SECTION: CAPITOL HILL HEARING TESTIMONY

LENGTH: 4528 words

COMMITTEE: HOUSE WAYS AND MEANS

SUBCOMMITTEE: HUMAN RESOURCE

HEADLINE: WELFARE OVERHAUL PROPOSALS

BILL-NO:

 

H.R. 1990             Retrieve Bill Tracking Report


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H.R. 3625             Retrieve Bill Tracking Report


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H.R. 4057             Retrieve Bill Tracking Report


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TESTIMONY-BY: HELEN BLANK,, DIRECTOR, CHILD CARE AND DEVELOPMENT DIVISION,

AFFILIATION: CHILDREN'S DEFENSE FUND

BODY:
Statement of

Helen Blank, Director, Child Care and Development Division, Children's Defense Fund

Testimony Before the Subcommittee on Human Resources of the House

Committee on Ways and Means

Hearing on Welfare Reform Reauthorization Proposals

April 11, 2002

The mission of the Children's Defense Fund is to Leave No Child Behind and to ensure every child a Healthy Start, a Head Start, a Fair Start, a Safe Start and a Moral Start in life and successful passage to adulthood with the help of caring families and communities. CDF provides a strong, effective voice for all the children of America who cannot vote, lobby or speak for themselves. We pay particular attention to the needs of poor and minority children and those with disabilities. CDF educates the nation about the needs of children and encourages preventive investments before they get sick, into trouble, drop out of school, or suffer family breakdown. CDF began in 1973 and is a private, nonprofit organization supported by foundation and corporate grants and individual donations. We have never taken government funds. The Act to Leave No Child Behind (H.R. 1990 / S. 940) is comprehensive legislation that reflects our vision for America's children and families. CDF welcomes this hearing and the Subcommittee's focus on legislation to renew the Temporary Assistance for Needy Families (TANF) and Child Care and Development Block Grant (CCDBG) programs and other programs of crucial importance to low income children and families.

We urge you to build upon the progress made over the past years and renew these programs so that they will better:

Help low income families get - and keep - stable, permanent jobs;

Improve child well-being and school readiness, and reduce child poverty; and

Help families with severe barriers to employment.

Your legislation must provide states and families with the resources, supports and flexibility needed to build upon what we have learned so far. The research evidence is strong: when welfare-to-work programs succeed in raising family income, the well-being of children improves. They do better in school and have fewer behavior or mental health problems. Quality child care helps children enter school ready to learn and helps parents find jobs and maintain steady employment. It is also true that when these programs fail and family income declines, children have more behavior and mental health problems.

We applaud Representative Cardin for his leadership in developing the Next Step in Reforming Welfare Act (H.R. 3625), comprehensive reauthorization legislation that provides the resources and supports that will improve TANF and CCDBG for low income parents and children. We urge the Subcommittee to incorporate the provisions of Rep. Cardin's bill, as well as other provisions from the Act to Leave No Child Behind (H.R. 1990) into your final legislation.

The reauthorizations of TANF and CCDBG have come at a critical time for low income families with children. During the 1990s, the strong economy, the increasing value and availability of work supports such as the Earned Income Tax Credit and subsidized child care, and the work requirements of the 1996 welfare law have all contributed to the increase in employment among low income parents. The number of children in families with one or more unemployed parents dropped by 1.4 million from 1995 to 2000. Single mothers dramatically increased their labor force participation - 73.9 percent were employed in 2000, up from 62.8 percent in 1995. Even among women who have not completed high school, employment increased from 33 percent to 53 percent from 1994 to 2001.[1]

But the economic boom and the work supports now in place have not been enough to provide stable jobs with above-poverty pay for substantial numbers of families with children. Three-quarters of all poor children in the U.S. live in families where someone works. According to the Urban Institute, half of those leaving welfare for work had below-poverty family earnings in 1999.[2] Various state surveys have shown that two-thirds or more of parents have worked at some point after leaving welfare. When families were working, they tended to work full-time or close to full-time hours, according to most reports about families that left TANF. Yet one of the few long-term surveys of welfare to work evaluations found that parents were working only about half the time over a four-year period.[3] Other data show that only a little more than a third of families leaving welfare work four quarters in a row.[4]

