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Federal Document Clearing House
Congressional Testimony
March 12, 2002 Tuesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 5282 words
COMMITTEE:
SENATE FINANCE
HEADLINE: LESSONS
LEARNED FROM WELFARE OVERHAUL
TESTIMONY-BY: TOMMY G.
THOMPSON, SECRETARY
AFFILIATION: DEPARTMENT OF HEALTH
AND HUMAN SERVICES
BODY: STATEMENT BY
TOMMY
G. THOMPSON SECRETARY DEPARTMENT OF HEALTH AND HUMAN SERVICES
BEFORE THE
COMMITTEE ON FINANCE UNITED STATES SENATE
MARCH 12, 2002
Mr.
Chairman, Senator Grassley and members of the Committee, I am honored to appear
before you today to discuss the next phase of welfare reform. Together our work
has had a profound impact on our nation's most vulnerable families. We have
exceeded the most optimistic expectations by assisting millions of families in
moving from dependence on welfare to the independence of work; we have provided
a strong commitment to child care to ensure parents can go to work without
worrying about the safety and well-being of their children; and we have
succeeded in collecting record amounts of child support on behalf of children
with a parent absent from the home. I am confident that together our work in
reauthorizing the Temporary Assistance for Needy Families
(
TANF) program and the Child Care and Development Block Grant
and Child Care Entitlement Programs, coupled with several critical changes to
Child Support Enforcement, will lead to even greater achievements in the future.
President Bush has laid out a clear path for reviewing all of the programs
impacted by the historic, comprehensive Personal Responsibility and Work
Opportunity Reconciliation Act (PRWORA). The President made a commitment to
pursue four important goals to continue transforming welfare in the lives of
those that it helped: strengthen work, promote strong families, give States more
flexibility and show compassion to those in need. These goals formed the
guideposts in shaping the Administration's proposals for
TANF,
child care and child support.
I would like to spend my time today
sharing information with you on the important progress we have made in
strengthening families under these three critical programs and highlighting the
specific areas the President has targeted for improvement. I will begin with
TANF, the cornerstone of our welfare reform efforts.
Temporary Assistance for Needy Families
As a former governor, I
can tell you that the Temporary Assistance for Needy Families program - or
TANF - has been a remarkable example of a successful
Federal-State partnership. States were given tremendous flexibility to reform
their welfare programs and as a result, millions of families have been able to
end their dependency on welfare and achieve self-sufficiency.
Since
1996, welfare dependence has plummeted. As of September 2001, the number of
families receiving assistance, which represents the welfare caseload, was
2,103,000 and the number of individuals receiving assistance was 5,343,000. This
means the welfare caseload and the number of individuals receiving cash
assistance declined 52 percent and 56 percent, respectively, since the enactment
of
TANF. Between January and September of last year national
caseloads actually declined about two percent, and while the July to September
statistics indicate a slight increase, the figures are still well below the
previous year's caseload levels. The general trend suggests the national
caseloads are not rising but, instead, have stabilized.
In New York
City, where we are understandably most concerned about job opportunities, the
city achieved more than 53,000 job placements for welfare recipients from
September through December 2001. While the number of
TANF
recipients increased briefly as a direct result of the tragedy of September 11,
by January there were about 18,000 fewer
TANF recipients on the
rolls than there were in August. Indeed, in December New York City had its
lowest number of persons on welfare since 1965.
Some other positive
outcomes we have seen since the law's passage include:
Employment among
single mothers has grown to unprecedented levels.
Child poverty rates
are at their lowest level since 1979. Overall child poverty rates declined from
20.5 percent in 1996 to 16.2 percent in 2000. The poverty rate among African
American children declined from 39.9 percent to 30.9 percent - the lowest level
on record. The poverty rate among Hispanic children declined from 40.3 percent
to 28.0 percent - the largest four-year drop on record.
The rate of
births to unwed mothers has stabilized.
