Welfare Reform: States' Implementation and Effects on the Workforce
Development System (Testimony, 09/09/1999, GAO/T-HEHS-99-190).

Pursuant to a congressional request, GAO discussed states' efforts to
implement welfare reform, focusing on: (1) what is known about the
effectiveness of various approaches for moving welfare recipients into
jobs; (2) how states are implementing welfare reform; (3) the status of
those leaving welfare; and (4) the challenges that lie ahead as welfare
reform continues to evolve.

GAO noted that: (1) research conducted to date on the effectiveness of
different welfare-to-work approaches--most of which pre-dated federal
welfare reform--suggests that programs that combine approaches,
including both job search assistance and some education and training,
tended to have better outcomes in terms of employment and earnings than
either approach alone; (2) consistent with these findings and the work
focus of the Personal Responsibility and Work Opportunity Reconciliation
Act, states have been revising their welfare programs to focus on moving
people into employment rather than providing them monthly cash
assistance; (3) to better support this new work focus, many states are
changing how they do business; (4) clients are often expected to test
the job market for a period of time before many other services are
provided; (5) education and vocational training are largely reserved for
those who need it to get or keep a job or to advance on a career ladder;
(6) as welfare agencies nationwide have focused more on moving clients
into jobs than on providing them cash assistance, the goals and
operations of the welfare system have become increasingly similar to
those of the nation's workforce development system; (7) the two systems
have begun to work more closely together to meet the needs of Temporary
Assistance for Needy Families (TANF) clients, although for the most part
the systems are still largely independent; (8) GAO's review of seven
state-sponsored studies and a recent nationwide study show that most of
the adults who left welfare were employed at some time after leaving the
rolls, usually in low-paying jobs, and that many have returned to the
rolls; and (9) as welfare reform continues to evolve, attention should
be paid to emerging challenges, such as: (a) developing ways in which
the systems can help the hardest-to-employ get and keep a job; (b)
enhancing opportunities for low-wage workers to maintain employment and
increase their earnings; and (c) developing ways to foster greater
collaboration between the workforce development and welfare systems,
such as through one-stop career centers, to meet the employment needs of
TANF clients.

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

 REPORTNUM:  T-HEHS-99-190
     TITLE:  Welfare Reform: States' Implementation and Effects on the
	     Workforce Development System
      DATE:  09/09/1999
   SUBJECT:  Welfare benefits
	     Public assistance programs
	     Employment or training programs
	     Disadvantaged persons
	     Workfare
	     State-administered programs
	     Surveys
	     Federal/state relations
IDENTIFIER:  Aid to Families with Dependent Children Program
	     HHS Temporary Assistance for Needy Families Program
	     Job Training Partnership Act Program
	     AFDC Work Incentive Program
	     Job Opportunities and Basic Skills Training Program

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Cover
================================================================ COVER

Before the Subcommittee on Postsecondary Education, Training, and
Life-Long Learning, Committee on Education and the Workforce, House
of Representatives

For Release on Delivery
Expected at 10:00 a.m.
Thursday, September 9, 1999

WELFARE REFORM - STATES'
IMPLEMENTATION AND EFFECTS ON THE
WORKFORCE DEVELOPMENT SYSTEM

Statement of Cynthia M.  Fagnoni, Director
Education, Workforce, and Income Security Issues
Health, Education, and Human Services Division

GAO/T-HEHS-99-190

GAO/HEHS-99-190T

(205506)

Abbreviations
=============================================================== ABBREV

  AFDC - Aid to Families With Dependent Children
  HHS - Department of Health and Human Services
  JOBS - Job Opportunities and Basic Skills
  JTPA - Job Training Partnership Act
  PRWORA - Personal Responsibility and Work Opportunity
     Reconciliation Act of 1996
  TANF - Temporary Assistance for Needy Families
  WIA - Workforce Investment Act of 1998
  WIN - Work Incentive

WELFARE REFORM:  STATES'
IMPLEMENTATION AND EFFECTS ON THE
WORKFORCE DEVELOPMENT SYSTEM
============================================================ Chapter 0

Mr.  Chairman and Members of the Subcommittee: 

Thank you for inviting me here today to discuss our work on welfare
reform and its implications for the nation's workforce development
system.  The Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (P.L.  104-193) (PRWORA) significantly
changed the federal role in providing assistance to needy families
with children.  While the previous federal welfare program, Aid to
Families With Dependent Children (AFDC), provided families with cash
assistance for an indefinite period, the new one, Temporary
Assistance for Needy Families (TANF), provides benefits for a
time-limited period and focuses on putting clients to work.  By the
time PRWORA was enacted, many states were already engaged in
reforming their welfare systems using AFDC waivers, but TANF's
emphasis on work has given welfare agencies a new focusone that has
long been the province of the workforce development system.\1
Bringing together two traditionally separate systems--welfare and
workforce development--to address the employment goals of welfare
reform could represent an effective way to make the best use of each
system's expertise and resources.  In fact, historically, about a
third of the participants in the nation's primary workforce
development program for economically disadvantaged adults--the Job
Training Partnership Act (JTPA) Title IIA program--have been welfare
recipients.  To help foster the linkage and focus assistance on
welfare's hardest-to-employ, 1 year after enacting welfare reform
legislation the Congress created the $3 billion Welfare-to-Work grant
program.  Throughout the course of welfare reform, the workforce
development system has also been reforming its service delivery
system--establishing one-stop career centers in an effort to make it
easier for all clients, including those on cash assistance, to access
services.  The Workforce Investment Act of 1998 (P.L.  105-220)
included a provision that this one-stop career center system be used
in all local areas nationwide to deliver many federally funded
employment and training services. 