The experience of the past decade has shown both the benefits and limits of a strong economy for low income families. In the past year, we have also seen the precariousness of employment when the economy falters. Most of the employment gains of 1995 to 2000 were wiped out in the recession of the following year. The number of children with at least one unemployed parent jumped more than 40 percent, from 2.8 million in 4th quarter 2000 to 4.0 million in 4th quarter 2001 (almost as much as the 1.4 million drop of the previous 5 years). Single mothers, who accounted for more than half of the total increase in working parents from 1995 to 2000, were disproportionately affected by the downturn in employment in 2001.[5]

Even in an economic boom, it would be impossible to improve child well-being while freezing child care and TANF funding for another five years. Rep. Cardin's bill takes an important step forward in raising the TANF block grant for inflation, substantially increasing the funding for Child Care and Development Block Grant, and establishing funds targeted to carry out TANF's goals. These investments will allow and encourage states to help low income families move forward and to make more secure the gains achieved by families thus far.

Help Low Income Families Get and Keep Stable, Permanent Jobs

Low income families all around the country are struggling to find steady jobs that will allow them to support their children and escape poverty. The key to their success is the availability of and access to essential work supports - child care, education and training, health care and transportation assistance. Without these supports, an unreliable child care arrangement, a car breakdown, a health crisis can make the difference between welfare or work for too many families. Congress has an opportunity to ensure the availability of work supports that are essential to help these families become productive workers and lift their children out of poverty.

Increase Child Care Funding

Studies show that when child care is available, and when families can get help paying for care, they are more likely to work. Without help, they may not be able to secure a job and stay employed and may end up turning to welfare.

In a survey of Minnesota families with children, one out of five said that child care problems had interfered with getting or keeping a job in the previous year.

In a study of families who were potential recipients of child care assistance in Illinois, nearly half said that the cost of child care had negatively impacted their opportunities for employment.

The welfare law created a new urgency to meet families' need for child care help while offering states new opportunities and resources to accomplish this task. The number of children and families receiving assistance has increased significantly over the past five years as a result of significant increases in federal and state funding for child care. However, the goal of providing adequate supports for all children and families who need them remains far out of reach. Only one out of seven children eligible for child care assistance through the Child Care and Development Block Grant (CCDBG) program is currently receiving it.

Child care costs can be a staggering burden for these working parents and consume a large portion of their paycheck. Child care costs can easily average $4,000 to $10,000 a year-more than the cost of college tuition at a public university. Yet 77 percent of higher education costs are covered by public and private dollars. In contrast, parents pay the bulk of child care costs. Spending by parents accounts for 60 percent of the cost, compared to 39 percent for government and just 1 percent for businesses.

A Fragile Foundation: State Child Care Assistance Policies, a recent report by the Children's Defense Fund covering the 50 states and the District of Columbia (and which we request be included in the hearing record), reveals that inadequate federal and state funding prevents millions of children in low income working families from being able to get the help they need.

Many hard-working low income families are not even eligible for help due to low state income eligibility cutoffs for child care assistance. Many who are eligible cannot get it-either because they are put on waiting lists or turned away due to inadequate funds, or because no effort has been made to let them know they are eligible to get help. Those fortunate enough to actually qualify for child care assistance face additional hurdles. In some cases, the amount the state will pay for care is so low that parents cannot find good quality providers who can afford to serve their children, and in other cases parents have to pay so much in parent fees or co-payments that child care expenses still are a staggering financial burden.

As of March 2000, only four states allowed families with incomes up to the maximum level allowed under federal law (85 percent of state median income) to qualify for assistance. In two-fifths of the states, a family of three earning $25,000 could not qualify for help. Even if a family is eligible for child care help, they may not necessarily receive it.

As of December 2001, more than one-third of the states had waiting lists or frozen intake-meaning they turned families away without even taking their names-because they were unable to serve all eligible families who applied.