But even with this notable
progress, much remains to be done, and States still face many challenges. Last
year, my Department held eight listening sessions throughout the country to
discuss the
TANF program and understand the new challenges
ahead. The States overwhelmingly support this program. States, administrators,
recipients, employers, and advocates have provided valuable insight into how we
could make the program even more responsive to the needs of families, while
keeping the basic structure and purpose of the program.
The
Administration's proposal to reauthorize
TANF would build upon
our stunning success by:
-strengthening the Federal-State partnership;
-asking States to help every family they serve achieve the greatest
degree of selfsufficiency possible through a creative mix of work and additional
constructive activities;
-helping States find effective ways to promote
healthy marriages and reduce out-of-wedlock childbearing;
improving the
management and, therefore, the quality of programs and services made available
to families; and
allowing States to integrate the various welfare and
workforce assistance programs operating in their States.
I would like to
offer some detail on each of these elements.
Strengthen the
Federal-State Partnership
Our proposal seeks to strengthen the
Federal-State partnership by maintaining the Federal financial commitment to the
program and by making some key policy changes to increase State flexibility. We
provide $16.5 billion each year for block grants to States and Tribes and an
additional $319 million for annual Supplemental Grants to States that have
experienced high population growth and had historically low funding levels. We
will also reauthorize and improve the $2 billion Contingency Fund. Authorization
for both the Supplemental Grant program and the Contingency Fund expired in
2001, but one year extensions for both were recently enacted into law as part of
the economic stimulus package signed by President Bush this past Saturday. We
continue the current maintenance of effort (MOE) requirement to retain States'
contribution to assistance for children and families. Finally, we will restore
over five years the policy permitting the transfer of up to 10 percent of
TANF funds to the Social Services Block Grant.
In
addition to these basic funding provisions, we propose a number of policy
changes on the use of funds that will provide States increased flexibility in
managing their programs.
-We ease limitations on services for the
unemployed by clarifying the definition of "assistance" so that rules tied to
such spending would not apply to child care and other non-cash support services.
We allow States to designate "rainy day funds" and clarify that such
funds would be reserved by States for future
TANF use.
Further, we revise current restrictions on carried-over funds by
allowing such funds to be spent on any service or benefit that achieves a
TANF purpose.
Maximize Self-Sufficiency Through Work
The second element of our reauthorization proposal is to maximize
self-sufficiency through work. First and foremost, States would be required to
engage all
TANF families with an adult in self- sufficiency
activities. States must approve activities as part of selfsufficiency plans and
regularly review case progress.
And in addition to the requirement for
universal engagement, we will increase the direct work requirement. In order for
a case to be counted as participating, our proposal requires a full 40 hours per
week participation in monitored, simulated work activities by welfare
recipients. Cases counted as participating would be required to average at least
24 hours per week (of their total required 40 hours) in direct work, including
employment, on the job
training, and/or supervised work
experience. States will have the flexibility to decide which activities should
make up the remaining 16 hours. These could include a variety of services the
States determine are needed by the family.
On a temporary basis, certain
cases could be counted as participating even when they are not averaging did not
average 24 hours per week in direct work. These cases would still be fully
participating - defined as 40 hours per week - but could be in work-related
training, short term substance abuse treatment, or
rehabilitation for up to three months within any 24-month period. When
calculating participation rates States will be allowed to exclude parents with
children under 12 months of age. As in current law, teen parents who are heads
of households and maintain satisfactory school attendance will be deemed as
meeting all participation requirements.
We will also gradually increase
minimum participation rate requirements. In FY 2003, at least 50 percent of all
TANF cases headed by a parent will be required to participate
in combined work and other activities designed to help them achieve self-
sufficiency. This percentage will increase five percent each year until reaching
70 percent in 2007. Calculation methods will be improved to recognize practical
challenges States face in keeping recipients involved and participating in the
program. There will be no separate standard for work participation for
two-parent cases.