These federal reforms, which in many ways built upon state reforms
and innovations, represent significant departures from previous
policies for helping the nation's vulnerable populations get and keep
jobs.  Since PRWORA was enacted, we have answered numerous
congressional requests for information with reports on how states
have changed their welfare programs, the relationship between states'
welfare systems and workforce development systems, and on what is
known about the status of families who have left welfare.  In
addition, today we are releasing a report, required by the Higher
Education Act of 1998,\2 examining research on effective
welfare-to-work approaches.  Because of your interest in these
issues, my testimony today will summarize findings from reports
examining the early outcomes of states' reforms, with an emphasis on
the extent to which the workforce development and welfare systems are
working together to address the goals of welfare reform. 
Specifically, I will discuss (1) what is known about the
effectiveness of various approaches for moving welfare recipients
into jobs, (2) how states are implementing welfare reform, (3) what
state-sponsored studies tell us about the status of those leaving
welfare,\3 and (4) the challenges that lie ahead as welfare reform
continues to evolve. 

In summary, research conducted to date on the effectiveness of
different welfare-to-work approaches--most of which pre-dated federal
welfare reform--suggests that programs that combine approaches,
including both job search assistance and some education and training,
tended to have better outcomes in terms of employment and earnings
than either approach alone.  Consistent with these findings and the
work focus of PRWORA, states have been revising their welfare
programs to focus on moving people into employment rather than
providing them monthly cash assistance.  To better support this new
work focus, many states are changing how they do business.  Clients
are often expected to test the job market for a period of time
before many other services are provided.  Education and vocational
training are largely reserved for those who need it to get or keep a
job or to advance on a career ladder.  As welfare agencies nationwide
have focused more on moving clients into jobs than on providing them
cash assistance, the goals and operations of the welfare system have
become increasingly similar to those of the nation's workforce
development system.  The two systems have begun to work more closely
together to meet the needs of TANF clients, although for the most
part the systems are still largely independent.  Our review of seven
state-sponsored studies and a recent nationwide study show that most
of the adults who left welfare were employed at some time after
leaving the rolls, usually in low-paying jobs, and that many have
returned to the rolls.  As welfare reform continues to evolve,
attention should be paid to emerging challenges, such as

  -- developing ways in which the systems can help the
     hardest-to-employ get and keep a job;

  -- enhancing opportunities for low-wage workers to maintain
     employment and increase their earnings; and

  -- developing ways to foster greater collaboration between the
     workforce development and welfare systems, such as through
     one-stop career centers, to meet the employment needs of TANF
     clients. 

--------------------
\1 For this testimony, 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 Job Training Partnership Act programs; welfare
system is defined as the state or local entity responsible for
administering programs that originate through the Department of
Health and Human Services (HHS), such as the previous Job
Opportunities and Basic Skills (JOBS) training program and the TANF
program. 

\2 See Welfare Reform:  Assessing the Effectiveness of Various
Welfare-to-Work Approaches (GAO/HEHS-99-179, Sept.  9, 1999). 

\3 For the purpose of this statement, the term welfare refers to
cash assistance received under AFDC or TANF. 

   BACKGROUND
---------------------------------------------------------- Chapter 0:1

For at least 30 years, states' welfare and workforce development
systems have been collaborating to various degrees to provide
employment and training services to welfare clients.  The requirement
for states to administer employment and training programs for their
AFDC clients began in 1967 with the Work Incentive (WIN) program,
which was jointly administered at the federal level by the Department
of Labor and HHS and at the state and local levels by the workforce
development system's Employment Service and by public welfare
offices.  Starting in 1981 with WIN demonstration projects, states
were given greater flexibility to design their programs and could
begin to require clients to work.  States could also opt to give
welfare agencies full responsibility for administering their
welfare-to-work programs instead of sharing responsibility with
Employment Service agencies.  Half of the states adopted WIN
demonstration projects in lieu of the traditional WIN program,
leading, in part, to a diminished role for Labor in providing
employment and training services to welfare clients.\4 In 1988, the
Congress replaced the WIN program with the JOBS program.  JOBS
provided AFDC participants a broad range of services, including
education and training assistance, and for the first time states were
required to place a specified minimum percentage of adult AFDC
participants in education and training activities.  Unlike WIN, which
had a clear federal role for Labor, the JOBS program was administered
at the federal level by HHS and at the state level by state AFDC
agencies.  However, at the local level, welfare agencies often
continued to rely on federally funded workforce development programs,
such as the Employment Service, to provide services to JOBS clients. 
When TANF replaced both AFDC and the JOBS program in 1996, HHS
continued to oversee TANF at the federal level, but states were given
much more flexibility to determine the nature of financial
assistance, the types of client services, and the structure of the
program and how services are to be delivered at the state and local
levels.  More recently, the Congress passed the Welfare-to-Work grant
program, which provided a total of $3 billion during fiscal years
1998 and 1999 to help TANF's hardest-to-employ participants obtain
jobs.  This latest welfare employment and training program is
administered at the federal level by Labor in coordination with HHS. 
At the state and local levels, it is administered through the system
that was established for another federally funded workforce
development program--JTPA. 

