SECTION: CAPITOL HILL HEARING TESTIMONY

LENGTH: 3691 words

COMMITTEE: HOUSE WAYS AND MEANS

SUBCOMMITTEE: HUMAN RESOURCE

HEADLINE: WELFARE OVERHAUL PROPOSALS

BILL-NO:  
H.R. 3625             Retrieve Bill Tracking Report
                      Retrieve Full Text of Bill

TESTIMONY-BY: LEE SAUNDERS,, EXECUTIVE ASSISTANT TO THE PRESIDENT,

AFFILIATION: AMERICAN FEDERATION OF STATE,

BODY:
Statement of

Lee Saunders, Executive Assistant to the President, American Federation of State, County and Municipal Employee (AFSCME), and Administrator, AFSCME District Council 37, New York, New York

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

Hearing on Welfare Reform Reauthorization Proposals

April 11, 2002

Mr. Chairman, my name is Lee Saunders. I am Executive Assistant to the President of the American Federation of State, County, and Municipal Employees (AFSCME), and, for three and a half years, I also served as Administrator of AFSCME District Council 37 in New York City.

AFSCME represents over 1.3 million employees of federal, state and local governments, local non-profit organizations, and health care facilities. Nationwide, we represent several hundred thousand TANF and other social service workers. In New York City, we represent 125,000 employees, including approximately 25,000 social service employees. In my testimony, I want to address three issues of importance to AFSCME: proposals to change the work participation requirements; the need to upgrade the quality of services in TANF offices; and accountability under TANF and the proposed super waiver.

Earlier this year, before President Bush submitted his recommendations for reauthorizing TANF, we had hoped to have a very different debate. We had hoped Congress would consider how to build on the experiences of states, TANF workers and clients and take the next step toward helping poor families leave welfare for long-term employment at living wages. We wanted to:

focus the program on reducing poverty instead of caseloads,

increase flexibility to provide education and training and to address the multiple barriers that keep many recipients from holding down a steady job,

increase funds for childcare and the TANF block grant so that states can provide a better system of work supports and services,

amend TANF to strengthen the nondisplacement protections and to add a transitional jobs program as an alternative to work experience programs,

add a new grant program to upgrade the skills of TANF employees and the effectiveness of TANF offices in meeting the individual needs of TANF recipients,

Restore benefits to legal immigrants who pay the same taxes as everyone else and who work in some of the hardest jobs in our society, and

Suspend the TANF lifetime limits when individuals are working but still receiving supplemental assistance from TANF or when a jurisdiction experiences the disappearance of large numbers of jobs, especially low skilled jobs, such as occurred in New York City after September 11.

Unfortunately, the President's work participation proposal has thrown the current debate backward to 1996. It ignores the dramatic number of individuals who have left welfare for employment. It seeks to resurrect an ideological fight that might score political points over who is "tough on work" but does not challenge us to work together on a sensible and reasonable strategy for helping states help poor families move into the mainstream.

Work Requirements

At the heart of the President's TANF recommendations is a requirement for "universal engagement" in which states would have to enroll 70 percent of their adult caseload in "constructive activities" averaging 40 hours per week. Of the 40 hours, a minimum of 24 hours must be in employment or other work activities, which may no longer include job search or vocational education to the extent they are currently allowed.

These participation rules represent an extreme policy change. In their original presentation, they even relied on subminimum wage work in order to reach 24 hours of work in low benefit states. In addition, the White House fact sheet stated "these [TANF] payments do not entitle an individual to a salary or to benefits provided under any other provision of law."

While we were pleased that Secretary Thompson affirmed that the Administration would adhere to a minimum wage policy, he did not address the status of the other workplace protection laws or the other provisions of the Fair Labor Standards Act. Furthermore, the courts have gone both ways on the question of workplace protections in various cases involving the treatment of individuals in New York City's Work Experience Program (WEP). Therefore, if Congress continues work experience, as we expect it will, we believe that TANF must be amended to codify the heart of the Department of Labor guidance regarding the applicability of workplace protections laws.

Even with such a modification, however, the work participation percentages and design are unrealistic, unreasonable, and too inflexible. They refocus the program on large-scale workfare systems and away from developing educational and job skills. They set too high a bar for states, local governments and individuals. They will hurt poor families by increasing sanctions, and they will hurt workers by displacing jobs and depressing wages and benefits in the low wage labor market.