The current penalty structure will apply when a State
fails to meet either, or both, of the universal engagement or participation rate
requirements. Potential penalties will be limited to a maximum of five percent
of a State's
TANF grant, as under current law. States subject
to a penalty will have the opportunity to develop a corrective compliance plan
and no penalty will be assessed as long as they are making progress toward
meeting the requirements. The current caseload reduction credit will be phased
out so that States still receive full credit against participation targets in
the first year, 50 percent of credit in the second year and no credit
thereafter. The five-year cumulative lifetime limit for
TANF
cash assistance will be retained. States may also continue to exempt up to 20
percent of their cases from this limit.
Finally, understanding the
significant barriers that tribes face to self-sufficiency, HHS will undertake a
major new technical assistance effort for tribal organizations to help them
build and administer effective Tribal
TANF programs.
Promote Child Well-Being and Healthy Marriages
Our proposal
embraces the needs of families by promoting child well-being and healthy
marriages. To this end, we establish improving the well-being of children as the
overarching purpose of
TANF. This meaningful change recognizes
that the four current goals of
TANF are important strategies
for achieving this purpose. Similarly, we clarify and underscore that the fourth
goal of
TANF is to encourage the formation and maintenance of
healthy, two-parent, married families and responsible fatherhood.
In
addition, we will target $100 million from the discontinued Illegitimacy
Reduction Bonus for broad research, evaluation, demonstration and technical
assistance, focused primarily on healthy marriage and family formation
activities. Funds previously used for the Illegitimacy Reduction Bonus could be
spent far more effectively on developing innovative approaches to support family
formation and healthy marriages. Strong and stable families are good for
children and must be a central goal of our next steps in welfare reform.
Research shows that both adults and children are better off in
two-parent families. It is no criticism of single parents to acknowledge the
better outcomes for children of married couple families. Rather it supports the
underlying principles to redirect our policies to encourage healthy marriage
especially when children are involved. Our approach to promoting healthy
marriage is to provide financial incentives for States, often working together
with private and faith-based organizations, to develop and implement innovative
programs to support family formation and healthy marriages. Those demonstration
programs will be carefully evaluated and information about successful programs
will be broadly disseminated.
Along those lines, we also redirect $100
million from the current- law High Performance Bonus to establish a competitive
matching grant program for States and Tribes to develop innovative approaches to
promoting healthy marriages and reducing out-of- wedlock births. State
expenditures will be matched dollar for dollar and
TANF funds
may be used by States to meet their matching requirement.
We require
States to discuss in their State plans the efforts they will make to accomplish
the family formation goals of the
TANF program, including the
promotion of healthy marriages, and their efforts to provide equitable treatment
for two-parent married families.
And finally within the context of our
goals to strengthen family formation and reduce illegitimacy, we will
reauthorize the Abstinence Education grant program to States and territories at
$50 million per year.
Improve Program Performance
Our fourth
reauthorization element focuses on improving program performance. We will
replace the current High Performance Bonus with a $100 million Bonus to Reward
Employment Achievement for meeting the employment goals of
TANF. We also will require States to establish and report on
performance goals related to each of the four major goals of
TANF and to describe in their State plans how they are
addressing each. Likewise, States will be required to describe particular
strategies and programs they are employing to address critical
TANF challenges. We will research the best ways to construct
performance measures that relate to the
TANF goals, collaborate
with States to identify key performance measures, and build uniform data support
and reporting methodologies.
Program Integration
For any
organization to succeed, it must never stop asking how it can do things better.
Using the flexibility under programs such as
TANF and the
One-Stop Career Center system, States have made great strides towards
transforming and integrating their public assistance programs into innovative
and comprehensive workforce assistance programs. But, with greater flexibility
even more can be accomplished. The final key element of our
TANF proposal seeks to enable far broader State welfare and
workforce program integration.
In our proposal, we establish new State
program integration waivers to permit States to further integrate welfare and
workforce development programs in order to improve the effectiveness of these
programs. Broad flexibility to design new strategies and approaches will be
provided. The proposed waivers could apply to all aspects of selected Federal
programs, including funding and program eligibility and reporting rules,
enabling States to design fully integrated welfare and workforce development
systems that could revolutionize service delivery.
