Welfare Reform: Progress in Meeting Work-Focused TANF Goals (Testimony,
03/15/2001, GAO/GAO-01-522T).

This testimony discusses the progress of welfare reform. GAO found that
states are transforming the nation's welfare system into a work-based,
temporary assistance program for needy families, with a focus on moving
people into employment rather than signing them up for cash assistance.
States' implementation of Temporary Assistance for Needy Families
(TANF), undertaken in a time of strong economic growth, has been
accompanied by a 50 percent decline in the number of families receiving
cash welfare. GAO's review of state-sponsored studies available in 1999
and several more recent studies show that most of the adults in families
remaining off the welfare rolls were employed at some time after leaving
welfare. All six of the states GAO visited have modified their "work
first" programs to better serve recipients who face difficulties in
entering the workforce. States have found that some of the recipients
with such difficulties do, in fact, find jobs. While states have made
significant progress in meeting work-focused goals, as welfare reform
continues to evolve, attention should be paid to these issues (1)
emphasizing and enhancing work-based strategies, including engaging
hard-to-employ recipients in work and helping families stay off welfare
and increase their earnings and (2) fostering and facilitating improved
management and service delivery approaches by states.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GAO-01-522T
     TITLE:  Welfare Reform: Progress in Meeting Work-Focused TANF
	     Goals
      DATE:  03/15/2001
   SUBJECT:  Workfare
	     State-administered programs
	     Welfare recipients
	     Public assistance programs
	     Disadvantaged persons
	     Program graduation
	     Employment or training programs
	     Federal/state relations
IDENTIFIER:  Aid to Families with Dependent Children Program
	     HHS Temporary Assistance for Needy Families Block Grant
	     California
	     Connecticut
	     Florida
	     Maryland
	     Michigan
	     Washington
	     HHS Temporary Assistance for Needy Families Program

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GAO-01-522T

For Release on Delivery Expected at 11: 00 a. m. Thursday, March 15, 2001

GAO- 01- 522T

WELFARE REFORM Progress in Meeting WorkFocused TANF Goals

Statement of Cynthia M. Fagnoni, Managing Director Education, Workforce, and
Income Security Issues Testimony

Before the Subcommittee on Human Resources, Committee on Ways and Means,
House of Representatives

United States General Accounting Office

GAO

Page 1 GAO- 01- 522T

Mr. Chairman and Members of the Subcommittee: Thank you for inviting me here
today to discuss the progress of welfare reform and our related work. The
1996 Personal Responsibility and Work Opportunity Reconciliation Act of 1996
(P. L. 104- 193) (PRWORA) significantly changed federal welfare policy for
low- income families with children, building upon and expanding state- level
reforms. It ended the federal entitlement to assistance for eligible needy
families with children under Aid to Families With Dependent Children (AFDC)
and created the Temporary Assistance for Needy Families block grant (TANF),
designed to help needy families reduce their dependence on welfare and move
toward economic independence. Under TANF, states have increased flexibility
to meet four broad goals:

Providing assistance to needy families so that children may be cared for in
their own homes or in the homes of relatives;

Ending the dependence of needy parents on government benefits by promoting
job preparation, work, and marriage;

Preventing and reducing the incidence of out- of- wedlock pregnancies; and

Encouraging the formation and maintenance of two- parent families. In
addition, PRWORA requires states to impose federal work and other program
requirements on most adults receiving aid and to enforce a lifetime limit of
5 years, or less at state option, on the receipt of federal assistance.

As states have implemented TANF, this Subcommittee has asked us to examine a
broad range of welfare reform issues. My testimony today will focus on the
progress of welfare reform related to the goals of providing assistance and
reducing dependency by promoting work. More specifically, it discusses (1)
states' progress in implementing TANF, (2) the status of families who have
left welfare, (3) the characteristics of adults currently receiving TANF and
state strategies for helping hard- to- employ recipients find jobs, and (4)
emerging issues as welfare reform evolves. The information on former welfare
recipients is from our 1999 review of state studies and more recent studies.
Information on current welfare recipients and state strategies for serving
hard- to- employ recipients is drawn from our latest review of national
data, numerous research studies, and visits to six states from a new report
to this Subcommittee to be released soon. Welfare Reform: Progress in
Meeting WorkFocused