Some of these waiting lists were extremely long: nearly 47,000 children in Florida, more than 36,000 children in Texas, 18,000 children in Massachusetts, and 12,000 children in Indiana. Studies and interviews with parents highlight the challenges that families on waiting lists face-many must choose between paying the rent or paying for child care, going into debt or settling for inadequate care because they cannot afford better options:

In a 1998 survey of parents on the waiting list for child care assistance in Santa Clara County, California, over one-third of parents reported earning less than $10,000 annually. About 40 percent of the families said they had given up on searching for work because they could not find affordable care for their children.

In a 1999 survey of families on the waiting list in Houston, most families reported that they spent 25 to 30 percent of their income on child care. Nearly one-third of the parents said that they had to put off paying other bills in order to pay child care expenses first, and 17 percent had to do without certain necessities. Nearly two-fifths of the families had to work fewer hours or miss work because of inconsistent child care.

Waiting lists tell only part of the story. They do not include families who do not bother applying for assistance because they know it is futile to expect to get help. The waiting lists would be even longer and many additional states would have to turn to them if more families knew they could get help. States report that many eligible families are not sufficiently informed about child care assistance. Two-fifths of the states acknowledge that eligible families are often unaware that they could receive help paying for care. If more families were informed about the availability of child care assistance and applied for it, it is highly unlikely the demand could be met, even in states that currently have no waiting lists. Only four states indicate that they could serve all eligible families.

Families that are fortunate enough to receive assistance may still find child care unaffordable due to burdensome co-payment policies. All states require families receiving assistance to contribute toward the cost of care based on a sliding fee scale and many states require families at the poverty level or below to pay a fee. Thirty-five states charge fees to families earning half the poverty level ( $7,075 a year for a family of three in 2000), even though there is scarcely room in their budgets for the most minimal charge.

Clearly, there are numerous gaps in state child care assistance policies. These gaps are now growing wider in a number of states. For example, Connecticut plans to eliminate child care assistance for families transitioning off welfare.

The impact of inadequate investments on the number of families who can receive child care assistance is illustrated by the situation in Texas, which already has a long waiting list. In 2001, the state failed to provide a sufficient funding increase to maintain even the current level of support for low income working families. In order to meet strict welfare to work requirements, the state will devote a larger proportion of its funds to serving families trying to move from welfare to work, which will cut back help for low income families working to stay off welfare. An estimated 6,000 fewer children in low income (non- welfare) families are expected to receive child care assistance in 2003, as compared to 2001.

Despite the urgent need for additional child care, the Administration has proposed to freeze funding for the Child Care and Development Block Grant for the next five years. Under the Administration's plan, at least 114,000 fewer children will receive child care assistance. We urge you to firmly reject this short-sighted proposal.

In order to truly help parents work and help children learn, we urge the Subcommittee to increase the Child Care and Development Block Grant by $20 billion over the next five years. These funds will allow states to double the number of children provided with child care assistance and erase their long waiting lists. Further, it will allow states to make improvements in child care quality that are so important to preparing children to enter school ready to learn.

Allow States to Offer More Education and Training

States must have the option to enroll more parents in a range of education and training programs and to have those activities count towards the federal work requirement. The Next Step in Reforming Welfare Act (H.R. 3625) allows 2 years of vocational education. H.R. 3625 also includes an Employment Advancement Fund, which can be used to provide more resources to states that wish to utilize more education as part of a strategy to help parents who have entered the labor force to advance in it. In addition, states intent on securing the Poverty Reduction Bonus in H.R. 3625 might choose to invest in more education and training as a means of increasing the earnings of parents leaving TANF. Parents with post-secondary training are more likely to get higher-paying, more permanent jobs.

The Administration's TANF plan would make it more difficult for states to invest in post-secondary education. Under current law, a year of vocational education counts towards the first 20 hours of work per week for a limited number of TANF participants. The Administration's plan expands the number of hours that must be spent in more narrowly-defined work activities to 24 per week, but excludes vocational education from these hours. Although parents would be allowed to enroll in education for the remaining hours, states will have few resources to put towards such activities. To increase the odds of meeting the steeper work participation rates, states will try to require more than 24 hours of paid or unpaid work. Most states have not created work experience jobs (working off benefits in community placements) because they are costly and do not have a good track record for leading to permanent employment. In the recent National Governors' Association/ American Public Human Services Association survey, one state noted that it was in the process of ending contracts for a work experience program because "it has not been as effective as other services in helping clients find employment." Nevertheless, the pressure to drastically increase participation rates and hours is likely to force states to fund work experience programs. With no additional TANF block grant funding over 5 years, there will be little left for education or training.