Some have referred to the President's plan as "doing New York City all over the country." In fact, however, even New York City, at the height of its workfare program, would not have come close to meeting these work participation requirements. We estimate that in order to comply with the 70 percent work participation rule today, the City would have to make sure 126,000 people were working. As of last November, only 47,192 - or 26 percent - of the adult caseload were in work activities. Even if the workfare program were running at its peak level of around 36,000 in 1999, the City would have only 37 percent or 66,367 people in work activities that would meet the Administration's test.

The gap between the idea of requiring 70 percent of the caseload to work 24 or 20 hours per week and the reality of implementing it is further demonstrated by Los Angeles County. We estimate that the County would have to ensure that 91,670 adults were working a minimum of 24 hours per week. To put this in perspective, the County itself employs 94,211 employees (and only 75,166 county, if police, firefighters, corrections, and teachers are excluded). While not all of the necessary work slots would be created in the county government, the operational challenge and cost would be overwhelming since low skilled work slots would have to be developed and managed in the public, non-profit and private sectors.

Clearly, then, this approach would force states to redirect substantial TANF resources into creating and supervising hundreds of thousands of work slots. States would have to abandon the many flexible strategies that they have used to blend work, education, training and job search to tailor programs to meet the individual needs of welfare recipients. Even then they would face a high probability of failure unless they reduced their caseloads through sanctions in order to make it easier to meet the rigid work test.

What makes this approach even more troubling is that New York City's WEP program is not a model that should be replicated. It has been a failure on many levels, and, indeed, the City is turning away from it.

The WEP program created a large subclass of unpaid "workers" who perform regular municipal functions, sometimes supervisory in nature, but who earn a welfare check instead of a paycheck and who have no employment benefits. These individuals have been assigned largely to three classes of work: office services, maintenance services, and human/community services. Some of them have been in their positions for years. And yet, the number that transition to regular city jobs has been abysmally low:

In addition to failing to provide a path to jobs with living wages, the WEP program has resulted in the elimination of thousands of city jobs. Unfortunately, New York law prohibits us from sharing with you the specific WEP assignments by department that we receive from the City and comparing them with comparable city jobs to demonstrate our case to you. However, we can provide information already in the public domain and directly observed by AFSCME staff.

Between December 1993 and November 1998, the number of civilian employees declined by about 15,000 in civilian agencies, and most of the lost jobs were entry-level positions. We estimate that the WEP program directly caused the loss of 800 jobs in the Parks Department and 1,600 in the Human Resources Department.

AFSCME's affiliate, District Council 37, filed five separate lawsuits alleging displacement violations under the New York State social services law, which was amended to provide for substantially stronger non-displacement protections than the weak provisions in the federal law. Among other things, these lawsuits documented an 85 percent staff reduction from 136 to 24 custodial assistants in the City's welfare offices while hundreds of WEP workers were assigned to clean the offices. Another City agency lost 274 custodian positions out of a total of 389 positions over a six-year period. In Orchard Beach Park, there were over 60 employees in 1996, yet by the summer of 1999 only about 12-13 city workers were left. Even so, there were still over 60 people working in the Park. The rest were WEP workers.

We do not think it is mere coincidence that the decline in workfare slots from 35,559 in December 1999 to 16,384 last November began around the same time AFSCME District Council 37 filed its lawsuits. We see the City's actions as a tacit admission that our charges have merit. Indeed, the City tried and failed to have the cases dismissed. Currently, only about 5,000 of the WEP positions are in mayoral agencies.

As the WEP program began to decline, AFSCME District Council 37 worked closely with low income advocates to convince the City Council to adopt a transition jobs program as an alternative to the WEP program. Although the City Council approved one, the Giuliani Administration refused to implement it.

One program was instituted, however, that combined work in the City's parks with training. While the training component of the "Job Opportunity Program" needs to be strengthened, the program assigned 3,000 welfare recipients to positions in union- represented jobs with union wages and benefits for a temporary period of time. Unfortunately, in the last days of the Giuliani Administration, the City contracted with a temporary employment agency, Temp Force, to take over payroll functions for the program. In the process, Temp Force became the "employer" and is paying wages of $7.95 per hour instead of the union wage of $9.85 per hour.

