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Federal Document Clearing House Congressional Testimony
April 11, 2002 ThursdaySECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 7545 words
COMMITTEE:
HOUSE WAYS AND MEANS
SUBCOMMITTEE: HUMAN
RESOURCE
HEADLINE: WELFARE OVERHAUL PROPOSALS
BILL-NO:
H.R. 4090 Retrieve Bill Tracking Report
Retrieve Full Text of Bill
TESTIMONY-BY: WENDELL PRIMUS,, DIRECTOR OF INCOME
SECURITY,
AFFILIATION: CENTER ON BUDGET AND
POLICY PRIORITIES
BODY:Statement
of
Wendell Primus, Director of Income Security, Center
on Budget and Policy Priorities
Testimony Before the
Subcommittee on Human Resources of the House
Committee
on Ways and Means
Hearing on
Welfare Reform
Reauthorization Proposals
April 11, 2002
Thank you, Mr. Chairman, and members of the Committee, for
the opportunity to testify before you today. I am Wendell Primus, Director of
Income Security for the Center on Budget and Policy Priorities. The Center is a
non-profit institute that conducts research and analysis on policy issues
affecting low- and moderate-income families at both the state and federal
levels. We receive no government funding.
My testimony
will briefly review the experience of
welfare reform over the last six
years, then analyze the Chairman's TANF reauthorization bill in light of what
research and state experience have shown to be effective in moving families from
welfare to work. Finally, I will outline a work-focused alternative plan
that would allow states to address some of the remaining challenges of
welfare reform by building on current successful state-based approaches.
The Experience of the First Six Years of
Welfare Reform
Nearly six years ago, Congress
passed legislation that dramatically altered the basic safety net for low-income
families with children. The Aid to Families with Dependent Children (AFDC)
program, which had existed for 60 years, was dismantled, and a new block grant
-- Temporary Assistance for Needy Families (TANF) -- was put in its place.
States used their block funds to design programs that
capitalized on the strong economy and moved
welfare recipients into
private- sector jobs. As cash assistance caseloads tumbled and the economy
surged, employment rates among single mothers rose significantly, continuing a
upward trend that began in 1993. While clearly playing a role, the law's work
requirements were not the only factor in this increase. States were able to use
TANF funds to create an expanded system of supports for low-income working
families. In addition to helping families leave
welfare, these supports,
including child care, transportation assistance, and state earned income tax
credits, have helped low-wage workers avoid going on to
welfare in the
first place. Besides TANF, other federal programs, including Medicaid, the
Earned Income Tax Credit, and the Child Care and Development Block Grant (CCDBG)
-- all expanded in the 1990s -- are part of this work support system.
The extent to which TANF has been transformed into a work
support system is reflected in state spending patterns and the number of
families served in TANF that do not receive
welfare. Fewer than 4 out of
every 10 TANF dollars are now spent on cash assistance. (1) The largest share of
the remaining dollars is spent on child care and other work supports. It is
important to note that the work support system funded by TANF extends beyond
welfare recipients to low-income families who have left
welfare
and those who have never received
welfare. Unfortunately, there is no
official count of the number of families who receive TANF-funded work supports
outside of the
welfare system. However, recent GAO data suggest that at
least 1 million non-
welfare families -- and quite likely many more --
receive work supports funded in part with TANF. (2) Thus, the number of
non-
welfare families receiving TANF-funded work supports is likely as
large, if not substantially larger, than the number of families receiving cash
assistance who are subject to TANF work requirements. (3)
While states have made substantial progress on the employment front in
the last few years, the reduction in poverty has been much more modest than the
reduction in TANF caseloads or the increase in families with earnings. Trends in
the "child poverty gap" provide strong evidence that this is due in part to the
large reductions in the amount of cash assistance and food stamp received by
eligible families. (The child poverty gap, which many analysts consider the
single best measure of child poverty, is the total amount by which the incomes
of all poor children fall below the poverty line.)
Before counting means-tested programs, the child poverty gap declined
substantially between 1995 and 2000, just as it had between 1993 and 1995. The
drop in the child poverty gap, as measured before means-tested benefits are
counted, primarily reflects the effect of the economy in reducing child poverty
through increases in employment and earnings among parents. But when the
benefits of means-tested programs (and federal tax policy) are taken into
account, the picture changes.