In concert with welfare system reforms, the Congress recently passed
sweeping new legislation, the Workforce Investment Act of 1998 (WIA),
to consolidate and streamline the workforce development system.  A
key provision of the legislation is to require states to use their
fledgling one-stop career center systems to deliver most employment
and training services.  At the time of WIA's enactment, one-stop
centers had begun to be established in all 50 states and were focused
on bringing together services for Labor's various employment and
training programs.  Under WIA, the services provided at one-stop
centers are being expanded beyond Labor programs to include federally
funded employment and training programs administered by the
Departments of Education, Housing and Urban Development, and Veterans
Affairs, as well as other programs.  Services provided under the TANF
block grant, however, are not included in the legislation. 
Currently, 11 states have had transitional WIA implementation plans
approved by Labor; one more state has had its WIA plan approved for
full implementation.  The remaining states are in the process of
developing their WIA plans. 

--------------------
\4 For more background information, see Pamela A.  Holcomb, Welfare
Reform:  The Family Support Act in Historical Context (Washington,
D.C.:  Urban Institute, Nov.  1993). 

   WHAT RESEARCH TELLS US ABOUT
   WHAT WORKS
---------------------------------------------------------- Chapter 0:2

Over the years, states' welfare-to-work programs have emphasized
different goals and philosophies for moving individuals into work and
have provided different types of services and activities to help
program participants reach these goals.  Programs with the goal of
rapid employment, also called the work first approach, emphasize
quick exposure to and entry into the labor force, reflecting the
belief that participants can best acquire employment-related skills
when they are working, regardless of the quality of the job.  These
programs' service strategies tend to rely heavily on job search
activities, but they may make use of education and training to some
extent.  On the other hand, programs with the goal of
skills-building, often called an education-based approach, usually
involve a greater initial investment in clients' education and
occupational skills so that when clients do enter the labor market,
they can obtain good jobsthose with higher pay and opportunity for
advancement. 

Research conducted to date on the effectiveness of different
welfare-to-work approaches, most of which pre-dated federal welfare
reform, suggests that programs using a combined approach--including
both job search assistance and some education and training--tended to
be more effective over a 5-year time period than either approach
alone in increasing employment and earnings while reducing welfare
payments.  In our review of five evaluations begun in the 1980s with
relatively long-term results (5 years),\5 we found that programs that
focused on rapid employment and job search activities combined with
education and training activities more often increased employment and
earnings and reduced welfare payments compared with programs that
focused solely on job search activities or those that placed the
greatest emphasis on education.  In addition, preliminary results
(2-year findings) from a more recent ongoing evaluation (started in
1992)and the only evaluation designed to explicitly compare the
effectiveness of a rapid employment approach with an education-based
approachfound that, while each approach increased participants'
employment and earnings, one approach was not clearly better than the
other.  The rapid employment approach did, however, cost about half
as much per person as the education-based approach.  Furthermore,
research showed that even some of the most successful welfare-to-work
programs did not usually move families out of poverty during the time
period studied. 

While the studies we reviewed provided useful information, more needs
to be known about how well different approaches are performing in the
current welfare environment, which none of the evaluations covered. 
The most recently completed evaluations that had 5-year results
provided information on welfare-to-work programs operated in the
1980s and 1990s; none included results on programs operated since
welfare reform.  Currently, HHS is funding 23 studies in 20 states on
welfare reforms that began under waivers to the AFDC program and are
continuing in the new welfare environment.  These studies will
provide more information on effective approaches for moving welfare
recipients into work.\6

--------------------
\5 See Welfare Reform:  Assessing the Effectiveness of Various
Welfare-to-Work Approaches (GAO/HEHS-99-179, Sept.  9, 1999). 