Even with the disappointing decision to outsource the Job Opportunity Program, it should be clear that New York City has been heading away from workfare and that the Administration's proposal and any other similar one would be at odds with the direction the City has been taking recently.

Conditions in Local Welfare Offices

The extreme work and engagement requirements in the Administration's plan would put intolerable pressures on TANF offices and welfare recipients, who even under current law, have been under considerable stress.

In New York City, not a week goes by without incidents of verbal abuse or violence. Until recently, TANF agency employees worked under threatening signs proclaiming "The clock is ticking." Their job performance evaluations have been heavily influenced by pressures to reduce the rolls and get recipients into WEP. As their caseloads rose, their ability to provide services effectively and in a humane manner was compromised with tension between worker and client increasing.

A report on the status of caseworkers and clients in Illinois issued by AFSCME District Council 31 in 1999 documented similar problems and concerns. Among other things, the study found:

Workloads of frontline workers increased substantially despite caseload declines because of a radically altered role for the caseworker. More than 73 percent of the caseworkers surveyed reported at least four new duties. Responsibilities expanded from benefit eligibility determination to include: a thorough assessment of each client; development of a comprehensive services plan; paternity establishment; identification of job leads, job referrals, and job search oversight; monitoring of time limits and more.

Many caseworkers were working substantial amounts of compensated and uncompensated overtime, coming in early and staying late, to try to keep up with their assignments and the department's constantly changing policies even as they struggled with outdated and inadequate technology that undercut their productivity.

The caseworkers urgently felt the need for more training. New employees often received only "on-the-job" training while long- time employees wanted more training to prepare them for their new responsibilities. Frustration with the lack of training was a major cause of the 30 percent turnover rate among first year employees.

The resulting pressures increased tensions between caseworkers, who felt under pressure to enforce rules "in the strictest and most inflexible manner possible" and clients who had trouble reaching their caseworkers and perceived them as meanspirited and uncaring. Again verbal abuse and even threats of physical violence resulted.

Against this backdrop, the Administration's plan to replace the flexibility that does exist currently with rigid requirements for 40 hours of activity and a mandatory evaluation for each client within 60 days are at odds with each other and the reality of life in a TANF office.

On the one hand, TANF workers will be responsible for substantially more recordkeeping as they try to document their clients' compliance with the 40-hour per week participation requirement. On the other hand, somehow they would have to do a thoughtful assessment of each client's needs within a specific time period mandated by law. How they could ever effectively arrange for constructive activities or document the time spent during the 16 hours during each week when work is not required is not at all clear. Presumably, they would have to engage in extremely intrusive and time consuming monitoring or give cursory attention to the requirement.

Either way, they no doubt would be under extreme pressure to make the numbers add up so that the state would avoid financial penalties. At the same time, clients will find it impossible to meet a rigid 40 per week requirement that is more demanding than most employees experience in the workplace where the average weekly hours worked was 34.5 hours in 2000.

As caseworkers see their job performance evaluated on how well they meet ever more rigid and unrealistic numbers, they will face pressure to sanction more people. The resulting increased tensions will, we fear, lead to more abuse and threats of violence in the workplace.

Instead of these unrealistic and inflexible numerical goals, AFSCME supports expanding on the flexibility currently in TANF to provide a broad array of education, training, and support services as proposed in Representative Cardin's bill (H.R. 3625). AFSCME also has worked with the National Association of Social Workers, National Urban League, and other unions to develop a quality improvement proposal that would improve the effectiveness and productivity of TANF offices with technology improvements, model caseworker training projects, and research into caseworker- client ratios. We strongly urge you to include these recommendations in the bill to be approved by the Subcommittee.

Program Accountability

The Administration's "super waiver" is the one area where it proposes greater flexibility. This super waiver is designed to give sweeping authority to the heads of five federal departments to waive federal requirements to promote "program integration."

Although we have not been able to review the details of the super waiver, we are concerned that it could lead to a de facto block granting of federal programs, more privatization of services, and, possibility, the conversion of federal grants into individual vouchers. In all of these cases, we believe that accountability for federal taxpayer funds will be weakened and that program goals will be compromised.