TANF Goals

Welfare Reform: Progress in Meeting WorkFocused TANF Goals

Page 2 GAO- 01- 522T

In summary, our work shows that states are transforming the nation's welfare
system into a work- based, temporary assistance program for needy families,
with a focus on moving people into employment rather than signing them up
for cash assistance. States' implementation of TANF, undertaken in a time of
strong economic growth, has been accompanied by a 50 percent decline in the
number of families receiving cash welfare- from 4.4 million in August 1996
to 2.2 million as of June 2000. Our review of state- sponsored studies
available in 1999 and several more recent studies show that most of the
adults in families remaining off the welfare rolls were employed at some
time after leaving welfare. Of adults who continue to receive TANF cash
assistance, national data show that a higher percentage is currently engaged
in work than previously- 17 percent in fiscal year 1997 compared to 25
percent in fiscal year 1999. A majority of those on the rolls, however, are
not working or engaged in work activities, in part because many have
characteristics that make it difficult for them to get and keep jobs. All
six of the states we visited have modified their “work first”
programs- designed to move recipients quickly into jobs- to better serve
recipients who face difficulties in entering the workforce. States have
found that some of the recipients with such difficulties do, in fact, find
jobs. While states have made significant progress in meeting work- focused
goals, as welfare reform continues to evolve, attention should be paid to
these issues:

Emphasizing and enhancing work- based strategies, including engaging hard-
to- employ recipients in work and helping families stay off welfare and
increase their earnings; and

Fostering and facilitating improved management and service delivery
approaches by states.

Consistent with the thrust of the federal welfare reform law, states are
moving away from a welfare system focused on entitlement to assistance to
one that emphasizes finding employment as quickly as possible, called a
“work first” approach. Our work and other studies show that many
states and localities have transformed their welfare offices into job
placement centers. In some locations, applicants are expected to engage in
job search activities as soon as they apply for assistance and may be
provided support services, such as child care and transportation, to support
their work efforts without adding them to the welfare rolls. Our recently
issued report on child care noted that spending on child care programs for
lowincome families under TANF and the Child Care and Development Fund As
States

Implemented Welfare Reform Amid Strong Economic Growth, Welfare Caseloads
Dropped 50 Percent

Welfare Reform: Progress in Meeting WorkFocused TANF Goals

Page 3 GAO- 01- 522T

increased substantially in recent years, from $4.1 billion in fiscal year
1997 to $6.9 billion in fiscal year 1999 in constant dollars. 1

As many welfare offices have increased their emphasis on work activities,
welfare offices and workers are also focusing more on helping clients
address and solve problems that interfere with employment. In addition, some
states are using the flexibility allowed under TANF to continue providing
services to families who left the welfare rolls as a result of employment,
including, in some cases, providing case management services to help ensure
that families can deal with problems that might put parents' jobs at risk.
Some states are also providing services to low- income working families not
receiving cash assistance.

States' implementation of more work- based programs, undertaken under
conditions of strong economic growth, has been accompanied by a dramatic
decline in the number of families receiving cash welfare. As shown in figure
1, the number of families receiving welfare remained steady during the 1980s
and then rose rapidly during the early 1990s. 2 The caseload decline began
in 1995 and accelerated after passage of PRWORA, with a 50 percent decline
in the number of families receiving cash welfare- from 4.4 million families
in August 1996 to 2.2 million families in June 2000. Caseload reductions
occurred in all states, ranging from 10 percent in the District of Columbia
to 85 percent in Wyoming. 3 While economic growth and state welfare reforms
have been cited as key factors to explain nationwide caseload decline, there
is no consensus about the extent to which each factor has contributed to
these declines. 4

1 Child Care: States Increased Spending on Low- Income Families (GAO- 01-
293, Feb. 2, 2001). 2 A Congressional Budget Office (CBO) model attributes
more than half of the growth in AFDC caseloads between 1989 and 1992 to
increases in the number of female- headed families (especially never-
married females) and approximately one- fourth of the growth to the
recession and to the weak economy that preceded and followed the recession.
CBO Staff Memorandum, Forecasting AFDC Caseloads, With an Emphasis on
Economic Factors (CBO, Washington, D. C.: July 1993).