\6 For more information, see Web sites
http://www.acf.dhhs.gov/programs/ opre/rd&e.htm and
http://aspe.os.dhhs.  gov/hsp/hspres.htm#outcomes

   STATES ARE CHANGING THEIR
   SYSTEMS TO EMPHASIZE WORK
---------------------------------------------------------- Chapter 0:3

Our studies conducted in 1997 and 1998 found that states have begun
changing their welfare systems to emphasize employment for people
seeking or receiving cash assistance.  In contrast to the JOBS
program, states now require more welfare recipients to look for work
or participate in work activities; emphasize job placement activities
rather than long-term education and training; provide other forms of
assistance, such as child care and transportation, to keep families
employed and off monthly cash assistance; and focus more on helping
families solve problems that interfered with work.  To provide these
services, many states turned to the workforce development system. 
However, some states have implemented separate service delivery
structures to provide employment-related services to welfare clients
only.  In addition, we found that the welfare system often
established the policies related to employment and training,
determining such things as the nature of employment assistance and
the type of training to make available to clients. 

      SERVICES FOCUS ON WHAT IS
      NEEDED TO GET AND KEEP A JOB
-------------------------------------------------------- Chapter 0:3.1

Our work\7 and other studies show that the employment and training
approaches in many states have changed from helping clients acquire
skills before employment to preparing clients to enter the job market
as quickly as possible.  When we made site visits in 1997 and 1998
looking at 11 states' early implementation of TANF,\8 most adults
receiving TANF were required to work or participate in work-related
activities\9 ; previously, adults with children under the age of
3--about two-thirds of the caseload--were exempted from work
participation requirements.  In addition, among the 11 states we
visited, most provided employment and training services that focused
on preparing TANF clients to enter the workforce quickly.  In fact,
many states required clients to test the job market for a specified
length of time before investing in what can be costly assessments or
vocational training programs.  In some instances, applicants were
expected to engage in job search activities as soon as they applied
for assistance. 

In these states, the training focused more on job-readiness skills
than on acquiring new vocational skills.  This job-readiness
training--lasting from 1 to 6 weeks--usually included instruction in
preparing resumes, developing interviewing skills, and dressing
appropriately for the work environment.  Sometimes these readiness
training classes were also used to teach employability skillssuch as
getting to work regularly and on time and resolving interpersonal
conflicts appropriately--found to be important in preparing clients
with no previous work history for the world of work.\10 In a growing
trend under welfare reform, employability skills were also taught by
way of experience in the job market, such as trial jobs, unpaid work
experience, community service jobs, or subsidized and unsubsidized
employment.  Nationwide, the percentage of welfare recipients who
were working or participating in work-related activities such as work
experience or community service increased from 7 percent in 1992 to
27 percent in fiscal year 1998, according to data from HHS. 

We also found that vocational and basic skills training, including
English as a second language and general equivalency diploma
training, was generally reserved for those who needed it to get or
keep a job or to advance in a career path.  This represented a
dramatic shift from services provided under JOBS.  Under TANF, we
found that skills training was often simultaneous with a work
activity and in addition to meeting the minimum work requirement.  In
the case of English language training, the focus was often on
learning vocabulary needed in the work environment.  Long-term
vocational training was generally declining in these states.  For
example, in Ohio, where 1 in 3 clients had received job skills
training or postsecondary education in prior years, after the state
came under federal welfare reform, only about 1 in 10 received such
training.  Shorter-term skills trainingusually not more than a
monthhad replaced the longer-term vocational training for most
clients.  These short-term classes were geared toward acquiring
specific new skills, such as computer skills; or upgrading current
skills, such as typing; or were driven by local employer needs. 

Sites like Santa Clara County, California, had traditionally placed a
strong emphasis on education and training under JOBS, but officials
told us that they, too, had embraced the work first approach,
having found the education-based approach less successful in moving
recipients into work and toward self-sufficiency.  While encouraging
recipients to find jobs as quickly as possible, however, Santa Clara
officials said they have continued to emphasize the importance of
education for becoming self-sufficient.  They estimated in 1997 that
about 25 percent of the county's recipients were able to find jobs
with a wage that enabled them to be self-sufficient, but as many as
75 percent would need to combine work with further training to obtain
the skills necessary for self-sufficiency. 

The extent to which states and localities provided skills training
sometimes varied depending on the local economy.  In many areas we
visited, the strong economy, coupled with entry-level labor
shortages, led employers to require little of their entry-level
candidates.  In Circleville, Ohio, for example, we were told that
many employers did not require high school diplomas as a condition of
hire, and therefore TANF clients readily obtained jobs that met their
work requirements without being given skills training.  On the other
hand, in Ironton, Ohio, where unemployment rates were well above the
statewide average and clients often lacked high school diplomas,
employers demanded higher skill levels of their new hires. 