While the gap still
shrunk -- by $3.6 billion between 1995 and 2000 -- this was much more modest
than the $7.4 billion drop that occurred between 1993 and 1995, even though
pre-transfer poverty fell nearly twice as much during the later time period. (4)
These data strongly support the conclusion that poverty could have fallen at a
faster rate between 1995 and 2000 if declines in the numbers of children
receiving means-tested benefits had not been as sharp.
There appears to be broad bipartisan consensus in Washington and among
states that an important goal of the next five years of
welfare reform is
to enhance child well-being, which includes reducing the extent and depth of
poverty among families with children. Meeting this goal will require moving
beyond
welfare reform's initial focus on caseload decline -- a move that
many states are already in the process of making. In addition, most agree that
further progress on this goal will require addressing the following
challenges:
Helping TANF Recipients Who Have Severe
"
Barriers" to Employment that Impede Their Progress in Moving toward
Self-sufficiency: While there are significantly fewer families on
welfare, a recent General Accounting Office study found that 38 percent
of them have a severe physical or mental health impairment. Studies have found
that these and other
barriers -- including domestic violence, lack of
stable housing, and having a disabled child -- significantly reduce the
likelihood of working. In order to make these families part of
welfare
reform's success, we need to be realistic about what it is going to take to get
them from where they are today to where they need to be, and ensure that states
have the resources and flexibility to work with them intensively towards that
goal.
Doing More to Help Recipients Find Better-paying
and More Secure Jobs that Can Support a Family: TANF recipients typically end up
in low-paying jobs -- most earn less than $8.00 an hour and many earn
significantly less than that. Data from studies of parents who left
welfare for work show that median quarterly earnings for families that
left TANF and were working were typically between $2,000 and $2,500, roughly 33
percent below the poverty level for a family of three. (5) Earnings do grow
after leaving
welfare, but they still remain quite low even years later.
A Wisconsin study that tracked
welfare leavers in that state found that
nearly 60 percent had below-poverty-level incomes even three years after leaving
welfare. (6)
Strengthening Families: Several
"family formation" trends have taken a positive turn in recent years. The teen
birth rate has fallen significantly since the early 1990s. The share of
children, particularly low-income children, living in two-parent families
increased while the share living in single-parent families fell. The number of
paternities established soared in the 1990s and amount of child support
collected in the federal- state child support system increased dramatically.
While these statistics are heartening, there is further progress to be made on
all of these fronts.
States have begun to fine-tune
their TANF programs to address these issues, but much more could be done to
improve outcomes for families in these areas. TANF reauthorization should
address these challenges by building on current effective state strategies where
they exist, and supporting research and demonstrations to develop a knowledge
base on which to build future successful programs.
The
Work Provisions in H.R. 4090
H.R. 4090 includes a
far-reaching set of changes to the work provisions in the TANF law. The most
significant changes are to TANF's participation rate structure under which
states must place a certain percentage of families in federally-authorized work
activities or face fiscal penalties. The proposed legislation makes the
following changes to the participation rate structure.
States would have to place 70 percent of TANF families in specified
work activities by fiscal year 2007, up from 50 percent in the current fiscal
year.
The current caseload reduction credit -- which
reduces state participation rates by 1 percentage point for each 1 percentage
point reduction in caseloads since 1995 -- would be replaced with a "rolling"
credit. Instead of being based on the reduction in caseloads since 1995, a
state's participation rate would be determined each fiscal year based on the
percentage reduction in the state's caseload in the three preceding fiscal
years.
To count fully toward the rate, families with
children age 1 or older would have to participate in work activities for 40
hours a week. This change would double the number of hours required for parents
with children under age 6 and increase by 10 hours a week the number of hours
required for other families.
The work activities that
count toward the first 24 hours of the work requirement would be narrowed to
paid work (unsubsidized and subsidized employment, and on-the-job training) and
unpaid work (work experience programs and supervised community service). States
would be able to count families placed in substance abuse, rehabilitative
activities, work-related training, and job search or job readiness assistance,
but for no more than three consecutive months in any 24-month period.