3 Data on caseload reductions for families by state utilize January 1997 to
June 2000 data. 4 Studies have specifically cited the following reasons for
the caseload decline: changes made by PRWORA; state changes to welfare
programs that preceded PRWORA; changes in client and caseworker behavior;
past increases in the minimum wage; and low unemployment rates. See Council
of Economic Advisers, The Effects of Welfare Policy and the Economic
Expansion on Welfare Caseloads: An Update (Washington D. C.: Council of
Economic Advisers, Aug. 1999). See also Rebecca M. Blank, What Causes Public
Assistance Caseloads to Grow? (Cambridge, Mass.: National Bureau of Economic
Research, Dec. 1997).

Welfare Reform: Progress in Meeting WorkFocused TANF Goals

Page 4 GAO- 01- 522T

Figure 1: Number of Families Receiving Welfare From 1982 Through June 2000

Source: Department of Health and Human Services (HHS), Administration for
Children and Families.

Welfare Reform: Progress in Meeting WorkFocused TANF Goals

Page 5 GAO- 01- 522T

Information on former welfare recipients shows that most adults who left
welfare had at least some attachment to the workforce. Our 1999 review on
the status of former welfare recipients identified studies from seven states
that provided representative data on families leaving welfare. 5 Employment
rates among adults in the families who left welfare in these seven states
ranged from 61 to 87 percent. 6 However, the employment rates were measured
in different ways. Studies measuring employment at the time of follow- up
reported employment rates from 61 to 71 percent. Studies measuring whether
an adult in a family had ever been employed since leaving welfare reported
employment rates from 63 to 87 percent. A more recent review of state and
local- level studies supported by funds from HHS' Office of the Assistant
Secretary for Planning and Evaluation (ASPE) shows similar patterns. 7 In
addition, a recent report by the Urban Institute, using data from its 1999
National Survey of America's Families (NSAF)- a nationally representative
sample- finds that 64 percent of former recipients who did not return to
TANF reported that they were working at the time of follow- up, while
another 11 percent reported working at some point since leaving welfare. 8

Not all families who leave welfare remain off the rolls. In the seven
studies we reviewed, the percentages of the families who left welfare and
then returned to the rolls ranged from 19 percent after 3 months in Maryland
to 30 percent after 15 months in Wisconsin. In ASPE's recent review of state
and local- level studies, the proportion of families who returned to welfare
within 12 months after exit ranged from 12 percent in San Mateo County,

5 See Welfare Reform: Information on Former Recipients' Status (GAO/ HEHS-
99- 48, Apr. 28, 1999). In this report we identified 18 studies about former
recipients and summarized the findings from eight of these studies
(representing seven states) based on whether the results could be
generalized to most families who left welfare in the state at the time of
the study. The states we studied are Indiana, Maryland, Oklahoma, South
Carolina, Tennessee, Washington, and Wisconsin. Because the seven states'
studies differed in time periods covered- from as early as 1995 to as late
as 1998- and categories of families studied, the results are not completely
comparable.

6 Employment rates in various studies generally excluded families who
returned to welfare. Removing families who return to welfare from the
employment rate calculations results in higher employment rates, because
many former recipients who return to the welfare rolls are not employed.

7 ASPE has encouraged the use of comparable measures among research focused
on former recipients. ASPE awarded grants to states and the research
community in fiscal years 1998, 1999, and 2000 for studies in 10 states and
three large counties.

8 Pamela Loprest, How Are Families Who Left Welfare Doing Over Time? A
Comparison of Two Cohorts of Welfare Leavers (Washington, D. C.: Urban
Institute, Dec. 8, 2000). Respondents had been off TANF from between 3
months to more than 12 months at time of follow- up interview. Most Adults
in

Former Welfare Families Were Employed at Some Time After Leaving Welfare,
Often at LowWage Jobs

Welfare Reform: Progress in Meeting WorkFocused TANF Goals

Page 6 GAO- 01- 522T

California, to 29 percent in Cuyahoga County, Ohio. 9 The study using 1999
NSAF data reported that 22 percent of those who had left the rolls were
again receiving benefits at time of the survey follow- up.

