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Congressional Testimony
April 11, 2002 Thursday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 3422 words
COMMITTEE:
HOUSE WAYS AND MEANS
SUBCOMMITTEE:
HUMAN RESOURCE
HEADLINE: WELFARE OVERHAUL PROPOSALS
TESTIMONY-BY: JASON A. TURNER,, DIRECTOR,
AFFILIATION: CENTER FOR SELF-SUFFICIENCY, MILWAUKEE,
WISCONSIN
BODY: Statement of
Jason A.
Turner, Director, Center for Self-Sufficiency, Milwaukee, Wisconsin
Testimony Before the Subcommittee on Human Resources of the House
Committee on Ways and Means
Hearing on Welfare Reform
Reauthorization Proposals
April 11, 2002
Greetings to Members of
the Committee:
Thank you for this opportunity to testify.
SUMMARY POINTS OF TESTIMONY
In the discussion below we will make
three arguments as follows:
The reauthorized bill should include
strengthened work requirements. These requirements are essential to transforming
the meaning of welfare away from a cash entitlement, and to maximizing the rate
of movement into and up within the private labor force. The work requirement
rates in current law are obsolete and have been overtaken by events. The
President's proposal, as modified by Chairman Herger's Personal Responsibility,
Work, and Family Promotion Act of 2002, sets us in the right direction. Many
state programs are unable to engage individuals in constructive activities
because adults under current law can ignore the requirement to participate and
continue to receive most of their welfare benefits. This undermines the ability
of these programs to reach out and bring in those most in need of the services.
The solution is to assure that the entire welfare check is made contingent upon
acceptance of the obligation to participate in constructive activities (full
check sanction), much the way a wage is contingent upon showing up to work.
The budget for the reauthorized
TANF program can be
reduced by ten percent without adversely affecting any essential aspect of the
program, including the provision of child care for working families, and would
in many respects result in improvements in the effectiveness of the service
delivery system.
WORK REQUIREMENTS NEED TO BE STRENGTHENED
The
TANF program has been extraordinarily successful at reducing
the caseload and moving individuals into employment, as we have seen above.
State programs have achieved this by instituting good up-front job search
programs in what is termed as a "Work First" approach. Experimental research
over the past decade and a half, influential among the drafters of the current
law, had revealed that education and
training alone is less
effective at helping individuals succeed in the private labor market than early
entry into employment if feasible, where on-the-job learning can help
individuals move up the employment ladder faster than holding them out of the
labor market for classroom instruction. Most often actual work can be combined
with education and
training in a more effective combination
than either one alone.
From this "Work First" orientation, our
experience has shown further that for those unable to find immediate private
employment, either full or part time, the next best alternative usually includes
some work experience as a core part, although not the only part, of an overall
schedule and effort resulting in employment. This is especially true for those
without extensive prior work history.
There are two key components which
together influence the effectiveness of welfare-to-work programs under
TANF. One component is the number of hours of activity required
of a participant, which is a measure of his or her effort. The second is the
overall proportion of individuals engaged in such activities, which is a measure
of the breadth and reach of the program. Both components, the intensity and the
breadth of program participation, are important to the overall effectiveness of
the program. The authors of the current
TANF program clearly
intended that both program intensity and program breadth be the focus, and they
did so by setting meaningful levels of weekly work requirements (measured in
hours), and participation rates (measured by the proportion of adults actually
engaged in the activity).
Surprisingly, given the goals of
TANF, the proportion of adults engaged in constructive
activities leading to employment, is quite low, once those who are already
employed while on welfare are excluded. Although over 40 percent of the adult
caseload in the average state is involved in some required activity, nearly 70
percent of these are in unsubsidized employment; i.e., they are collecting
welfare while working at a regular job. This is, of course, good as far as it
goes. But for the remainder, i.e. those not working and still receiving
benefits, current law has done little to encourage states to constructively
engage this group. For example, excluding those who are working in a job at the
same time they are receiving welfare benefits, of the rest only on in five
adults are doing any constructive activity leading to work.[1]
In order
for the
TANF program to make significant continued progress at
helping adult recipients achieve financial independence, it will have to find
ways to get states to engage a far larger proportion of the adult population
than is being served under the current program. A major management commitment is
necessary to mount a large and ongoing program for a high proportion of
recipients, and although the policy makers who drafted the
TANF
program may have anticipated that most recipients would be involved in welfare
to work activities, implementation by states has simply not produced this
result.