Instead of addressing the remaining challenges by building
on current state strategies to help families overcome
barriers to
employment and find better jobs, the proposed legislation would curtail state
flexibility and effectively require all states to adopt a federally proscribed
welfare-to-work program structure. States would be forced to restructure
their current programs and abandon many of the successful strategies they
currently use to help parents prepare for, find, and retain employment in favor
of more costly programs. Such a change might be warranted if states had clearly
failed to implement effective
welfare-to-work programs over the past few
years, or if there were research evidence showing that the proposed approach was
more effective at addressing current
welfare reform challenges than
existing state approaches. There is, however, no evidence to support either of
these conclusions; indeed, there is evidence to suggest that the proposed
approach could be less effective than other state-based approaches.
The reformulated caseload reduction credit is likely to
give states little help toward meeting the work participation requirements.
Under H.R. 4090, states would only get credit toward their work participation
rates if the overall caseload fell over the previous three-year period. While no
one can predict caseload levels with certainty, the rapid caseload decline that
occurred in the mid 1990s appeared to be leveling off even before the recession
and in 2001, 34 states saw their caseloads increase. It should be noted that
when a state's cash assistance caseload remains steady, this does not mean that
families are not moving from
welfare to work. It simply means that the
number of families who have fallen on hard times and need help, at least
temporarily, is about the same as the number of recipients who were able to
leave
welfare, often because they found jobs.
The Proposed Participation Rate Structure Would Limit State
Flexibility
Under H.R. 4090, states would be required
to place a substantially increased proportion of their caseloads in a very
narrow set of work activities or be subject to fiscal penalties. Two activities,
job search and vocational education, that currently count toward the rate would
not count at all toward the 24-hour requirement. For recipients who do not
already have an unsubsidized job, they could only be counted toward a state's
work participation rate if they worked in a subsidized job or participated in
work experience, supervised community service, or on-the-job training programs
for 24 hours each week. Families would have to be placed in one of these
activities even if the state does not believe this would be the best approach to
helping them succeed in the labor market.
Some may
argue that because participation rates remain below 100 percent, states will
continue to have the flexibility to structure different activities for a
significant share of its TANF recipients. This is incorrect. While the
participation rate that states will be required to meet is less than 100
percent, to achieve a participation rate in the 60 to 70 percent range, they
will need to impose the federally-mandated work requirements on nearly 100
percent of families. This is the case for two reasons. First, some parents will
not be able to meet the hourly requirements for a particular week because of
personal family circumstances, including illness or having to care for an ill
child. (7) Second, even in well-run programs, a significant number of recipients
are not in activities at any given time because they are waiting for a program
to begin a new session, are between work activities or assignments, or they
cannot begin a work activity until child care is in place. Researchers have
recognized that in order to attain any given participation rate, a state must
actively seek to attain participation for a considerably larger group of
families. (8)
The proposed legislation would allow
states to count families placed in substance abuse, rehabilitative activities,
work- related education or training, and job search and job readiness activities
for three consecutive months in any 24 month period. It also would allow states
to define what counts toward work for the final 16 hours of the 40 hour work
requirement. As a practical matter, however, these provisions provide almost no
new flexibility for states.
Under current law, states
actually have considerable flexibility to place participants in the types of
activities that the proposed legislation would now limit to three months. While
some of these activities do not currently count toward the work participation
rates (except in several states with waivers that the proposed legislation would
rescind), states have generally achieved actual participation rates that are
substantially higher than the required federal standard. This is due in large
part to the current law's caseload reduction credit that lower the rates states
must meet based on the decline in caseloads since 1995. As a result, states have
been able to place recipients in activities that do not count toward the federal
rate without having to be concerned that they would fail to meet the required
standard. Many states have used this flexibility to place participants in
barrier-removal activities that have not necessarily been limited to
three months, while maintaining their otherwise vigorous and intensive efforts
to move recipients to work.
By increasing the overall
rates and modifying the caseload reduction credit in a manner that would likely
limit the extent to which it reduces states' effective rates over time, the
proposed legislation would eliminate this flexibility that currently exists.
Similarly, allowing states to define work activities that
count toward the final 16 hours of a 40-hour requirement is not an enhancement
to the flexibility states have under the current work participation
requirements. For families with children age 1 to 6, the federally-mandated work
requirement is 20 hours but states are free (and many do) require participation
in state-approved activities -- activities which may differ from the work
activities under current federal law -- for additional hours each week. Since
the proposed legislation would require an additional 20 hours of work for these
families, it can only be characterized as limiting state flexibility for them,
regardless of whether states are able to define allowable work activities for 16
of the new hours.