Help families receive the benefits for which they are eligible

H.R. 3625 assists states in improving access to the services and benefits that serve as work supports through a $100 million a year competitive grant fund. These grants would help states re- open gateways to work supports for which many working families are eligible - even if they no longer receive TANF. The Children's Defense Fund's Community Monitoring Project found that only half of those who left TANF were receiving food stamps; less than one-third were getting child care help; and three-fifths had health insurance of any kind, despite low incomes.[6] Under the grant fund in H.R. 3625, states could seek funds to streamline eligibility procedures, co-locate eligibility workers in convenient locations, and/or improve outreach to families. This is a constructive approach that will stabilize work and help families to make ends meet by improving access to help including food stamps, the Earned Income and Child Tax credits, child support enforcement, child care, and health coverage (and sometimes housing or other subsidies).

Improve Child Well-Being and School Readiness and Reduce Poverty

Poor children should not suffer from the combined effects of rising unemployment and a weakened safety net. But in 2001, even though the number of children with unemployed parents surged, TANF spending on cash assistance was $546 million less than in the previous year.[7] The likelihood that even the poorest children would be helped by cash assistance plunged from 1994 to 2000. In 1994, 61 percent of children in families' whose non- welfare income was below half the federal poverty line received welfare assistance. In 2000, only one-third of children this poor were in families that received TANF.[8]

Make Poverty Reduction a Purpose of TANF

Rep. Cardin's bill sets forth the goal of reducing child poverty and gives states funding and incentives to achieve the goal. Reducing the extent and severity of child poverty is added as an explicit purpose of TANF. This language directs states to take steps to help families who are extremely poor, and not to limit their attention to those families just below the poverty line.

Provide funding to enable states to develop anti-poverty strategies

States must have the resources to help families secure permanent jobs and to provide a range of supports to stabilize employment and reduce poverty. H.R. 3625 provides resources through the Poverty Reduction Bonus, the Employment Advancement Fund, and the Family Formation Fund to enable states to try the anti-poverty strategies most targeted to their own economic conditions. In marked contrast, the Administration's plan is explicit in stating that improving child well-being underlies all the TANF purposes, but does not recognize that reducing poverty is central to improvements in child well-being, and provides no new funds to help states develop anti-poverty approaches.

The Administration's plan does divert at least $200 million in existing TANF funds towards marriage promotion and reduction of out-of-wedlock births (with another $100 million to be supplied through a state matching requirement, which states can satisfy by using federal TANF funds). Encouraging two-parent families can certainly be an anti-poverty strategy. Redirecting the $100 million in Bonus to Reward Decrease in Illegitimacy funds towards research and demonstration projects for family formation is a valid idea, but states should be allowed to pursue multiple strategies towards reducing poverty.

Provide Wage Supplements

H.R. 3625 also provides that wage supplements given to families with low earnings do not count as assistance, and therefore fall outside the federal time limit. Currently, a few states (Illinois, Delaware, Maine, and Rhode Island) use their own funds to continue cash supplements for families that work and/or participate in post-secondary education. Because findings from welfare to work evaluations strongly show that increased family income helps children, states should be able to use federal TANF funds to continue wage supplements as long as earnings are low enough that families remain eligible.

Improve the Quality of Child Care

Quality child care is also critical to improving child well-being and helping children enter school ready to succeed. The nation cannot proceed successfully on its track towards improving educational outcomes unless it focuses on the developmental needs of young children. The process of learning to read begins well before a child enters elementary school.