The President's
TANF reauthorization proposal,
Working Toward Independence, (as modified by Chairman Herger's bill), moves us
in the right direction toward the next level of reform by focusing state
programs on increasing the level of effort made by individuals in the program,
and by increasing the program's breadth and reach. It does this while retaining
the state operational flexibility inherent in the
TANF program.
The President's plan as modified by Chairman Herger (hereafter PRWFPA
2002), sets a 40 hour week as the standard for welfare-to- work activity, which
is an increase from 30 hours per week under current law (or 20 for single
parents of children under 6). The 40 hour week is comparable to the time
commitment necessary in a full-time job. Unlike current law, however, which
measures only participant time spent in work-like activities such as subsidized
employment and work experience, the President's plan divides required activity
into two parts - - work-like activity for 24 hours per week (i.e. three-day
equivalent) and state-flexible activity for the other 16 hours. This is intended
to give states the flexibility they need to blend other program components into
the week to maximize its effectiveness, such as education,
training, substance abuse treatment, and job search.
In
addition to moving to a higher level of participant weekly commitment, the
PRWFPA 2002 bill intends to increase the proportion of individuals actually
engaged in welfare-to-work activities by increasing the state required
participation rate to 70% from its current 50%, while making certain adjustments
(the caseload reduction credits) to make it easier for states to achieve.
Are the state work requirements as outlined in the President's plan
realistic and achievable for the majority of states? Absolutely!
States
have already shown from the current legislation that they are capable of
designing programs to meet federal performance targets when challenged to do so.
The President's plan sets important targets, but leaves the bulk of the
operational decision-making to state policy makers.
Both former Governor
Thompson of Wisconsin and Mayor Giuliani of New York City have designed and
operated large-scale welfare-to- work programs as originally envisioned by the
authors of PWRORA, and as likely to be achieved in practice under the
President's bill (with certain suggested modifications). Both Wisconsin and New
York share the aspiration to run full-week programs with high levels of required
participation. Some of the practical fundamentals of operating such programs are
outlined below:
Welfare-to-work programs should constitute genuine
practice for private employment.
The program should operate on a
standard full-time workweek which conforms to the expectations of private
employment. This allows participants to practice organizing their lives around a
realistic work schedule of eight hour work days and five day work weeks;
Real work should be made part of the weekly activity. The pride and
satisfaction of successfully mastering work tasks often results in a big
psychological lift and translates into confidence in the search for private
employment;
Work assignments must include close supervision and regular
feedback. Those who lack work histories are often not familiar with workplace
norms of professionalism and conduct, and frequently find it difficult to submit
or supervisory authority or get along with co-workers. Good supervisors who
agree to make part of their task the acculturation of participants play a large
role in the success of their charges.
There must be swift consequences
for non-attendance without cause. The notion of such consequences can be a new
and ultimately constructive experience for those used to being involved in a
bureaucratic welfare system in which not much changes. Thus, the importance of
reliability must be taught, and for this to occur benefits must be closely tied
to attendance.
High levels of required and ongoing participation best
allows for the goal of replacing cash assistance with work. Welfare-to-work
activities which become part of an ongoing obligation as a condition of receipt
of welfare, allow for an ever-present option for those rotating in and out of
the labor market. It can operate much like an accordion, expanding and
contracting to accommodate those out of the labor force, while keeping work
habits and skills in good repair.
Required ongoing participant activity
probably exerts its greatest net caseload impact at the time of enrollment.
Where participation in welfare-to-work programs has been required of applicants
who do not find private employment within a certain period of time, the number
of actual slots used by participants is almost always far fewer than
anticipated. Fewer slots are necessary because individuals who know they must
engage in work in exchange for benefits frequently elect not to enroll in the
program in the first place. Instead, they find immediate employment or increase
their hours in existing part-time employment.