For families with school-age children
who are currently subject to a 30-hour requirement, the proposed legislation
would allow states to count a broader range of activities toward hours 25
through 30 of the work requirement than is currently allowed. This is a very
limited enhancement of flexibility, however, given that the plan would also
narrow substantially what counts toward the first 24 hours of the work
requirement. In addition to prohibiting vocational education, job readiness, and
job search from counting toward the first 24 hours, the plan would not allow
other educational activities and job skills training -- which currently can
count for 10 of the required 30 hours -- to count until the 24 hour requirement
in direct work activities is satisfied.
Moreover,
regardless of the child's age, in order to meet the 24- hour requirement, states
will likely have to place families in the narrower set of paid and unpaid work
activities for more than 24 hours. This is because a state gets no credit for an
individual participating in the work activities prescribed by the proposed
legislation for 23 hours or less, even if they are in other activities for 16
hours. To avoid the potential risk of not getting any credit for a family,
states are likely to schedule participants in the narrower set of activities for
significantly more than 24 hours each week.
Finally,
many states -- particularly those with low cash benefit levels -- will have
difficulty meeting the work requirements while complying with the federal legal
requirement that recipients not be required to work at an effective wage below
the minimum wage. Many TANF recipients receive only partial benefits because
they have other forms of income (including Social Security benefits) while many
families in low-benefit states receive cash assistance benefits that are below
$200 per month. The Herger bill makes no exception to the requirement that
families participate in paid or unpaid work for 24 hours each month for families
in which such a requirement would mean that they were working at below the
minimum wage. (9)
States would be Forced to Abandon
their Own Successful Approaches
Under the proposal, all
states would face sharply increased work participation rate requirements that
would require them to focus on meeting these requirements to avoid fiscal
penalties. Families that are not able to find unsubsidized employment, would
have to be placed in subsidized work, work experience, supervised community
service, and on-the-job training. Only a few states and localities have
welfare-to-work programs that place a substantial number of parents in
these activities and only about 7 percent of TANF recipients nationally who are
not working participate in one of these narrow activities. (10) As a
consequence, most states would have to reconstruct their work programs,
jettisoning current employment initiatives in favor of the narrow set of
activities that would meet the new prescriptive federal requirements. (11)
Instead of large-scale subsidized work or work experience
programs, most states operate
welfare-to-work programs that are focused
on placing participants in unsubsidized private-sector employment. These
programs generally require participants to conduct an intensive job search often
in conjunction with "soft- skills" training and other job readiness activities.
In keeping with recent research findings discussed below on the effectiveness of
what is commonly referred to as a "mixed strategy" approach, a growing number of
states are modifying their programs to combine an overall work emphasis with
opportunities for pre-employment training and targeted vocational education.
While work experience is often a component in these types of programs, it is
typically used on a case-by-case basis, rather than as a one-size-fits-all
activity for every participant who does not immediately find unsubsidized
employment.
While evaluation studies that cover all 50
states and compare the effectiveness of all of the varying work program
approaches are not available, the data that is available generally finds that
states using strategies quite different from the particular program model the
proposed legislation would mandate have been successful in helping large numbers
of parents move from
welfare to work. In fact, many states utilizing very
different approaches have achieved rates of caseload reduction and employment
that equal or exceed national averages.
There is some
evidence to suggest that the model mandated by the proposed legislation could be
less effective than other state approaches. Washington State's recent decision
to discontinue its work experience program is instructive on this point. The
state's decision was based in part on results from a recent evaluation of the
state's TANF program which found that work experience had no positive impact on
participant earnings, while other activities - - including jobs skills training,
a paid transitional jobs program, and pre-employment training -- all had
positive impacts on earnings. (12) The pre-employment training program had the
strongest earnings impacts, increasing quarterly earnings by $864. The work
experience program did appear to increase employment rates somewhat, but other
activities, including job skills training increased employment by a greater
amount.
Of the programs evaluated in Washington State,
only the work experience program and the paid transitional jobs program would
appear to count toward the first 24 hours the proposed work rates. (13) Since
the paid transitional jobs program is too expensive to operate on the large
scale that would be required to meet the proposed rates, Washington State would
have little choice but to resurrect a work experience program that it had
previously discontinued because of poor results.