Of those who left welfare, former recipients in the seven states we reviewed
had average quarterly earnings that generally ranged from $2,378 to $3,786
or from $9,512 to $15,144 annually. 10 This estimated annual earned income
is greater than the maximum annual amount of cash assistance and food stamps
that a three- person family with no other income could have received in
these states. 11 However, if these earnings were the only source of income
for families after they leave welfare, many of them would remain below the
federal poverty level. 12

In addition to information on individuals' earned incomes, former
recipients' total household income and use of other government supports are
key to understanding the circumstances of these families. For example, the
recently expanded earned income credit (EIC) can increase the incomes of
qualified low- income families by as much as $2,271 for families with one
child and $3,756 for families with two or more children. 13 The ASPE review
of state and local- level studies reported that there were limited data on
total household income. Reports from the few states that attempted to gather
this information found that 45 to 50 percent of household income comes from
the adult leaving TANF, 20 to 40 percent from others in the household, and
between 3 and 8 percent from other sources, such as child support and
Supplemental Security Income. More is known about former recipients' use of
other government supports. Some of the state studies we reviewed reported
that between 44 and 83 percent of the families who left welfare received
Medicaid benefits, and between 31 and 60 percent received food stamps. More
recent research at the state

9 Julia B. Isaacs and Matthew Lyon, A Cross- State Examination of Families
Leaving Welfare: Findings From the ASPE- Funded Leavers Studies, presented
at the National Association for Welfare Research and Statistics 40th Annual
Workshop in Scottsdale, Ariz. (Aug. 1, 2000; revised Nov. 6, 2000).

10 We estimated annual incomes by extrapolating quarterly earnings; states
did not provide information on annual earnings. Using this method may
overestimate the annual earnings, as a former recipient may have worked
fewer than four quarters.

11 In these seven states, for a single- parent, three- person family with no
income, the maximum annual amount of cash assistance and food stamps
combined ranged from $6,000 in Tennessee to $9,744 in Washington as of
January 1997.

12 For 1998, the federal poverty level for a family of three was $13,650. 13
The EIC is a refundable tax credit for qualified working people who have
earned incomes below certain specified levels.

Welfare Reform: Progress in Meeting WorkFocused TANF Goals

Page 7 GAO- 01- 522T

level and nationally also shows differences in the rate of Medicaid and food
stamps receipt among former welfare recipients.

While many adults have left the welfare rolls for work, those remaining on
the rolls have increased their work efforts. Nationwide, the percentage of
TANF recipients combining welfare and work has risen from 17 percent in
fiscal year 1997 to 25 percent in fiscal year 1999. Most current recipients,
however, are not engaged in work or work activities as defined by PRWORA. At
least in part, this may be because many current recipients have
characteristics that make it difficult for them to work, according to data
from national surveys and several studies, as well as from officials in the
six states that we visited. 14 The states we visited had taken steps to help
hard- to- employ recipients move into jobs, such as improving and expanding
case management or providing programs and services targeted specifically to
prepare them for work. While recipients with one or more work- impeding
characteristics may find the transition to work difficult, the states have
found that some do find jobs.

14 For Welfare Reform: Moving Hard- to- Employ Recipients Into the Workforce
(GAO- 01- 368, forthcoming), we visited six states: California, Connecticut,
Florida, Maryland, Michigan, and Washington. In addition, we collected and
analyzed caseload data from these states and from Oregon, New York, and
Wisconsin. States Are Taking

Steps to Help Hard- toEmploy Recipients Find Jobs

Welfare Reform: Progress in Meeting WorkFocused TANF Goals

Page 8 GAO- 01- 522T

The proportion of TANF recipients nationwide who were engaged in
unsubsidized employment increased during the past few years. According to
our analysis of HHS data, the percentage of recipients who were engaged in
unsubsidized employment increased from 17 percent in fiscal year 1997 to 25
percent (or 400,000 recipients) in fiscal year 1999. 15 In the states we
reviewed that provided us with data on their caseload characteristics, the
percentage of the caseload that was employed ranged from 6 percent to just
under 40 percent. 16 This wide range of rates may be explained in part by
the varying state policies on the amount of earnings a person may retain
while still remaining eligible for welfare. 17