States need more resources devoted to improving the quality of child care. They are currently required to spend a minimum of 4 percent of their CCDBG funds on quality efforts. They have used these funds for vital supports and creative initiatives, ranging from hiring more inspectors to ensuring facilities are safe, to housing infant and toddler, health, and early literacy specialists in resource and referral programs to work with their communities' child care providers. However, a 4 percent set-aside is not nearly enough considering the numerous components that need to be in place for children to receive the quality of care they need, including well-trained and well-compensated staff, low child-staff ratios, safe, roomy facilities designed to meet the needs of young children, basic equipment such as books and toys, regular monitoring and inspection of providers, and resource and referral programs to help families find care and support providers. We urge you to support an increase in the quality set- aside to 12 percent, as proposed in Rep. Cardin's bill.

Help families to receive the child support they are owed

Getting more child support to families is an important anti- poverty measure. The poverty rate for custodial families who receive all the child support they are owed is 15.2 percent, compared with the 35.7 percent poverty rate for families that do not receive any of the child support they are due.[9] When poor children do receive support, it adds an average of $2,000 a year to their family's budget, increasing their total income by 26 percent.[10] The child support distribution improvements passed by the House in 2000, many of which have been included in the Administration plan and H.R. 3625, should be part of TANF reauthorization legislation.

Restore TANF to legal immigrants: Many legal immigrant families - many of whom were working - experienced severe hardships after being denied benefits in 1996 such as food stamps, Medicaid and TANF. More than one-fifth of all poor children in America live in immigrant families. Thirty-seven percent of children of immigrants lived in families reporting trouble affording food, compared with 27 percent of children of non-immigrants. Children of immigrants are also more than two times as likely as children of natives to live in families that pay more than half their income for housing. Restoring TANF eligibility to legal immigrants would be an important anti-poverty strategy.[11] The Administration plan restores food stamps to some legal immigrants, but fails to restore TANF.

Help Families with Severe Barriers to Employment

Require Screening and Assessments to Identify Barriers to Employment

Forty-four percent of TANF adults reported one or more serious physical or mental impairments in 1999, compared with 16 percent of other U.S. adults. Research found that one-fifth of parents receiving TANF reported that one or more children had a health problem. Domestic violence, substance abuse, illiteracy, or inability to speak or write English are also prevalent. Without treatment, families with one or more problems are more likely to be sanctioned and lose assistance than are other recipients.

TANF can be improved by requiring screening and assessments, with an individualized Personal Responsibility Plan developed for each family. If mental health or substance abuse services are identified as necessary steps, those services should be considered part of the plan, and families should get participation credit when they undertake such treatment. Any family about to lose assistance because of a failure to comply with program rules should receive a further in-person evaluation and a compliance plan devised to address the barriers to employment. In Tennessee, where a similar approach has been taken, the number of families losing assistance through sanctions has been considerably reduced.

Set Appropriate Work Participation Requirements

The 40-hour work requirement should be rejected in favor of individualized plans based on screening and assessments by trained caseworkers and appropriate professionals. The 70 percent participation rate should be rejected in favor of the employment credit (included in the Making Work Pay Act, H.R. 4057 and H.R. 3625). The employment credit replaces the caseload reduction credit by reducing the required work participation rates only when states succeed in placing people in jobs - not simply because they leave the TANF rolls. The Levin credit sends all the right messages to states - they are rewarded when families leave TANF for real jobs, and rewarded further when the jobs pay at least one-third of the state's average wage. In addition, states are given credit when they provide child care or transportation help to low income working families that are not receiving cash assistance.

Protect Families During an Economic Downturn

Many welfare recipients transitioning into work are ineligible for Unemployment Insurance. Congress should make improvements in Unemployment Insurance so that new entrants into the labor force could count their most recent quarters of work and they would be more likely to qualify for UI. Similarly, parents seeking part- time work ought to be eligible for UI benefits. Because only one in five single mothers with work experience ever qualifies for UI, TANF has become the de facto unemployment insurance system for many low income mothers. Working families should have better access to unemployment compensation.

Additional investments in TANF and child care will help more low income parents get into stable employment and help ready their children for school. We should not miss an opportunity this year with reauthorization to expand investments in programs that are so crucial to the success of children and families and to truly ensure that no child is left behind.



LOAD-DATE: May 1, 2002