The
model that would be dictated by the proposed legislation also runs counter to
the growing state interest in tailoring work activities more closely to the
needs of individual parents rather than being limited to a narrow set of work
activities countable toward the work participation requirements. States want to
move their work programs in this direction in part because of the substantial
evidence that now exists about the extent of
barriers to employment among
the remaining TANF caseload. By narrowing what counts toward meeting work
requirements and diverting funding to that very limited set of activities, the
proposed legislation will make it more difficult for states to invest in
benefits and services that address the significant challenges that remain --
helping the harder-to-employ move from
welfare to work and helping
recipients with persistently low wages qualify for higher-paying jobs. In fact,
in February the National Governors' Association passed on a bipartisan basis a
welfare reform policy that called on Congress to allow states to count a
broader range of activities toward the work participation requirements. (14)
The Proposed Legislation Would Mandate an Approach that
Runs Counter to Two Decades of
Welfare Reform Research
The legislation would mandate an approach that falls outside of the
mainstream of current state
welfare-to-work approaches despite a lack of
research evidence indicating that it would be more effective than other work
programs that are evaluated over the last two decades. The clearest finding from
this extensive body of research is that providing a range of employment and
training services is the most effective
welfare-to-work strategy, rather
than the one-size-fits-all model that the H.R. 4090 would impose on states. The
single most effective program in the recently completed 11-program National
Evaluation of
Welfare-to- Work Strategies (NEWWS) -- a program that
operated in Portland, Oregon in the mid-1990s -- did not have a large-scale work
experience component. Instead, the Portland program emphasized moving
participants quickly into private sector jobs, while allowing for varied initial
activities and establishing performance standards that encouraged case managers
to help participants find jobs that paid well above the minimum wage and offered
better long-term career opportunities. (15) Participants were more likely to
find better-paying jobs that were full-time and provided employer-based health
insurance than
welfare participants in a control group.
Similarly, none of the programs that have been shown to measurably
increase child well-being included work experience as a significant program
component. Perhaps the most notable example is the Minnesota Family Investment
Program (MFIP) demonstration, which increased child well-being (as measured by
school performance and behavior), in addition to having strong positive impacts
on employment, poverty, and marriage rates. MFIP achieved these outcomes despite
placing fewer participants in work experience than in any other program
component. (16) Minnesota has since adopted a statewide TANF program modeled on
this demonstration program. Program administrators have said that the change
proposed by the Administration would force them to shift away from this program
model in spite of its unprecedented success.
Sweeping
New Waiver Authority Is the Wrong Mechanism for Assuring Adequate State
Flexibility
The Herger bill would allow the Secretaries
of HHS and the Department of Labor to waive any program rule in any program
operated through their agencies, with the exception of Medicaid (though it
appears that states could seek waivers of SCHIP rules). A companion TANF
reauthorization bill introduced by Rep. McKeon (R-CA), chairman of the
subcommittee on 21st Century Competitives of the House Education and Workforce
Committee (which has joint jurisdiction over some parts of the TANF program)
also would include programs under the Secretary of Education in this "super
waiver" proposal. Programs that could be affected include unemployment
insurance, student loans and aid programs, federal support for K-12 education,
job corps, head start, the public health service, and family planning programs.
Some have cited this so-called super-waiver proposal as the answer to questions
raised about the significant restraint on state flexibility included in the
work-related sections of the proposal. (While the current proposal is limited to
programs in these agencies, the Administration's original proposal was broader
and House leaders have indicated that programs in other agencies will be added
to the super-waiver proposal by other House committees.)
The super-waiver proposal does not limit the number of states that can
be granted particular types of waivers nor does it impose any significant
limitations on the types of rules states can apply to have waived, except that a
waiver must not result in higher federal costs than would be incurred under
standard federal law. This is in contrast to most current waiver provisions. For
example, the Workforce Investment Act allows states to apply for waivers but
prohibits waivers of federal worker protection and minimum wage laws. Moreover,
unlike past waiver policies which allowed states to operate demonstration
projects to test the efficacy of new initiatives or alternative approaches,
there would be no requirement that these waivers have a research objective or
even be subject to an independent evaluation. Rather than being designed to
encourage states to test new approaches, this waiver policy simply would allow
waivers of any program rule a state did not like.