Universal work programs
require work slots for individuals of all capabilities. Having a near-universal
expectation of work helps change the culture of the system and channels the
energy of recipients in a constructive direction away from attempting to qualify
for exemptions.
Sanction policies play a large role in achieving high
levels of participation. High non-participation rates are a feature of most
mandatory programs. In Wisconsin, where the Wisconsin Works program pays cash
benefits only to those who first participate in work activities, compliance by
definition is high. However, in states like New York that do not use a version
of full-check sanction for non-participation, a large proportion of families may
accept a lower
TANF payment rather than engage in work.
High turnover rates present management problems but lower the number of
required work slots. The high turnover rate has at least two causes. One cause
is that those who reliably participate in their work assignments, even for short
periods, find they can obtain private employment. Fully half of all individuals
who participated in New York's work experience program for any period during the
first quarter of 2000 found employment the same calendar year. In addition,
normal caseload dynamics in which recipients leave the rolls further increases
turnover. The high work experience turnover rate means that far fewer actual
slots are needed to run a universal program than would otherwise be required.
In conclusion, managing a large-scale welfare-to-work program is both
practical and necessary to achieving true welfare reform. The President's plan,
with modifications, sets us in the right direction.
THE CURRENT LAW DOES
NOT PROVIDE ADEQUATE INCENTIVE FOR RECIPIENTS TO ENGAGE IN WELFARE-TO-WORK
ACTIVITIES
Under the goals and objectives laid out in the President's
and Chairman's bill which would result in near-universal engagement in
constructive activities by adults on welfare, there will come a point beyond
which states will be unable to make progress under provisions of current federal
law. The reason for this is that there is currently no federal requirement that
cash benefits be connected to an obligation to participate. Only a small portion
of the overall cash benefit is affected by non-participation in about half the
country. As a result, individuals who refuse offers to participate cannot be
induced to enroll and remain outside the ability of states to help them move to
self- sufficiency.
As an example from New York City, as of December
2001, there were literally no more individuals left that the welfare agency had
not called into its welfare-to-work program. Yet tens of thousands of
individuals were at home having refused to cooperate, and were therefore outside
the ability of the program to help.
It is essential that a true work
program include a connection between the receipt of benefits and positive
participation. Those without a work history need to practice work-like habits
such as routine and reliability. The connection between benefits and work effort
is an essential part of the learning process. If we don't have it, states are
running a voluntary program without the name. The solution is to adopt a version
of a full check sanction for non-participation.
A TEN PERCENT REDUCTION
IN THE BUDGET ALLOCATED TO THE
TANF BLOCK GRANT CAN EASILY BE
ACCOMMODATED WITHOUT CONSTRAINING THE PROGRAM'S EFFECTIVENESS
There is
far more money available for welfare-to-work expenditures than ever before
because about half of the prior expenditures on benefits are no longer required
as a result of caseload reductions. This of course is a good development
overall, and accommodates increased spending per remaining adult recipient, as
well as permitting more funds to be dedicated to child care for working
families, and other such supports.
However, we may be reaching a point
where the plentiful availability of resources may begin to be counterproductive.
The excess liquidity in the
TANF system can result in programs
being less efficient and effective than they otherwise might be if careful use
of resources remains a budget necessity. For example, in New York City we now
spend about ten times the amount per remaining recipient on welfare-to-work
services (of all kinds, including child care and substance abuse treatment) as
compared to prior to the passage of
TANF, even though caseloads
are about 60% lower (not ten times lower). This anomaly occurs because benefit
payments represented the overwhelming proportion of total welfare spending in
the pre-
TANF era.