As many welfare offices increased their emphasis on employment and
work-related activities, they also began to focus more on helping
clients address and solve problems that interfered with work, in some
cases diverting families from monthly cash assistance.  In our work
in 1997\11 we found that many states used some of their additional
budgetary resources under TANF\12 to provide services to help TANF
families address barriers to employment, including lack of child
care,\13 lack of transportation,\14 and complex mental and physical
health problems.  In addition, states sometimes provided other forms
of assistance, such as one-time, lump-sum cash payments and
assistance with job search, in an attempt to keep families from
needing monthly cash assistance.  One-time cash payments can help
families catch up on rent, repair the car, or get through a medical
emergency, thereby allowing them to more readily get or keep a job. 
A study sponsored by HHS showed that as of August 1998, 31 states had
reported using at least one diversion strategy in at least part of
the state.\15 A 1999 Rockefeller Institute review of 20 states'
welfare programs found that states and localities had developed a
range of diversion programs.\16 For example, a diversion program in
Texas allowed caseworkers to provide families with employment
counseling or refer them to public or private agencies for a variety
of services.  Arizona's diversion program offered families emergency
shelter, rent or mortgage assistance, or assistance with utility
payments.  In addition to diverting clients from the welfare rolls,
states were also providing services to families that had left the
rolls as a result of employment, including, in some cases, providing
case management services to help ensure that families could deal with
problems that could jeopardize employment. 

--------------------
\7 See Welfare Reform:  States' Experiences in Providing Employment
Assistance to TANF Clients (GAO/HEHS-99-22, Feb.  26, 1999) and
Welfare Reform:  States Are Restructuring Programs to Reduce Welfare
Dependence (GAO/HEHS-98-109, June 18, 1998). 

\8 These states were Arizona, California, Connecticut, Louisiana,
Maryland, Massachusetts, Michigan, Ohio, Oregon, Texas, and
Wisconsin. 

\9 To receive a TANF grant, states must impose work requirements for
adultsat least 25 hours per week in fiscal year 1999 (which we call
the minimum work requirement).  States must meet steadily rising
requirements for the percentage of adults that must participate in
work activities50 percent by fiscal year 2002.  States may decide
which activities constitute work for the purposes of obtaining
assistance, but PRWORA limits what states can count as work to meet
their federal participation rate.  Allowable work activities for
adult recipients include subsidized or unsubsidized employment,
on-the-job training, unpaid work experience, community service,
vocational educational training, and providing child care services to
certain other participants. 

\10 See Employment Training:  Successful Projects Share Common
Strategy (GAO/HEHS-96-108, May 7, 1996). 

\11 See GAO/HEHS-98-109, June 18, 1998. 

\12 For more information, see Welfare Reform:  Early Fiscal Effects
of the TANF Block Grant (GAO/HEHS-98-137, Aug.  18, 1998). 

\13 For more information on welfare reform and child care, see
Welfare Reform:  State Efforts to Expand Child Care Programs
(GAO/HEHS-98-27, Jan.  13, 1998). 

\14 See Welfare Reform:  Transportation's Role in Moving From Welfare
to Work (GAO/RCED-98-161, May 29, 1998) and Welfare Reform: 
Implementing DOT's Access to Jobs Program (GAO/RCED-99-36, Dec.  8,
1998). 

\15 See Kathleen Maloy and others, A Description and Assessment of
State Approaches to Diversion Programs and Activities Under Welfare
Reform (Washington, D.C.:  George Washington University, Aug.  1998). 
See also Kathleen Maloy and others, Diversion as a Work-Oriented
Welfare Reform Strategy and its Effect on Access to Medicaid:  An
Examination of the Experiences of Five Local Communities (Washington,
D.C.:  George Washington University, Mar.  1999). 

\16 See Richard P.  Nathan and Thomas L.  Gais, Implementing the
Personal Responsibility Act of 1996:  A First Look (Albany, N.Y.: 
Federalism Research Group, The Nelson A.  Rockefeller Institute of
Government, 1999). 

      WORKFORCE DEVELOPMENT AND
      WELFARE SYSTEMS ARE STILL
      LARGELY INDEPENDENT
-------------------------------------------------------- Chapter 0:3.2

To provide employment and training services to welfare clients, the
workforce development and welfare systems are still operating largely
as two separate systems.  In our visits to five states in 1998, we
found that, at the state level, only oneWisconsinhad fully
integrated its welfare and workforce development systems into a
single agency.  In the other four states, where workforce development
and welfare systems were not integrated, only Michigan used its
workforce development agency to establish employment and training
policies for TANF clients.  In the remaining three states, the
welfare system established the employment and training policies for
the states' TANF clients, deciding such things as the nature of
employment assistance and the type of training to make available to
clients.  Only in Wisconsin had the organizational structure changed
from what existed before welfare reform.  However, all five states
were continuing to make changes in their workforce development and
welfare systems to respond to the new environment under welfare
reform. 

At the local service delivery level, the workforce development system
was called upon throughout the state in Wisconsin, Michigan, and
Massachusetts to deliver employment and training services to TANF. 
In addition, in some locations in Ohio (a state with county-based
TANF policymaking), county welfare agencies used the workforce
development system to provide services.  When services were provided
by the workforce development system, they were usually provided
through one-stop career centers.  One-stop centers were used
statewide in Wisconsin and Michigan; however, they played somewhat
different roles in each state.  In Wisconsin, all services to welfare
clientsincluding eligibility determinationas well as services to
nonwelfare clients were available at the one-stop center.  In
contrast, Michigan's eligibility determination was performed at the
local welfare office, and TANF clients were then referred to a
one-stop career center to receive employment and training assistance,
often side by side with nonwelfare clients.  Services in
Massachusetts, however, were brought to TANF clients at the welfare
offices by the workforce development or one-stop center staff rather
than sending the TANF clients to the local workforce development
agency or one-stop center to receive those services.  Massachusetts'
workforce development officials told us that they provided employment
and training assistance in welfare offices as a convenience to the
client and to facilitate a client's easy transition to meeting work
requirements and obtaining other supportive services. 