The
following are just some examples of the kinds of waivers which the Secretaries
of these agencies would have authority to approve:
The
Secretary of the Department of Education could waive any rules related to
federal education funding, including formulas that direct resources to
low-income children.
The Secretary of HHS could approve
a state waiver in which key federal TANF program rules are eliminated --
including the maintenance-of-effort requirement, data reporting standards, or
the requirement that states not sanction a parent that could not meet work
requirements due to a lack of child care.
HHS also
could approve a waiver in which a state would be permitted to divert all of the
resources it now devotes to activities to ensure that child care providers offer
safe, high- quality care to other purposes. As child care budgets tighten due to
heightened work requirements and frozen funding, states may be tempted to ignore
the importance of the quality of child care services and wish to focus solely on
placing as many children as possible in child care programs. Basic health and
safety protections now required under federal law also could be waived.
Waivers that transfer substantial resources from
activities permissible under one program to entirely different programs also
would be permissible. For example, the Secretaries of these agencies could
approve waivers in which federal TANF funds are shifted to provide student aid
to middle-income college students, to augment federal funding for public
education, or employment and training programs for higher-income laid-off
workers.
The Herger bill also would appear to allow the
Secretaries to waive other independent statutory and regulatory requirements
applicable to programs within their jurisdiction, including minimum wage
requirements, OSHA standards, and civil rights regulations. At a minimum, there
is no language in the bill that would clearly prohibit waivers of these
requirements. There also is little question that the Secretaries would be able
to waive certain program-specific civil rights protections that provide greater
protections than general civil rights law or that clarify the applicability of
civil rights rules to specific programs. This would include section 188 of WIA
which contains equal opportunity and nondiscrimination protections specific to
WIA and 408(c) of TANF which provides that the Americans with
Disabilities Act and Title VI of the Civil Rights Act of 1964 apply to
TANF.
If programs under the jurisdiction of other
agencies, the problems only compound. If programs under the Departments of
Agriculture and Housing are included, for example, a state could apply for
waivers that could dramatically reorder federal funding priorities involving
billions of dollars and cutting across multiple programs.
The only statutory limitation, other than cost-neutrality, on these
Secretaries' authority to approve waivers is that the state applying must show
that the waiver would further the purposes of all of the programs involved. This
language is so vague that a Secretary could determine that any state proposal
met this test.
In short, this broad new waiver
authority would mean that if a state and the administration agree that they do
not approve of a statutory provision in TANF, public health programs, child care
programs, education and training programs, or any other program within the
jurisdictions of HHS and DoL, they can effectively exercise line-item veto power
and have that rule waived. This would eliminate any assurance that Congress
could establish any national standard or requirement in programs within HHS or
DoL. If enacted, this waiver authority would represent an unprecedented
abrogation of Congressional authority to establish funding priorities, set
funding levels, and legislate program parameters. In transferring such authority
to the Executive branch, this provision would allow any Administration to make,
in conjunction with a state, unilateral policy decisions that Congress never
would have agreed to within the legislative process.
Such broad waiver authority is not needed and could be very damaging.
If there are particular areas within a program in which there is consensus that
states should have more flexibility in establishing rules, those areas should be
addressed in a targeted manor. For example, if there is consensus that states
should have more latitude in the way they design their
welfare-to-work
programs, then the TANF statute should provide that flexibility. Similarly, if
there are particular areas in which states should have more flexibility to align
WIA and TANF rules, those areas should be identified and the statutes altered to
provide that flexibility.
It also should be noted that
the Herger bill would terminate
welfare-related waiver programs currently
operating in some 10 states. These waivers were granted prior to the enactment
of TANF and states with such waivers were allowed to continue those programs,
even if they conflicted with federal TANF rules, under the 1996
welfare
law. It seems odd that while seeking to provide the Administration and states
with new ways to seek very broad waivers, that the bill would terminate those
waivers already in place.
The Herger bill also would
appear to allow the Secretaries to waive other independent statutory and
regulatory requirements applicable to programs within their jurisdiction,
including minimum wage requirements, OSHA standards, and civil rights
regulations. At a minimum, there is no language in the bill that would clearly
prohibit waivers of these requirements. There also is little question that the
Secretaries would be able to waive certain program-specific civil rights
protections that provide greater protections than general civil rights law or
that clarify the applicability of civil rights rules to specific programs. This
would include section 188 of WIA which contains equal opportunity and
nondiscrimination protections specific to WIA and 408(c) of TANF which provides
that the Americans with
Disabilities Act and Title VI of the Civil Rights
Act of 1964 apply to TANF.