I would like to turn
now to another program that offers a vital connection to a family's ability to
achieve self-sufficiency: child support enforcement.
Child Support
Enforcement
Child support is a critical component of Federal and State
efforts to promote family selfsufficiency. For the low-income families who
receive child support, it makes up a significant portion of the family budget
(26 percent).
PRWORA instituted a number of important child support
enforcement measures. Tools such as increased automation, the National Directory
of New Hires and Federal Case Registry, the passport denial program, the
financial institution data match, and license revocation have made a tremendous
difference in improving State performance and strengthening child support
collection efforts. Equally important, PRWORA streamlined paternity
establishment, particularly voluntary paternity establishment, to encourage
fathers to take the first step toward providing their children with financial
and emotional support. The impact of these changes has been dramatic. The number
of paternities established or acknowledged has reached almost 1.6 million. Of
these, nearly 700,000 patemities were established through in-hospital
acknowledgement programs. In FY 2001, with a caseload of 17.4 million cases, a
record of nearly $19 billion in child support was collected.
Like
TANF, our proposals for child support enforcement build on our
success under PRWORA. These proposals will increase child support collections
and direct more of the support collected to families, moving the child support
program toward a focus on families and away from the historic purpose of
recoupment of Federal and State outlays.
Directing More Support to
Families
Under current law, States and the Federal government can keep
some of the child support collected on behalf of current or former
TANF recipients to defray costs of welfare. We are proposing to
change that law and give States an incentive to give more of the child support
directly to the family. Families and children will benefit financially and,
equally important, the children will see that their parents support and care for
them.
Today, more families receiving assistance are working and the
assistance they receive is more temporary. The Wisconsin W-2 waiver
demonstration has shown that when
TANF families receive the
child support paid on their behalf, fathers are more likely to pay child support
and to pay more child support.
Currently, half the States pass through a
portion of child support collections to
TANF families, entirely
out of State funds. Under our proposal, the Federal government would share in
the cost of amounts above a State's current pass-through up to the greater of
$100 per month or $50 over current State efforts. Federal contributions to
passthrough of collections to
TANF families will provide a
strong incentive to States to begin to pass through additional support to these
families, or increase the amount of the current passthrough. Effective October
1, 2004, this proposal would increase collections going to families by $280
million over five years.
Under a similar proposal to increase support
reaching families, States would be given the option to adopt simplified
distribution rules under which all support collected would be sent to families
that have transitioned from welfare. This proposal would increase collections
going to families by $810 million over five years and eliminate the need for
States to explain and support complex distribution decisions. This provision
would also be effective October 1, 2004.
Increasing the Amount of Child
Support Collected
The second prong of our strategy for child support
enforcement is to increase the amount of support collected by adding to our
existing cadre of enforcement tools.
First, we would expand our
successful program for denying passports to parents owing $2,500 in past-due
support. The passport denial program, run jointly by HHS and the Department of
State, currently works to deny passports to delinquent parents owing more than
$5,000 in past due support. In FY2000 alone, individuals with child support
arrearages paid $3.6 million in lump sum child support payments to avoid losing
their passports. An additional number of these individuals have entered into
payment agreements under which support payments are made regularly to children.
Currently, passports are being denied to 60 delinquent parents per day.
We know of many examples of payments by parents who could pay but don't
until threatened with the loss of their passport. One parent who had never made
a voluntary payment paid $67,000 in order to travel for work. Another parent
paid over $10,000 to obtain his passport to go to a family reunion. And a parent
in New York paid his account in full -- $27,328 --in order to go on a
vacation.Under our proposal, approximately one million cases could be added to
the passport denial program.
We also are proposing to expand the Federal
administrative offset program by allowing certain Social Security benefits to be
offset to collect unpaid child support in appropriate cases selected by the
States. Currently under the Federal Debt Collection Act, Old Age, Survivors and
Disability (Social Security) benefits can only be offset for Federal debt
recovery. Our proposal would provide a limited expansion to include child
support debts and would be subject to the same offset thresholds, or safeguards,
as current law.