Rather than use the workforce development system to provide
employment and training services, Arizona and some locations in Ohio
had developed separate welfare-dedicated centers to serve their
welfare clients.  These structures were designed to provide all
TANF-related services, including eligibility and employment and
training services in one location.  Nonwelfare clients received their
employment and training services elsewhere, often through one-stop
career centers that were being developed concurrently, but these
one-stop centers generally did not serve TANF clients in Arizona. 
Similarly, four counties in Ohio at the time of our visit were
developing welfare-dedicated centers to serve their TANF clients. 

The welfare systemthrough TANF fundsand not the workforce
development system was the principal source of funding for
work-related services for TANF clients.  In fact, even where the
workforce development system was providing services to the state's
TANF clients, it was doing so largely with TANF funds, even though
these clients could also obtain services funded by the workforce
development system, such as through the JTPA Title IIA program. 
Nationwide, the use of the JTPA Title IIA program to serve TANF
clients had generally begun to decline at the time of our visits. 
From July 1995 through June 1997, the proportion of JTPA Title IIA
clients who were also receiving AFDC/TANF benefits declined in
thirty-four states, with declines as high as 19.1 percentage points
in New Hampshire.  In four of the five states visited during our 1998
site visits, the declines continued through June 1998.  The declines
in these states ranged from 8.8 percentage points in Massachusetts to
5.2 percentage points in Arizona over the 3-year period.  Only
Wisconsin, with an integrated workforce development and welfare
system, showed an increase9.1 percentage pointsof JTPA Title IIA
clients who were also AFDC/TANF clients. 

During our visits to the five states, no clear-cut answer emerged as
to which service delivery approach--using the traditional workforce
development or the welfare-dedicated structures--worked best in
meeting the employment and training needs of welfare clients in these
states.  State and local officials we spoke with differed about where
they believed welfare clients' needs are better served.  The
philosophy of the one-stop career center system, as well as the
workforce development system as a whole, has been one of serving a
universal populationservices are available to all clients, with
some services for some clients funded out of targeted, categorical
programs.  In this view, welfare clients are seen as similar to all
other job seekers, obtaining employment and training services,
side-by-side with all other clients, from service providers who
specialize in the field of employment and training.  According to HHS
officials at the time of our visits, 17 states used one-stop career
centers or other traditional workforce development structures as the
primary means to deliver employment and training services to welfare
clients.  An alternative approach to serving welfare clients in
workforce development structures is to provide services to these
clients in centers that target all services to welfare clients only. 
These centers are usually staffed by service providers who specialize
in the needs of welfare clients, and they often include workers who
specialize in determining program eligibility.  These welfare-only
centers can also provide welfare clients with a range of other
related services, including child support enforcement services, help
with finding child care, and screening for domestic violence and
mental health problems.  In this latter approach, welfare clients are
seen as having unique needs that are better served by individuals
with special knowledge of welfare and welfare-related issues.  HHS
officials reported that, at the time of our visits, 14 states had
established welfare-only centers as the primary means to provide
employment and training services to TANF clients. 

   MOST ADULTS IN FORMER WELFARE
   FAMILIES WERE EMPLOYED AT SOME
   TIME AFTER LEAVING WELFARE,
   OFTEN AT LOW-WAGE JOBS
---------------------------------------------------------- Chapter 0:4

Given the large decline in the number of families receiving
welfare--47 percent between January 1994 and March 1999--greater
attention is being focused on learning how these families are faring. 
The information available from some states and national sources
indicate that most families who left welfare had at least some
attachment to the workforce.  There are no federal requirements for
states to report on the status of former welfare recipients.  As a
result, the only systematic data at the state level on families who
left welfare come from research efforts initiated by states.  During
our review on the status of former welfare recipients,\17 we
identified studies from seven states\18 that provided representative
data on families leaving welfare.  Because the seven states' studies
differed in key ways, including time periods covered--from as early
as 1995 to as late as 1998--and categories of families studied, the
results are not completely comparable among the studies.  However,
the studies provided information on the status of families who had
left welfare in these states at the time of the studies and, because
certain results are consistent across the studies, suggest a pattern
of what was happening to such families. 

Seven of the state studies reported that most of the adults in
families remaining off the welfare rolls were employed at some time
after leaving welfare.  Employment rates ranged from 61 to 87 percent
for adults in the families who left welfare in these seven states. 
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.  These employment
rates generally excluded families who returned to welfare, which can
be a substantial portion of the families who leave welfare.\19 The
percentages of the families who initially 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. 