Although more TANF recipients are combining welfare and work, in fiscal year
1999 a majority did not participate in work activities- a monthly average of
nearly 60 percent of all TANF recipients nationwide. Although this may have
been caused by weak implementation of state work programs, the
characteristics of TANF recipients may affect their abilities to engage in
work and work activities. Studies have shown that having certain
characteristics, such as poor health or disability, no high school diploma,
limited work experience, exposure to domestic violence, substance abuse, and
limited English proficiency, makes engaging in work activities more
difficult. Based on data from its 1997 National Survey of America's Families
(NSAF), the Urban Institute found that the greater the number of these
characteristics a TANF recipient has, the less likely that recipient is to
be engaged in work or work activities. 18 The survey showed that 88 percent
of recipients who had none of these characteristics were working or engaging
in work- related activities, compared to 59 percent with one of these
characteristics and 27 percent with three or more (see

15 Percentages represent the average monthly number of families with at
least one adult engaged in unsubsidized employment divided by the number of
families in the overall work rate, as defined by the Administration for
Children and Families. The families included in the overall work rates are
all TANF families except (1) child- only cases and (2) families disregarded
for one of the three reasons allowed under federal law: (a) they have a
child under age 1; (b) they are participating in the tribal work program; or
(c) they were sanctioned during the month but not for more than 3 of the
past 12 months.

16 Data were reported by states and may not be consistent with each other.
17 Some experts have speculated that this wide range may also be because
states that have enforced “work first” are likely to have
experienced the greatest caseload decline and thus lower work levels for
those remaining on the rolls.

18 NSAF is an ongoing, nationally representative survey, of the
noninstitutionalized, civilian population of persons under age 65 in the
nation as a whole. Sheila Zedlewski, Work- Related Activities and
Limitations of Current Welfare Recipients (Washington D. C.: The Urban
Institute, July 1999). A Majority of TANF

Recipients Are Not Engaged in Work Activities, in Part Because Many Have
Characteristics That Make it Difficult for Them to Get and Keep Jobs

Welfare Reform: Progress in Meeting WorkFocused TANF Goals

Page 9 GAO- 01- 522T

fig. 2). 19 Officials in all six of the states we visited agreed that
recipients with one or more work- impeding characteristics find it hardest
to successfully enter the workforce, and are often referred to as hard-
toemploy recipients. However, states have found that while having these
characteristics makes employment difficult, some recipients do, in fact,
find jobs.

Figure 2: TANF Recipients Engaged in Work or Work Activities, by Number of
Obstacles to Employment, 1997

88% 59%

43% 27%

0% 10%

20% 30%

40% 50%

60% 70%

80% 90%

100% 0 1 2 3+

Number of Obstacles

Source: 1997 NSAF, The Urban Institute.

Our analysis of existing studies showed that a considerable percentage of
TANF recipients have characteristics that make it difficult for them to
work. Table 1 identifies the range of estimates a number of studies provide
on the prevalence of some of these characteristics in the welfare
population. For example, estimates of the proportion of the welfare caseload
with health problems or disability range from 20 to 40 percent, and the
proportion of the caseload with no high school diploma from 30 to 45
percent.

19 The Urban Institute analysis counted only those characteristics shown to
significantly depress work activity as obstacles to employment: less than a
high school education, last employment 3 or more years ago, child under age
1, either very poor mental health or health condition that limits work,
caring for a disabled child, and limited English. NSAF did not collect data
on domestic violence or substance abuse.

Welfare Reform: Progress in Meeting WorkFocused TANF Goals

Page 10 GAO- 01- 522T

Table 1: Prevalence of Selected Characteristics Among TANF Recipients Based
on Selected Studies

Characteristic Estimated range

of TANF recipients with characteristic

(percent) Number of

selected studies measuring this

characteristic

Health problems or disabilities 20- 40 12 Lack of high school diploma 30- 45
8 Current domestic violence 10- 30 7 Lack of job skills 20- 30 3 Substance
abuse 3- 12 8 English as a second language 7- 13 4 Multiple barriers 44- 64
5

Note: Studies were conducted between 1997 and 1999. The estimates provided
by each study are not directly comparable to those from other studies
because each defines characteristics slightly differently and examines a
different specific population. For example, when measuring the incidence of
substance abuse, one study counted only recipients who self- reported
seeking substance abuse treatment while another counted recipients believed
by case managers to need to address substance abuse problems. Likewise, the
scope of the studies varies; most cover only a single state or community
while one is national in scope. Because of difficulties identifying and
measuring these characteristics, these studies may understate the prevalence
of these characteristics among TANF recipients. Nonetheless, together these
studies give a rough indication of the prevalence of these characteristics
among TANF recipients.