Our final enforcement proposal would ensure that child
support orders are fair to both custodial parents and children as well as the
noncustodial parents by requiring States to review and adjust child support
orders in
TANF cases every three years, reinstating a prePRWORA
policy.
Typically, the ability of obligors to pay child support
increases over time. Periodically reviewing and adjusting child support awards
to reflect current income can result in increases in the amount of the support
provided and the economic security of single parent families. The five-year
limit on receipt of
TANF creates a substantially different
environment than that which existed prior to PRWORA. At least one review of a
support order during a family's receipt of
TANF will help
ensure that families leave the welfare rolls knowing that they will continue to
receive child support at an appropriate level.
There also are legitimate
reasons to reduce an existing award, for instance, if the obligor has lost his
job or suffered a major decline in income. In those cases, periodic review and
adjustment means that the award amount is fair and that the child support agency
is assisting a low-income father who does not have the current ability to pay
support, by helping the father avoid building up a large and unmanageable
arrearage.
Processing Fee
In addition to our proposals for
increasing support and directing more of the support collected to families, we
will require States to impose a 5 annual processing fee on families that
have never used public assistance in cases where the State has been successful
in collecting support on their behalf. Because the fee is collected only when
the State is successful in collecting support and represents a fraction of the
cost of the services families receive, we are confident it will not pose a
barrier to families seeking child support enforcement services.
As
States and the Federal government struggle to serve all the needs of its
citizens, it is imperative that we find innovative ways to finance the program.
This minimal step toward contributing to the costs of the program is reasonable
and represents a firm step toward changing the perception that the purpose of
the child support program is to recoup welfare benefits, building on the
positive message of our child support distribution proposals. While it will
raise expectations of customer service, I am confident that these expectations
will be met.
I would like to turn now to child care, a key support
service.
Child Care
In 1999, 20 million families in the United
States had one or more children under the age of 13 with an employed mother.
Thirty-two percent of these families were low-income. For a number of reasons,
including the high cost of child care, many of these families have difficulty
finding care arrangements that they can afford. I can tell you from my
experience as Governor of Wisconsin, access to child care assistance can make a
critical difference in helping low income families find and retain jobs.
Further, studies measuring the impact of child care subsidies on
employment in several communities and States across the country show that
receipt of subsidies substantially increases the likelihood of employment.
Eighty-three percent of all families who received child care subsidies in 1999
did so because the parents were employed (with most of the other parents
receiving subsidies while in
training or education).
As
we approach reauthorization of our child care authorities, the Administration is
committed to preserving the key aspects of the program: parental choice;
administrative flexibility for States and Tribes; support for work and job
training; inclusion of faithbased and community-based
organizations; and healthy development and literacy skills for children in care.
The major restructuring of the Federally funded child care programs under PRWORA
remains an effective and efficient method for distributing child care funds to
States. States were given flexibility to determine the best use of those funds
to meet the varying needs of their low-income populations. Therefore, our
proposed reauthorization of the discretionary Child Care and Development Block
Grant (CCDBG) and mandatory Child Care Entitlement programs, does not seek any
changes to the underlying structure and financing of these essential programs.
Rather, we enthusiastically support maintaining the historically high level of
funding for child care.
Our proposal includes $2.1 billion for the Child
Care and Development Block Grant and $2.7 billion for Child Care Entitlement --
a total of $4.8 billion for what is referred to as the Child Care and
Development Fund or CCDF. When combined with
TANF and other
Federal funding sources, over $17 billion is available for child care and
related services for children.
Under our proposal, States continue to
have flexibility to use Temporary Assistance for Needy Families
(
TANF) funds for child care both by transferring up to 30
percent of
TANF funds to CCDF and by spending additional
TANF money directly for child care. In recent years, States
have used significant amounts of
TANF funds for child care,
including $2.3 billion for transfers to CCDF and $1.4 billion in direct spending
in FY 2000. In addition to CCDF and
TANF, other programs in my
Department also fund early childhood care and education, including the Social
Services Block Grant and Head Start. And the Administration's education bill,
recently passed by the Congress and signed by President Bush, includes
additional flexibility and funding for school age care and literacy programs.