We are especially concerned that "integrating" the Workforce Investment Act (WIA) and Wagner-Peyser Act with TANF could mean a redirection of Labor Department resources toward TANF clients and away from workers not on welfare, who are served by WIA. In light of the failure of the Administration to recommend any new resources to accompany its new expectations for the TANF system, it is highly probable that states will be forced to redirect resources from any related programs to which they have access.

The experience with privatized administration of the TANF program to date is instructive and should raise serious doubts about the loss of protections for citizens and accountability to taxpayers when services are privatized through with a contract process or a voucher system.

One of the most profound changes in federal policy under TANF was the elimination of the cash entitlement and the requirement for public administration of the program. By 2000, less than one- third of TANF funds was devoted to cash payments, while the rest was being spent on a broad array of employment, training, and social services.

Two states, Florida and Wisconsin, are notable for the management of their TANF programs. In Florida, TANF was "integrated" with the new WIA programs under a single administrative entity called Workforce Florida. In a striking departure, this not-for-profit corporation was given unrestricted authority to make policy for the programs under its control. In other words, it is performing important state policy-making functions, and is not simply a service provider. The consequences of the arrangement are discussed in an article titled "Privatization of TANF in Florida: A Cautionary Tale" by Cindy Huddleston and Valory Greenfield in the January-February edition of the Journal of Poverty Law and Policy.

Huddleston and Greenfield point out that, while the Florida law specifically made Workforce Florida subject to the state's public records and sunshine laws, it did not mention the state's Administrative Procedures Act. That law protects citizens by prohibiting public agencies from acting arbitrarily, unilaterally, or illegally. It gives individuals the right to notice and a hearing if their substantial interests are affected by agency action. It requires public notification and an opportunity for input on agency plans. To date, according, to the article, Workforce Florida has asserted that it is not covered by the Act or bound by its requirements.

Another area of uncertainty in Florida has been the implications of the privatized arrangement for constitutional due process protections, which require government to use reasonable and fair procedures before depriving citizens of benefits or other property interests. Neither Workforce Florida nor the regional workforce boards have acknowledged officially that TANF recipients must be provided due process before being sanctioned or deprived of a service. Regional workforce boards are not required to give written notice of decisions or the opportunity of requesting a hearing. However, the related state agency, the Agency for Workforce Innovation, recently has published guidance detailing a framework for each local workforce board in setting up a grievance procedure.

In Wisconsin, the privatized W-2 program in Milwaukee demonstrates a different set of problems. At the start, the process was set up to award state contracts to counties that demonstrated an aggressive policy of reducing caseloads. Milwaukee, where most of the state's caseload resided, was never seriously considered for a public operation. The original competitive bidding process to select the five private providers involved classic pitfalls, including underbidding by three of the five private agencies that subsequently received $18.2 million in additional funds after the state awarded them contracts.

Millions of dollars in TANF funds were diverted from services to the poor. Between 1997 and 1999, the five contractors earned profits in the range of $26.2 million in TANF funds that were realized by reducing caseloads and, therefore, program costs. Among other things, they used the funds to invest in various business enterprises including the purchase of a cellular telephone company and real estate. State audits have found that the private agencies misappropriated more than $875,000. Among these expenditures was spending by Maximus for staff parties and entertainment, pursuing welfare contracts in other states, flowers, hotel bills for Maximus' top managers, and a political contribution. Other audits found that Employment Solutions, Inc., a subsidiary of Goodwill Industries, charged taxpayers for $810,000 in staff bonuses, including a $61,000 bonus for the Executive Director, and spent $270,000 in TANF funds to seek contracts in other states.

AFSCME strongly opposes expanding opportunities for more of these arrangements through broad waiver authority. Instead, Congress should require states to use public agencies to determine eligibility and pay cash benefits and should apply additional accountability requirements designed to protect the taxpaying public on states for the expenditure of TANF funds. These requirements should provide the same or equivalent protections as those available under federal requirements for fair and impartial administration by merit system employees and the constitutional protections inherent in public administration.

In summary, the Administration's recommendations for TANF reauthorization offer too much flexibility in one area and far too little in others. We believe the legislation proposed by Representatives Cardin and Mink represents a far better approach, one that focuses on the needs of poor families, instead of one driven by arbitrary numbers.



LOAD-DATE: May 1, 2002