Information from the states we visited is consistent with the studies' data.
Officials in these states indicated that many recipients have poor mental or
physical health, have substance abuse problems, or were victims of domestic
violence. Some officials noted that the actual extent of these
characteristics can be hard to determine because most states and localities
rely on recipients to disclose this information about themselves to their
case managers, which they are often reluctant to do.

The six states we visited implemented a TANF program that can be
characterized as “work first” and, as a result, their TANF
programs share a few common elements. All of the programs seek to move
people from welfare into unsubsidized jobs as quickly as possible. Officials
expressed the belief that the best way to succeed in the labor market is to
join it, and the best setting in which to develop successful work habits and
skills is on All Six of the States We

Visited Have Modified Their “Work First” Programs to Better
Serve Hard- to- Employ Recipients

Welfare Reform: Progress in Meeting WorkFocused TANF Goals

Page 11 GAO- 01- 522T

the job. 20 However, to varying degrees, these six states have modified or
enhanced their approach to better serve recipients for whom the “work
first” approach is not successful because they have characteristics
that may impede employment. The states we visited differ markedly in their
approach to identifying recipients who have these characteristics so that
they can either be exempted from work requirements or provided with targeted
programs and services that would help them obtain employment. Some states
and localities require TANF recipients to look for a job and offer enhanced
services only to those who are unsuccessful, while others begin by screening
and assessing new applicants to identify those with characteristics that
might impede their ability to get a job. The strategies states use to assist
those recipients identified as hard- to- employ also vary. Some of the
states we visited have focused their efforts on improving and expanding case
management, while others have targeted programs and services specifically to
prepare hard- to- employ recipients for work. All six of the states we
visited also refer recipients to programs run by non- TANF agencies and
organizations that help recipients deal with specific problems such as
substance abuse and mental illness that may affect their ability to get and
keep a job.

During our site visits, state and local officials reported program success
at the local level. For example, in Grand Rapids, Michigan, the local TANF
agency has stationed two case managers at a large company that employs TANF
recipients to help hard- to- employ recipients retain their jobs. These on-
site case managers serve as a resource both for employees and for the
employer, helping employees cope with crises that might otherwise cause them
to lose their jobs, and intervening on behalf of the employer at the first
sign of trouble. The company's retention rate for current and former TANF
recipients was 81 percent, as compared to only 33 percent for their non-
TANF employees. Company officials directly attributed the higher retention
rates to on- site case management and cooperation from the local TANF
agency.

20 A recent study by the Manpower Demonstration Research Corporation (MDRC)
reviews 20 welfareto- work programs and assesses the effectiveness of these
programs at increasing the employment and earnings of single- parent welfare
recipients. The study found that employment- focused welfare programs
resulted in higher earnings for the most disadvantaged recipients than
education- focused programs, but that programs with a mix of activities
tended to help the broadest range of people. See Charles Michalopoulos,
Christine Schwartz, and Diana Adams- Ciardullo, What Works Best for Whom:
Impacts of 20 Welfare- to- Work Programs by Subgroup (New York, N. Y.: MDRC,
Aug. 2000).

Welfare Reform: Progress in Meeting WorkFocused TANF Goals

Page 12 GAO- 01- 522T

As states have taken steps to implement a work- based, temporary assistance
program for needy families, key issues have emerged, including continuing
support for work- for those on the welfare rolls and those already employed-
and building state and local management and service delivery capacity.

As many TANF recipients have moved into employment, emerging issues are
related to helping those remaining on the rolls move into the workforce,
enforcing work requirements in future years, and helping former welfare
recipients maintain their employment. The states we visited in 2000 said
that while some TANF recipients with work- impeding characteristics are able
to successfully enter the workforce, many need considerable time and support
in order to become work- ready, including services and work- preparation
activities that address their specific needs. To be successful in moving
hard- to- employ TANF recipients into the workforce within their 5- year
time limit for federal benefits, states will need to provide work-
preparation activities tailored to the needs of their hard- to- employ
recipients. To help states with this challenge, we have recommended that HHS
do more to promote research and provide guidance that would encourage and
enable states to estimate the number and characteristics of hard- to- employ
recipients. In addition, we have recommended that HHS expand the scope of
its guidance to states to help them use the flexibility they have under
PWRORA to provide appropriate work- preparation activities for hard- to-
employ recipients within the current TANF rules. During our site visits we
discovered that some states and localities did not understand the full range
of flexibility they have under the law.