Taken together, all of these funding opportunities have substantially increased
the amount of resources available for quality child care and related programs.
Funding available through our child care programs and
TANF transfers alone will provide child care assistance to an
estimated 2.2 million children in FY 2003. This is a significant increase over
the number served just a few years ago; in 1998 about 1.5 million children
received subsidized care.
The overall goal of
TANF
reauthorization is child well-being. Child care supports this goal as well as
being a vital work support. Our child care reauthorization proposals complement
our expectation that all families will be fully engaged in work and other
meaningful activities by ensuring that resources are available to support safe,
affordable child care when necessary.
Promoting Child Development and
Literacy through Child Care
In addition to supporting working parents,
quality child care promotes early childhood development and literacy skills. To
improve quality and support the child development component of child care,
States support a range of strategies and the Department manages a broad
portfolio of
training and technical assistance activities to
support their efforts. According to the latest plans submitted by States, the
most common approaches include grants and loans to providers for specific
quality improvements,
training and technical assistance for
providers and staff, monitoring of compliance with regulatory requirements,
strategies to improve retention and compensation of child care providers, and a
special focus on improving the quality of care for infants and toddlers.
The President's budget maintains funding for quality child care. A
minimum of four percent of the CCDF must be spent on activities to promote
quality. In addition, the budget proposes to retain set-asides for infant and
toddler care, school-age care and resource and referral services, additional
quality expenditures, and ongoing research to identify and promote effective
child care practices. My Department is providing technical assistance to equip
States to make the best use of their quality funds, including activities that
promote literacy. At the same time, we are promoting systemic partnerships
between child care, Head Start, family literacy, and other school readiness and
reading programs.
State Flexibility
States have significant
flexibility to decide how child care funds will be used and what will be
emphasized in achieving the overall goals of improving access to care and the
quality of care. For example, within basic Federal requirements, States
determine eligibility criteria and co-payments for families as well as provider
reimbursement rates. The Department convenes State child care officials and
other experts to assess needs within the child care system and to plan remedies
where they are needed and improvements where they are possible. Further, to add
to this dialog, this year we are funding the first federally sponsored child
care policy demonstrations that will be rigorously evaluated.
Promoting
Parental Choice
Along with State flexibility, parental choice is a key
element of a successful child care program. Families must be allowed to choose
the care that best meets their needs, whether with a relative, neighbor, child
care center, faith-based program, or after-school program. In FY 2000, over 78
percent of CCDF subsidy payments were made using certificates or vouchers. Using
these vouchers and other child care payments, 56 percent of children were cared
for in a child care center, while 31 percent were in family child care homes,
four percent were in group homes, and nine percent were in the child's home.
To help parents make these critical child care decisions, CCDF funds
parent education and outreach. Nationally, my Department funds the Child Care
Aware web-site and tollfree hotline to link parents to information about child
care in their local communities.
We are on the right track with CCDF and
we must maintain a high level of Federal funding commitment to ensure our child
care resources continue to meet the needs of working families.
Conclusion
Mr. Chairman, the proposal I bring before you today
contains many different elements. What binds these fundamental elements together
is the desire to improve the lives of the people and families protected by
America's social safety net. As noted by the President, "We've made progress,
there's no question the doors of opportunity that were shut and sealed have now
been opened.... Yet there is no acceptable level of despair and hopelessness in
America. We will not leave people in need to their own struggle, and we will not
leave them to their own fate." The President has publicly stated his commitment
to the next phase of welfare reform; and this committee demonstrated its desire
to succeed when you made the hard choices on the original precedent-setting
PRWORA legislation and in your on-going interest in the impact of these changes.
It is time to take the next steps in welfare reform and the President and I
stand ready to work with you to achieve even greater successes for America's
neediest families.
I would be happy to answer any questions you have.
LOAD-DATE: March 13, 2002