The significant increase in available
funds has resulted in enormous pressure for states to find ways to spend or
obligate funds. In a ten-state study published about six months ago, the General
Accounting Office found that of ten states studied, five had used between
fifteen and twenty five percent of their
TANF funds to supplant
state spending.[2] Moreover, even with the pressure to expend funds, as recently
as the first half of fiscal 2001 states as a group were spending at a rate equal
to only 91% of their available block and supplemental
TANF
grants [3] (states have now caught up and are spending at a rate slightly higher
than that available through annual grants).[4]
Another way to see the
increase in available resources as a result of the caseload decline is to
consider that from FY 1998 to FY2001, spending on cash assistance declined from
61% of total
TANF expenditures to 38%. As a result, significant
amounts of funds have been freed up for other uses. However, even counting all
the 2001 spending on basic
TANF related functions - - i.e. for
cash assistance; for welfare and working family child care; for education,
training and work experience; for state supplements to the
EITC; for computers and administration; and for all other direct work supports -
- there still remained 23% of the
TANF block grant which was
available and re-programmed for other uses, according to calculations made by
the Center for Budget and Policy Priorities.[5]
The result of excess
liquidity in the
TANF program means, for a state and local
administrator, pressure to spend money in ways they might not otherwise deem
wise. Some state and local administrators have had difficulty extracting the
best value from employment and
training vendors.
As of
the end of the last fiscal year 7.4 billion dollars in federal funds remained as
unobligated or unliquidated from the
TANF block grant, or an
accumulation rate of about 1.5 billion per year (unliquidated funds may have
been committed, see footnote). A ten percent reduction would take out about 1.7
billion dollars per year in the amount of federal funds otherwise available, or
an amount not much greater than the excess which has accumulated each year.[6 ]
Nor is there a shortage of child care funding. For FY 2002 the total
federal share of child care funds through the CCDF,
TANF and
SSBG equals a very generous $
8.7 billion. To this add the state
shares under
TANF and CCDF for a combined total of
$
11.7 billion. This amount does not account for children being
cared for while participating in Head Start (another $
6.5
billion)[7].
But even these figures underestimate the amount of federal
resources devoted to supporting children in care arrangements. The dependent
care tax credit subsidizes child care in an amount in excess of
$
2.6 billion (1998) per year.[8] Moreover the two largest tax
programs which help support children, the Earned Income Tax Credit and the Child
Tax Credit, dwarf all other programs combined. The refundable EITC, originally
conceived as one way to help low-income working families better manage the
expenses of working (including the expense of child care), contributes over
$
30 billion to families per year. Finally, the child tax credit
contributes over $
20 billion to families.
The two
systems, the direct subsidy system and the tax system, work together, with
welfare parents and entry level employed adults relying more on direct
subsidies, and low and middle income working families utilizing the tax
subsidies to a greater extent.
Thirty-two states have no waiting lists
for CCDF child care. Of those remaining that do, these states tend to have state
criteria which extends eligibility way up into the middle class (e.g. California
with a maximum income limit of $
35,100, New Jersey at
$
36,570 and No. Carolina at $
34,224).[9] For
those well into the middle class, states may wish to assure parents are
utilizing the tax subsidy system while reserving its direct subsidies for its
lower income families.
Finally, experience shows that child care waiting
lists, particularly in large cities, are not always accurate. Maintaining lists
is often complicated and bureaucratic. When New York City carefully went through
its extensive waiting list, it found far fewer families actually needing child
care than was implied by the size of the list. Reasons for this included the
following:
Many families on the waiting list or receiving child care
subsidies no longer needed them because the child was no longer living with the
family.
Some previously eligible for care for reasons of work or program
participation were no longer engaged in the activity which provided their
eligibility.
Some families were receiving one kind of child care
subsidy, but were looking for another kind of care, e.g. a particular center.
Some families had placed their names several times on one or more lists.
Child care vendors receiving fixed amounts to make available a certain
numbers of slots had turnover vacancies unknown and not listed in the city
inventory, thereby undercounting the amount of child care available and paid
for.
In conclusion, the tremendous success of PWRORA at helping families
achieve self-sufficiency has reduced the level of state and local funds
necessary to provide benefit payments. The federal taxpayer should participate
in at least some of this success in the form of reduced contributions to the
TANF block grant.
LOAD-DATE:
May 1, 2002