In addition to working with hard- to- employ recipients, states must enforce
federal work requirements for most TANF recipients. The robust economy has
generally helped states meet federal work participation rates. In fiscal
year 1999, the highest percentage of TANF adult recipients meeting federal
work participation rates- 66 percent- was in unsubsidized employment.
Moreover, states were also aided in meeting federal participation rates by
receiving credits for the recent caseload reductions as allowed under
PRWORA. In the event of an economic downturn when jobs may be less readily
available, more states may turn to alternative activities for meeting their
work requirements. These activities could include subsidized employment,
work experience, community service, and on- the- job training, which we call
work- site activities. However, states have more limited experience with
work- site activities; nationwide only about 14 percent of TANF recipients
meeting federal work participation rates were in such activities in fiscal
year 1999. As a result, implementing large- scale Emerging Issues as

Welfare Reform Evolves

Emphasizing and Enhancing Work- Based Strategies

Welfare Reform: Progress in Meeting WorkFocused TANF Goals

Page 13 GAO- 01- 522T

work programs may prove challenging. 21 To provide valuable information for
administrators and policymakers on what could in the future become an
increasingly important part of TANF programs nationwide, we recommended that
HHS take steps to collect more information on worksite activities, including
supporting evaluations of them, and disseminate such information to the
states. HHS has taken steps to support some evaluations in this area.

While promoting work among those receiving welfare is essential, some states
have turned their attention to supporting the work efforts of those who have
left the rolls. Many former welfare recipients are employed in low- wage
jobs and at risk of returning to welfare. TANF provides states the
flexibility to devise and implement strategies that help such families
maintain and advance in their jobs. Some states and localities have
undertaken efforts to help low- wage workers upgrade their job skills to
improve their job prospects. For example, when we visited states in 1998, we
found that Michigan had set aside $12 million for postemployment training
for TANF clients who were already meeting their work requirements.
Similarly, Wisconsin had a $1 million Employment Skills Advancement Program
under which poor working parents- including TANF clients- received grants
for attending training programs through the workforce development system. 22
HHS is evaluating some projects designed to help former welfare recipients
retain their jobs and advance in the workplace.

As welfare agencies focus on moving needy families toward economic
independence by providing a wide array of services, such as child care, food
stamps, and employment and training services, they are drawing on numerous
federal and state programs- often administered by separate agencies. 23
These are sweeping changes that have profound implications for the
information needs of states and the automated systems designed to meet those
needs. Although automated systems in the 15 states we examined in 1999
supported welfare reform in many ways, a number of

21 Welfare Reform: Work- Site Activities Can Play an Important Role in TANF
Programs (HEHS- 00- 122, July 28, 2000).

22 Welfare Reform: States' Implementation and Effects on the Workforce
Development System (GAO/ T- HEHS- 99- 190, Sep. 9, 1999).

23 HHS oversees programs such as TANF, Medicaid, child care, and child
support enforcement; the Department of Agriculture oversees food stamps; and
the Department of Labor oversees employment and training programs. Fostering
and Facilitating

Improved Management and Service Delivery Approaches

Welfare Reform: Progress in Meeting WorkFocused TANF Goals

Page 14 GAO- 01- 522T

these systems have major limitations in one or more of three key areas- case
management, service planning, and program oversight. 24 We found, for
example, that some state and local agencies had difficulties in accessing
data on the characteristics of TANF recipients that the agencies could use
to identify and meet the service needs of their caseloads. We also
identified a gap in the ability of automated systems to support enforcement
of the 5- year TANF time limit across states. While states are making
efforts to improve their systems, they face obstacles- including some at the
federal level, such as the complexity of obtaining federal funding for
systems projects that involve multiple agencies. To facilitate states'
efforts, we recommended that HHS establish an interagency group to help
overcome this and other difficulties. HHS, Labor, and Agriculture have begun
meeting regularly to address these issues. Sustained high- level attention
will be needed to move forward in this important area.