The Child Support and Family
Formation Provisions of the Administration's Plan
The
proposed legislation makes several changes in the areas of child support and
family formation.
For current and former
welfare
recipients, states would be given a new option and new incentives to direct
child support payments currently retained by states and the federal government
to families. (Collections on behalf of current and former
welfare
recipients are often retained by the federal government and states as
reimbursement for
welfare costs.)
The
"illegitimacy reduction bonus" would be replaced with a "Healthy Marriage
Promotion" competitive matching grant program. States would be able to use
federal TANF funds to meet the state match requirement.
An additional $100 million is diverted from the high performance bonus
for use by the Secretary to fund further marriage promotion research,
demonstrations, and technical assistance.
The fourth
purpose of TANF would be changed from "encourag[ing] the formation and
maintenance of two-parent families" to "encourag[ing] the formation and
maintenance of healthy, 2-parent married families, and encourag[ing] responsible
fatherhood." States would be required to establish annual, specific plans and
numerical performance goals to improve outcomes with respect to this purpose and
the other three purposes of TANF.
Child Support
Provisions are More Modest than Earlier House- Passed Legislation
There is strong evidence that noncustodial parents are
more likely to pay child support if they know that the support goes to their
children. Research has shown that when child support is passed through to
families receiving
welfare, the child support paid by noncustodial
parents increases,
welfare receipt declines, and children's financial
well-being improves. (17)
The Herger bill includes two
provisions that would help states to implement policies that increase the extent
to which child support goes directly to children. The first provision would
provide states with an option to direct delinquent child support payments
collected by intercepting noncustodial parents' federal tax refund checks to the
children of former
welfare recipients. The second provision would help
states to implement or enhance policies that direct a portion of child support
payments collected from noncustodial parents of children currently receiving
TANF to their children. Under current law, states and the federal government
generally retain child payments made by noncustodial parents of children
receiving TANF. While states already have the flexibility to pass through child
support, if they exercise this option, they must still send the federal
government its portion of any child support collected, making it an expensive
option to take. The Herger bill would help states pay for the costs of providing
up to the greater of $100 per month or $50 more than the current state "pass
through" to families that receive TANF.
These
provisions, while positive, are far more modest, than child support legislation
sponsored by Representatives Nancy Johnson and Ben Cardin that passed the House
of Representatives in 2000 with overwhelming bipartisan support.
Within five years of enactment, the Johnson-Cardin bill would have
required all states to direct intercepted federal tax refunds to former
welfare recipients who are owed past-due child support. A uniform
national rule is preferable to a state option in this area for two reasons. It
is more equitable than a state option -- whether a child receives support should
not depend on her or his state of residence. It also makes more sense given the
additional complexities that would result in the interstate distribution of
child support if states had varying rules in this area.
The Johnson-Cardin legislation would have limited the requirement that
families applying for
welfare sign over to the state their right to
collect unpaid child support that was owed to them before they applied for
welfare. (The requirement that families turn over the support owed to
them while receiving
welfare is retained in both bills). The Herger bill
leaves this requirement in place. The Johnson-Cardin approach recognizes that
families who hold off from applying for
welfare should not be penalizing
by having to turn over child support that was owed to them before applying for
welfare.The Johnson-Cardin bill placed a
substantially higher limit on the amount of child support that states could pass
through to current TANF families with financial support. Under the Johnson-
Cardin bill, the federal government would help pay for the costs of providing up
to $400 in child support to a family with one child receiving TANF.
Johnson-Cardin also is more advantageous than the Administration's plan for
states that had previously implemented a child support pass-through policy.
(18)
Family Formation
There is
substantial interest in developing programs that further reduce nonmarital
births, foster and strengthen healthy two- parent families, and increase the
proportion of children cared for by both parents. However, very little is known
about what kinds of policies and programs could produce desirable results in
these areas. (One exception is teenage pregnancy reduction, where a growing body
of research points to successful strategies.) (19)
Unfortunately, both the Healthy Marriage Promotion competitive matching
grant program and the additional research and demonstration funding proposed in
H.R. 4090 are so narrowly focused that little would be learned about effective
strategies for strengthening and improving child well-being under this proposal.
