeth. To protect children, states must ensure that child 
care is available for those who are being required to work.

B. Setting Time Limits for Welfare Receipt, to be Followed by Work

    Most of the people who enter the welfare system do not stay on AFDC 
for many consecutive years. Two out of three persons who enter the 
welfare system leave within two years and fewer than one in ten spends 
five consecutive years on AFDC. Most recipients use the AFDC program 
not as a permanent alternative to work, but as temporary assistance 
during times of economic difficulty.
    While persons who remain on AFDC for long periods represent only a 
modest percentage of all people who ever enter the system, they do 
represent a high proportion of those on welfare at any given time. 
Finding ways of helping these persons become self-sufficient is 
extremely important in promoting their well-being and that of their 
children. Although many face serious barriers to employment, others are 
able to work but are not moving in the direction of self-sufficiency.
    Many analysts believe that time-limited benefits would help to move 
employable welfare recipients toward work and away from reliance on 
welfare. There is not a large body of research in this area. Several 
states have begun demonstrations of various forms of time limits. More 
study is needed in order to know the effects of time limits.
    For this reason, we are inviting demonstrations that test the 
effects of systems of individualized time limits, systems of time 
limits followed by work, preferably in the private sector, in 
subsidized work or community service if necessary, and systems of 
straight time limits, with exemptions from the time limit for those 
who, despite good faith efforts, are unable to work or find a job. 
Consistent with the objectives of the Act, demonstrations must protect 
families where the adult, through no fault of her or his own, is unable 
to find employment.

C. Requiring Fathers to Pay Child Support or go to Work to Pay Off What 
They Owe

    There is substantial evidence that many custodial parents now 
receiving AFDC would not need this support if they received child 
support from the non-custodial parent. One of the primary reasons for 
non-support by some non-custodial parents, especially never-married 
fathers, is unemployment and underemployment. Many of these fathers 
need both assistance and incentives to obtain employment and pay 
support. Without work requirements, job readiness assistance, job 
training, and community service, it will be difficult for many of these 
fathers to contribute very much to the financial support of their 
children.
    The available program evaluation research focusing on non-custodial 
parents indicates that a number of programs show promise in assisting 
these fathers to support their children. The Parents' Fair Share (PFS) 
demonstration programs have developed effective procedures to identify 
eligible non-custodial parents and have established court-based 
processes to require fathers to participate in work-based program 
activities and to enforce regular participation. Preliminary data from 
PFS shows that the work and training requirements provide states a 
promising mechanism to discover previously unreported income of non-
paying, non-custodial parents. Also, in the PFS sites, as well as in 
other non-custodial parent demonstration programs, title IV-D agencies 
have developed flexible and responsive child support enforcement 
systems to complement non-custodial parent work and training 
requirements.
    Further testing of these requirements will assist us in determining 
whether this approach will result in increased child support payments 
and will enhance non-custodial parents' overall support of their 
children. To build on the knowledge base being developed through PFS 
and similar demonstrations, we are inviting demonstrations that require 
unemployed or underemployed non-custodial parents who owe child support 
to work or participate in work experience, community service, or job 
preparation activities.

D. Requiring Minor Mothers to Live at Home and Stay in School

    It has become increasingly important to obtain at least a high 
school diploma in order to obtain employment and become self-
sufficient. Moreover, a high school diploma may be essential to achieve 
a decent standard of living.
    A study of teenage childbearing in the 1980's found that in 1986 
only 56 percent of women in their twenties who had given birth at age 
17 or younger had completed high school, compared with over 90 percent 
of those who delayed childbearing until after their teenage years. 
Little has changed since then. While we are beginning to obtain more 
knowledge of the types of programs that are successful in encouraging 
and helping minor mothers finish high school, we need to know 
considerably more about what works. Therefore, demonstrations testing 
ways of helping minor parents complete schooling are extremely 
important.
    Congress already has recognized that one means of helping minor 
parents complete school and meet the needs of their children is to have 
these young parents live with their own families. States now have the 
option of requiring minor parents to live at home, provided that this 
is a safe environment for them. To facilitate these arrangements, and 
to 

[[Page 42576]]
ensure that AFDC benefits are spent in a manner that achieves the goals 
of the Social Security Act, a number of states are experimenting with 
programs that direct the AFDC payment to the responsible adult, rather 
than to the minor mother. This strategy recognizes the importance of 
promoting general family responsibility.
    Another strategy that has had success in Ohio and several other 
demonstration sites is setting up incentives and penalties for teen 
parents designed to have them stay in school. The recently completed 
study of Ohio LEAP found the program to be successful in increasing the 
rate at which teens who were already enrolled in school remained 
enrolled and in increasing the rate at which those who had already 
dropped out of school returned to high school or an equivalent program. 
Further testing of this type of strategy should enable us to determine 
whether these results can be replicated, and improved upon, in other 
settings and through variations in program design.
    For these reasons, we are inviting demonstrations that require 
minor mothers to live with parents or relatives or in a supervised 
living situation, as long as the home is not dangerous to the physical 
or emotional health or safety of the minor; that direct the AFDC 
payment to the responsible adult, rather than to the minor mother; and 
that require minor mothers to stay in school and utilize reasonable 
sanctions and incentives tied to school attendance.

E. Paying the Cash Value of Welfare and Food Stamps to Private 
Employers as Wage Subsidies When They Hire People Who Leave Welfare and 
Go To Work

    The effectiveness of subsidized employment in increasing 
employment, earnings, and self-sufficiency has been studied over the 
last 20 years. A number of rigorously evaluated programs have shown 
positive effects on increasing the earnings of welfare recipients who 
participated in them. This was also found to be true in the more recent 
national evaluation of the Job Training Partnership Act program.
    By combining AFDC and Food Stamp benefits, a state could create a 
very substantial subsidy that encourages employers to hire AFDC 
recipients. This form of wage subsidy has the potential of increasing 
the number of recipients who are able to obtain unsubsidized 
employment.
    Subsidized employment has generally been a very small scale 
activity within the JOBS program. Demonstrations using AFDC and Food 
Stamp benefits would provide important information on the ability of 
this approach, when applied on a larger scale, to increase the 
employment, earnings, and self-sufficiency of AFDC recipients. They 
also will provide important information regarding the degree to which 
employers respond to wage subsidies.
    Therefore, we are inviting demonstrations of systems where AFDC and 
Food Stamps benefits become wages, paid by employers when recipients 
work, as long as the jobs meet minimum standards, and families receive 
at least as much total income as they would have from AFDC and Food 
Stamps. States can choose to ask employers to pay into an account to 
help the recipient make the transition into unsubsidized employment.

Information on Application

    The Administration for Children and Families, will be mailing state 
welfare departments a ``Welfare Reform Demonstration: Special 
Application Form''. This form should facilitate requests for waivers in 
the five specified areas. Requests for further information and/or forms 
should be addressed to Howard Rolston at the address listed above. 
Additionally, by August 21, 1995, states can obtain information on the 
waiver process and on electronic filing of waiver applications on the 
internet. On the world wide web, the URL (universal resource locator) 
is http://www.acf.dhhs.gov. Gopher users can use gopher.acf.dhhs.gov.

(Catalog of Federal Domestic Assistance Program, No. 93562; 
Assistance Payments--Research)

    Dated: August 11, 1995.
Mary Jo Bane,
Assistant Secretary for Children and Families.
[FR Doc. 95-20294 Filed 8-15-95; 8:45 am]
BILLING CODE 4184-01-P