Turning to the incomes of those who left welfare, former recipients
in these seven states had average quarterly earnings that generally
ranged from $2,378 to $3,786or from $9,512 to $15,144 annually.\20
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.\21
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.\22 While the studies provide information
on individuals' earned incomes, much remains unknown about families'
total household income, such as earnings by other household members,
child support payments, or financial assistance from relatives and
friends, or about receipt of income supports such as Medicaid, food
stamps, subsidized child care, and the earned income tax credit. 
However, a recent study, performed after our review by the Center on
Budget and Policy Priorities, suggests that the very poorest
single-mother familiesthose at 55 percent of the federal poverty
levelexperienced a loss in income between 1995 and 1997, even when
the incomes of others residing in the household were taken into
account.  The study linked this loss to a reduction in public
assistance received by these families.\23

While we could not draw conclusions about the status of most families
that have left welfare nationwide on the basis of studies in several
states, a recently issued study on the status of families nationwide
indicate similar findings.  On the basis of a 1997 survey of a
nationally representative sample of families, the Urban Institute
reported that 61 percent of the former recipients who were still off
welfare at the time of the interview were working, with a median wage
of $6.61.  For the families with earnings, the median amount of
monthly earnings was $1,149.  The study also found that nearly 30
percent of those who left welfare in 1995 were receiving welfare
benefits again in 1997.  A significant percentage of former welfare
recipients were not working--20 percent neither had jobs nor lived
with spouses who had jobs.\24

--------------------
\17 See Welfare Reform:  Information on Former Recipients' Status
(GAO/HEHS-99-48, Apr.  28, 1999). 

\18 The states are Indiana, Maryland, Oklahoma, South Carolina,
Tennessee, Washington, and Wisconsin. 

\19 Removing families who return to welfare from the employment rate
calculations results in higher employment rates than when they are
included, since many former recipients who return to the welfare
rolls are not employed. 

\20 We estimated the amounts of annual incomes by extrapolating the
quarterly earnings; the states did not provide information on annual
earnings. 

\21 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 Jan.  1997. 

\22 For 1998, the federal poverty level for a family of three was
$13,650. 

\23 Wendell Primus, Lynette Rawlings, Kathy Larin, and Kathryn
Porter, The Initial Impact of Welfare Reform on the Incomes of
Single-Mother Families (Washington, D.C.:  The Center on Budget and
Policy Priorities, Aug.  22, 1999). 

\24 Pamela Loprest, How Families That Left Welfare Are Doing:  A
National Picture, Series B, No.  B-1 (Washington, D.C.:  Urban
Institute, Aug.  1999).

   CHALLENGES AHEAD AS WELFARE
   REFORM CONTINUES TO EVOLVE
---------------------------------------------------------- Chapter 0:5

On the basis of our work in several states, we have already seen some
of the effects of the dramatic changes related to state and federal
welfare reform on states' workforce development systems.  We expect
even more changes in the future, as the two systems continue to
respond to changing dynamicsdynamics that include states' increasing
focus on supporting low-income workers under welfare reform.  As
welfare reform and the workforce development system evolve, attention
should be given to several emerging issues, including getting jobs
for the hardest-to-employ, finding ways to enhance opportunities for
low-wage workers, and fostering greater collaboration between the
workforce development and welfare systems. 

      GETTING JOBS FOR THE
      HARDEST-TO-EMPLOY
-------------------------------------------------------- Chapter 0:5.1

As states must meet steadily rising work participation rates, they
must require an increasingly greater proportion of their welfare
caseloads to participate in work-related activities--including some
recipients who may have been exempted previously or who are less
job-ready.  As a result, even if economic conditions remain
favorable, states' initial successes with moving applicants and
recipients into employment will probably slow over time.  In
response, states will need to adjust their approaches to better
enable families with a range of problems to take steps toward
becoming more self-supporting.  Finding ways to involve the
recipients who remain on the welfare rolls in work activities was one
of the most challenging and widespread implementation issues cited in
many of the states we visited.  The Welfare-to-Work grants provided
added funding to allow states to experiment with different
approaches, and states developed plans to use these funds to meet
local needs.  For example, Michigan's and Wisconsin's plans
emphasized assistance to unemployed noncustodial parentsindividuals
who often have child support payments in arrears that result in
dependents seeking welfare cash assistance.  Massachusetts' plan
focused on serving TANF recipients who were reaching their time
limits on cash assistance.  One area in New York planned to have
staff available 24 hours a day to assist the hardest-to-employ TANF
recipients find and keep jobs.  While TANF and Welfare-to-Work grant
funds are available to provide a variety of services to the
hardest-to-employ, little is known about how best to help these
individuals move to economic self-sufficiency, largely because they
have often been exempted in the past from participating in work. 
More research and evaluation will be needed to identify approaches
that show the most promise for working with these welfare families. 