In both cases, the Department of Health and Human Services (HHS) would be
required to fund a narrow set projects including marriage promotion activities
such as pro-marriage advertising campaigns, pre-marital education classes,
marital counseling, and relationship strengthening.
Efforts to reduce teen pregnancy are notably absent from the list of
projects that can be funded with these resources, despite research indicating
that reducing teen pregnancy can be an effective means to reducing the number of
children living in single-parent families. Also absent from the list of
allowable uses of these funds are efforts to foster the involvement of
noncustodial parents in the lives of their children, or to enhance the ability
of noncustodial parents to pay child support could not be supported with these
resources. (20) Because we know so little about what works in these areas,
states should be allowed to use these funds to conduct a wide range of research
and demonstrations that could reasonably be expected to have positive impacts on
family formation.
Finally, there are two troubling
aspects of the funding mechanism for these efforts. While we support eliminating
the "illegitimacy bonus" which appears to have rewarded states that experienced
falling nonmarital births unrelated to state efforts in this area, the high
performance bonus should not be cut by 50 percent to fund these efforts. The
TANF program includes many fiscal penalty provisions, but the high performance
bonus is the only TANF provision that rewards states for achieving better
employment outcomes and increasing access to work supports. In addition, states
should not be permitted to use federal TANF funds as the state match for the
Healthy Marriage Promotion competitive matching grant program. If the Congress
decides that additional resources should be allocated to such marriage-related
proposals, states should be required to contribute new resources, rather than
taking funds from existing TANF efforts, to participate in a competitive
matching program for which they are receiving additional federal funds.
The Fiscal Implications of H.R. 4090
Despite increasing the participation rates that states must meet and
hourly requirements that families must meet, while also requiring states to
place substantially more parents in more expensive subsidized jobs or work
experience programs, H.R. 4090 would freeze both TANF and child care funding for
five years at the FY 2002 level. Even without the far more costly work
participation requirements on states in H.R. 4090, freezing TANF and child care
funding for five years would itself mean that most states would be unable to
maintain their current
welfare reform efforts.
The 1996 law based each state's TANF block grant level on its
historical AFDC spending. Funding was not indexed for inflation. Data from the
Treasury Department show that in FY 2001, states spent $18.5 billion a year on
TANF -- $2 billion more than the annual block grant level. States have been able
to do this because they can tap unspent funds from the early years of the TANF
program. Those funds, however, are dwindling quickly. Many states either have
few remaining reserves of unspent funds from prior years or will be without any
significant reserves at some point in the next couple of years. If funding
remains frozen, many states will have to cut TANF services significantly,
including supports for working poor families with children. Adding to this
problem, the $16.5 billion will purchase less in services and benefits with each
passing year, due to inflation. Since 1997, the block grant has lost 11.5
percent of its value -- five more years of funding at the current level would
mean that it would fall 22 percent below its value in 1997.
If the child care block grant is frozen, it would lose nearly 12
percent of its value by FY 2007 due to inflation. The cost of child care is
comprised primarily of the salaries of child care workers. States will not be
able to freeze the salaries of these workers for the next five years and, thus,
as the cost of child care rises, states will be unable to maintain their current
service levels without devoting increased state resources to child care or using
larger amounts of TANF funds for child care, leaving even less in TANF for other
purposes. It is likely that most states would be forced either to reduce the
number of children served or increase the costs borne by low-income families by
reducing the value of the subsidy. Thus, while most analysts agree that there
remains large numbers of low-income families who need child care assistance in
order to afford quality, stable child care, funding would be falling and states
would not be able to maintain even their current child care programs.
The Herger bill includes a provision which would allow
states to transfer up to 50 percent of its TANF funds to the child care block
grant. Under current law, states can transfer up to 30 percent of TANF funds to
the child care block grant but can spend an unlimited amount of TANF funds
directly on child care. In fact, under current law, a state could choose to
spend its entire TANF block grant on child care assistance. Thus, increasing the
amount that can be transferred to the child care block grant provides no
additional resources for child care.
New Work
Requirements Would Be Costly
LOAD-DATE: May 1, 2002