The Pew Charitable Trusts

In a move welfare advocates say could turn back the clock on progress states have made helping families escape poverty, Congress this week voted to impose tougher standards on state welfare block grants, without providing the funds needed to meet the new goals. 

 

New provisions in the law-which extends the federal welfare program, Temporary Assistance for Needy Families (TANF), for another five years-put more pressure on states to require poor parents to engage in work-related activities if they want to receive government aid.

 

The law-which reauthorizes the 1996 statute that created the welfare reform program-is part of a broad federal budget bill that eliminated some $40 billion in social services funding to the states over the next five years.  The cuts-the biggest in more than a decade-will reduce Medicaid , student aid funding and federal payments to the states for administering child-support enforcement programs.

 

After previous attempts to extend the welfare law failed, congressional leaders decided to append the provisions to the budget bill to ensure passage.

 

The new law keeps the federal welfare program intact and funds it at historic levels, but asserts federal authority over state-funded welfare programs previously run independently. The law also imposes disproportionately tougher work standards on two-parent families, compared to single-parent families.

 

The law's apparent marriage penalty is ironic, critics say, because it also allocates $750 million to promote wedlock and fatherhood.

 

The tougher work requirements "virtually guarantee that every state will incur penalties and fail to meet the federally mandated work participation rates, until they reconfigure their programs," said Michael Bird of the National Conference of State Legislatures.

 

The Congressional Budget Office (CBO) estimates the stiffer rules-which require 50 percent of single-parent families and 90 percent of two-parent families to engage in federally approved work-related activities--will cause states to forfeit about $23 million in federal money over the next five years.

 

An even bigger drain on state budgets is the estimated $12 billion CBO predicts states will need over the next ten years to expand welfare-to-work programs to meet the new requirements and pay for inflationary increases in existing child care subsidies so that poor parents can continue to work.

 

The new law requires state-funded welfare programs-which had been exempt from work rules-to come under federal scrutiny and count toward work participation percentages. It also takes away a cushion in the old law that allowed states to fall far short of the mandated work rates without being penalized.

 

"It basically takes the 'block' out of the block grant concept," Bird said, explaining that the original intent of the law was to give states broad authority and incentives to develop effective programs that would help poor families find work and move off welfare rolls.

 

Sponsors of the original TANF reauthorization bill wanted to eliminate the 90 percent work participation requirement for two-parent families and impose the 50 percent standard for all families.

 

"It was generally understood, based on past experience, that the 90 percent work participation goal for two-parent families was unattainable," said welfare advocate Sharon Parrott of the Center for Budget and Policy Priorities.

 

But the 90 percent provision was put back into the bill once it became part of the budget package because of parliamentary requirements that policy changes in a budget bill must have a measurable fiscal impact.

 

A CBO analysis indicated that tightening the work rules would result in a decline in total federal funding, because states were likely to fall short of the standards-particularly for two-parent families-and would incur penalties.

 

In the 1996 law, work participation rates were considered targets states would strive to hit as they geared up their welfare-to-work programs.  To ease the transition, states could shave points off the work participation minimums if they reduced their caseloads below1995 levels. As a result of this credit system, most states still fall short of the 50 percent work participation standard without being penalized. 

 

The new law wipes the credit slate clean by shifting the base year for caseload reductions to 2005, requiring states to meet the 50 percent and 90 percent work participation rates immediately.

 

"The big concern is that this provision creates tremendous incentives for states to further cut their caseloads, whether or not families get jobs or get help. The incentive is not to run a better employment program, but to cut off funding to needy families," said Mark Greenberg of the Center for Law and Social Policy.

 

Critics of the new TANF provisions say that including separate state-funded welfare programs in the work rate calculations will force states to abandon innovative projects that don't qualify as federally approved work-related programs, but have helped families achieve long-term financial independence.

 

One such program-Maine's Parents as Scholars project-was grandfathered into the original reauthorization, but it was removed from the reconciliation bill because it did not meet the fiscal impact requirement. 

 

Under the program-launched by the Maine legislature in 1997-the state provides tuition aid to low-income parents so they can find jobs that will pay enough to support their families.

 

Proponents of the stricter rules argue that separate state programs under the 1996 TANF law were a way for states to simply provide cash to needy families without requiring them to participate in any type of work-related program.

 

"States moved hard-to-serve clients into separate programs so they wouldn't be counted-not because those 'innovative' programs wouldn't get federal approval," said Becky Shipp, Senate Finance Committee staffer.

 

The Government Accountability Office (GAO) recently reported that states were getting federal approval under the TANF program for "journaling, massage therapy, running errands for neighbors and smoking cessation classes," all defined as job preparation activities, she said.

 

"I can't conceive how you can be more experimental or innovative than massage therapy or running errands," Shipp said, adding that recent GAO data show that some 60 percent of welfare families are not participating in any type of work-related activities.

 

Under the 1996 TANF program-which has been credited with helping millions of American families become self-sufficient-the federal government provided a block grant to states, giving them broad discretion to provide aid to needy families as long as the states helped welfare recipients find jobs.

 

Federal money can be used for cash assistance, transportation, childcare and so-called work preparation and support programs. TANF-which serves more than two million American families-requires states to contribute some of their own money to separate welfare programs.

 

States had the leeway to run separate programs-often for families with special-needs, such as physical disabilities, mental illness and drug and alcohol addiction-without following TANF work guidelines.  Instead of federally approved work-related activities, many states offered special-needs parents counseling, rehabilitation, education and vocational training.

 

As in the past, the new law docks states up to 5 percent of their federal funding if they fail to meet mandated work participation rates. In addition, states must make up the revenue shortfall and contribute a higher percentage of state money to the program the following year.