      FINDING WAYS TO ENHANCE
      OPPORTUNITIES FOR LOW-WAGE
      WORKERS
-------------------------------------------------------- Chapter 0:5.2

Our work and other studies consistently show that many of the
families leaving welfare are employed in low-wage jobs.  While many
former welfare recipients are now employed, these families' prospects
for achieving a measure of economic stability remain an important
issue, especially in light of prior research showing that AFDC
mothers have generally experienced little rise in wages over time.\25
Some states and localities have undertaken efforts to help these
former welfare recipients, as well as other low-wage workers, upgrade
their skills to improve their job prospects.\26

Michigan, for example, set aside $12 million in 1998 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
vocational training or education programs.  This focus on serving
clients engaged in work may require establishing new service
strategies, such as offering training in the evenings and on
weekends, and providing for the child care needs of participants.  It
may also mean broadening the coverage of existing federally funded
training programs through the workforce development system to clearly
embrace those already in the workforce, such as through continued
training after employment. 

--------------------
\25 See Gary Burtless, Employment Prospects of Welfare Recipients,
The Work Alternative:  Welfare Reform and the Realities of the Job
Market, Demetra Smith Nightingale and Robert H.  Haveman, eds. 
(Washington, D.C.:  Urban Institute Press, 1995). 

\26 See Rebecca Brown and others, Working Out of Poverty:  Employment
Retention and Career Advancement for Welfare Recipients (Washington,
D.C.:  National Governors' Association and HHS, 1998); Mark Elliott,
Don Spangler, and Kathy Yorkievitz, What Next After Work First? 
(Philadelphia, Pa.:  Public/Private Ventures, Spring 1998); and
Brandon Roberts and Jeffrey D.  Padden, Welfare to Wages:  Strategies
to Assist the Private Sector to Employ Welfare Recipients (Chevy
Chase, Md.:  Brandon Roberts and Associates, Aug.  1998). 

      COLLABORATION BETWEEN THE
      WORKFORCE DEVELOPMENT AND
      WELFARE SYSTEMS
-------------------------------------------------------- Chapter 0:5.3

When we did our fieldwork in 1998,\27 we observed that the workforce
development and welfare systems were still largely independent.  When
the Congress authorized the Welfare-to-Work grant program, it
provided an opportunity for the two systems, in those states that
participated, to collaborate.  However, we also found that, because
TANF funds were plentiful and flexible, the need for additional
resources alone was not sufficient to bring together the workforce
development and welfare systems in the states we visited.  With the
passage of WIA and the expansion of one-stop career centers, states
and localities have an opportunity to reassess how services are
coordinated and delivered.  Providing TANF services through these
centers is a state and local option, and some states may call upon
the centers to deliver at least some services to welfare clients. 
Many states are already doing so.  It is too early to know whether
the various reforms and collaborative efforts will lead to greater
flexibility and cooperation in providing services.  As the
implementation of WIA unfolds, more research will be needed to
determine how one-stop career centers can be most effective in
meeting the employment and training needs of all clients, including
welfare clients and low-income workers, and how the structure of the
federal programs in WIA can provide for more efficient program
operation. 

--------------------
\27 See Welfare Reform:  States' Experiences in Providing Employment
Assistance to TANF Clients (GAO/HEHS-99-22, Feb.  26, 1999). 

-------------------------------------------------------- Chapter 0:5.4

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

   GAO CONTACT AND ACKNOWLEDGMENTS
---------------------------------------------------------- Chapter 0:6

For future contacts regarding this testimony, please contact Cynthia
M.  Fagnoni at (202) 512-7215.  Individuals making key contributions
to this testimony included Sigurd Nilsen, Gale Harris, and Dianne
Blank. 

RELATED GAO PRODUCTS

Medicaid Enrollment:  Amid Declines, State Efforts to Ensure Coverage
After Welfare Reform Vary (GAO/HEHS-99-163, Sept.  10, 1999). 

Welfare Reform:  Assessing the Effectiveness of Various
Welfare-to-Work Approaches (GAO/HEHS-99-179, Sept.  9, 1999). 

Food Stamp Program:  Various Factors Have Led to Declining
Participation (GAO/RCED-99-185, July 2, 1999). 

Welfare Reform:  Information on Former Recipients' Status
(GAO/HEHS-99-48, 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-to-Work Grants (GAO/HEHS-99-40, Feb.  5, 1999). 

Welfare Reform:  Implementing DOT's Access to Jobs Program
(GAO/RCED-99-36, Dec.  8, 1998). 

Domestic Violence:  Prevalence and Implications for Employment Among
Welfare Recipients (GAO/HEHS-99-12, Nov.  24, 1998). 

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

Welfare Reform:  Changes Will Further Shape the Roles of Housing
Agencies and HUD (GAO/RCED-98-148, June 25, 1998). 

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

Welfare Reform:  Transportation's Role in Moving From Welfare to Work
(GAO/RCED-98-161, May 29, 1998). 

Medicaid:  Early Implications of Welfare Reform for Beneficiaries and
States (GAO/HEHS-98-62, Feb.  24, 1998). 

Welfare Reform:  States' Efforts to Expand Child Care Programs
(GAO/HEHS-98-27, Jan.  13, 1998). 

*** End of document. ***