Welfare agencies' increased focus on helping needy adults with children find
and maintain employment brings them directly into the province of the
workforce development system. 25 When we reviewed the role of the workforce
development system in providing services to welfare recipients in the states
in 1998, we observed that workforce development and welfare systems were
still largely independent. When the Congress created the Welfare- to- Work
grant program in 1997, under which it authorized $3 billion in grants to be
administered through the Department of Labor to help hard- to- employ
individuals, it provided an opportunity for the two systems, in
participating states, to collaborate. In addition, the passage of the
Workforce Investment Act (WIA) of 1998, designed to integrate and streamline
federal employment and training services, requires most employment and
training services to be provided through a single system, called the One-
Stop Center System. These recent changes in the workforce development
system, along with welfare reform, give states and localities an opportunity
to reassess how employment- related services are coordinated and delivered.
While providing TANF services through onestop centers is a state and local
option, we noted in our 2000 report that at the local level, 24 states
reported providing at least some TANF services on- site at a majority of
their one- stop centers. 26 Seven states provided

24 Welfare Reform: Improving State Automated Systems Requires Coordinated
Federal Effort (GAO/ HEHS- 00- 48, Apr. 27, 2000).

25 We define the workforce development system as the state or local entity
responsible for administering programs that originate through the Department
of Labor, such as the state Employment Service or Workforce Investment Act
programs.

26 Workforce Investment Act: Implementation Status and the Integration of
TANF Services (GAO/ THEHS- 00- 145, June 29, 2000).

Welfare Reform: Progress in Meeting WorkFocused TANF Goals

Page 15 GAO- 01- 522T

TANF employment and eligibility services, Medicaid, and food stamp services
at a majority of their one- stop centers. While it is too early to know what
service delivery approaches may prove most effective and efficient, as
welfare reform and WIA implementation evolve, research will be warranted to
determine best practices.

Mr. Chairman, this concludes my prepared statement. I will be happy to
respond to any questions you or other Members of the Subcommittee may have.

For future contacts regarding this testimony, please call Cynthia M. Fagnoni
at (202) 512- 7215 or Sigurd Nilsen at (202) 512- 7003. Individuals making
key contributions to this testimony included Sonya Harmeyer, Gale Harris,
Katrina Ryan, Kim Scotten, and Andrea Romich Sykes. GAO Contacts and

Acknowledgments

Page 16 GAO- 01- 522T

Child Care: States Increased Spending on Low- Income Families (GAO- 01- 293,
Feb. 2, 2001).

Welfare Reform: Work- Site- Based Activities Can Play an Important Role in
TANF Programs (GAO/ HEHS- 00- 122, July 28, 2000).

Welfare Reform: Improving State Automated Systems Requires Coordinated
Federal Effort (GAO/ HEHS- 00- 48, Apr. 27, 2000).

Welfare Reform: State Sanction Policies and Number of Families Affected
(GAO/ HEHS- 00- 44, Mar. 31, 2000).

Welfare Reform: Assessing the Effectiveness of Various Welfare- to- Work
Approaches (GAO/ HEHS- 99- 179, Sep. 7, 1999).

Welfare Reform: Information on Former Recipients' Status (GAO/ HEHS99- 48,
Apr. 28, 1999).

Welfare Reform: States' Experiences in Providing Employment Assistance to
TANF Clients (GAO/ HEHS- 99- 22, Feb. 26, 1999).

Welfare Reform: Status of Awards and Selected States' Use of Welfare- toWork
Grants (GAO/ HEHS- 99- 40, Feb. 5, 1999).

Welfare Reform: Early Fiscal Effects of the TANF Block Grant (GAO/ AIMD- 98-
137, Aug. 18, 1998).

Welfare Reform: Child Support an Uncertain Income Supplement for Families
Leaving Welfare (GAO/ HEHS- 98- 168, Aug. 3, 1998).

Welfare Reform: States Are Restructuring Programs to Reduce Welfare
Dependence (GAO/ HEHS- 98- 109, June 18, 1998).

Welfare Reform: HHS' Progress in Implementing Its Responsibilities (HEHS-
98- 44, Feb. 2, 1998).

Welfare Reform: Three States' Approaches Show Promise of Increasing Work
Participation (GAO/ HEHS- 97- 80, May 30, 1997).

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