States Refine Welfare Programs in 1999 as Pace of Reform Slows


WASHINGTON - The tidal wave of reform unleashed three years ago has begun to recede as most states this year have refrained from instituting major changes to their programs for the poor and have opted instead for minor refinements.

Buoyed by early signs of success the unprecedented drop in caseloads nationwide and modest increases in the percentages of adults leaving welfare for work most states have adopted a wait-and-see attitude toward their new welfare systems.

Arkansas is the one exception. Its legislature did implement major new reforms in 1999.

Governors in many states have announced plans to boost child-care spending for the working poor.

In Michigan, Texas and New York, governors have sought additional childcare or other benefits for poor families while also pushing stricter requirements for welfare recipients.

Wyoming this year created a children's health program and Texas is putting the finishing touches on its Children's Health Insurance Program (CHIP).

"Child care and CHIP are the biggest areas of growth in human services," said William Waldman, Executive Director of the American Public Human Services Association.

There is likely to be more action in the coming months.

States are under mounting pressure from Washington to spend, or at least plan to spend, more of the $16.5 billion annual federal welfare grant. In 1997 and 1998, 33 states left more than $3 billion in the federal treasury, according to the U.S. Department of Health and Human Services.

Under new welfare rules unveiled last month, states must decide their plans for the surplus now.

After October 1, they will not be able to commit the leftover money to some key supports for welfare families allowed by the 1996 federal welfare act such as child care, transportation and work subsidies. They will still be able to use the reserve for cash assistance and other basic needs, such as housing subsidies.

As a result, many of the states with unused federal funds may move to commit more of it to welfare programs in the next few months.

That, in turn, could prompt states to cut their own welfare contributions, as they replace state outlays with federal dollars. Last week, the Wisconsin Assembly approved a plan to use $33.7 million in federal funds to finance the state's Earned Income Tax Credit. The state savings would then be passed along to taxpayers in the form of a modest property tax cut. Governor Tommy Thompson has announced his support for the idea, which still awaits approval by the state Senate.

Overhaul in Arkansas

Inspired by Florida's welfare program, Arkansas this year established a 15-member council, the Transitional Employment Board, to coordinate welfare programs statewide.

Officials had discovered that many welfare recipients in Arkansas were not receiving the assistance they needed to keep their jobs.

The new management system will try to pinpoint who needs special services such as child care and transportation and will direct recipients to those services, said Phil Price, special advisor to the Arkansas Legislature on welfare issues.

"We have money we're not using, as most states do," Price said

In Arkansas, families may rely on welfare for up to 24 months. Under the new rules, that two-year clock will stop for families who are not receiving the help they need.

Representatives from each of the six state agencies involved in welfare-to-work programs will sit on the new board, together with representatives of business and at least one current or former welfare recipient. Similar councils will operate at the local level.

Arkansas this year also relaxed its work requirements for some welfare recipients. The state will now stop the clock for recipients who are making steady progress in school while continuing to comply with welfare-program rules. The state is also easing its work requirement from 25 to 15 hours a week for recipients who are working toward a GED, are receiving vocational training or are enrolled in college.

"Just dropping 10 hours per week makes [school] much more doable for a parent with small children," Price said.

Michigan Approves Drug-testing

In Michigan, where Republicans now control both houses, Gov. John Engler recently won approval of a long-sought drug-testing program.

Under legislation Engler signed last month, Michigan welfare applicants will soon have to submit to drug tests to qualify for cash assistance.

Many states have found it difficult to identify whether welfare applicants have substance-abuse problems, but Michigan is the first to institute drug testing for all applicants, according to the National Conference of State Legislatures.

Some states, such as Oregon, test only if they suspect a welfare recipient uses drugs.

The Idaho Legislature this year considered, but did not pass a bill that would have allowed the state's Department of Health and Welfare to test participants suspected of drug abuse.

Michigan plans to roll out its program slowly, beginning in three counties on October 1. The law calls for testing all applicants statewide and instituting random testing of recipients by 2003.

Engler says applicants who fail the test will receive drug treatment. "This program will help us identify these individuals and provide them with the incentive to change their lives," he said in a press release.

Those who fail to comply with drug treatment will see their welfare benefits cut.

The Michigan Legislature also recently approved a plan to fingerprint welfare applicants to prevent families from receiving assistance under more than one name.

Expanding Child Care - A Top State Priority

The Michigan Legislature has yet to approve a budget request from Engler for a vast expansion of the state's child care program.

Engler announced in February a plan to spend an additional $281 million this year and next on child care for poor families. Michigan already spends $420 million annually reimbursing low-income families for child care expenses.

Increasing child care funding is under consideration in at least 15 other states:

  • Last week, the Minnesota Legislature approved an unprecedented increase in funding for the state's child care subsidy program. Under the proposed bill, Minnesota would double spending on child care subsidies for families on welfare over the next two years. The state is also increasing the funding for child-care for other low-income families by $20 million, bringing the state's total bill for childcare to more than $300 million.
  • In Massachusetts, Republican Gov. Paul Cellucci has proposed increasing child care spending by $102 million next year. Cellucci wants to spend about $55 million on child care for welfare recipients and another $47 million on care for other low-income families.
  • Gov. George Bush of Texas has asked his Legislature for an increase in child care funding of $100 million over two years.
  • In Pennsylvania, Gov. Tom Ridge has proposed spending $376 million on child care subsidies next year, an increase of $33 million.
  • Last month, New Jersey Gov. Christie Todd Whitman announced plans to use $100 million in federal funds over three years on child care for low income families. The New Jersey Department of Human Services says the additional money will eliminate the waiting list for child care, which now stands at 7,500 children. New Jersey already finances 55,300 slots for low-income children, with priority going to those on welfare or those who have recently left welfare.
  • The Montana Legislature this year approved a plan to spend $30 million on child care for low-income and welfare families over the next two years.
  • A bill in Maine to expand child care, Head Start and after-school programs awaits the Legislature's final approval.
  • According to the National Conference of State Legislatures, Arizona, California, Florida, North Carolina, South Carolina, Tennessee, Utah and Wisconsin are also considering increasing child-care funding for welfare and low-income families next year.

New Welfare Rules

A number of Governors this year have asked their legislatures to modify their welfare programs.

Gov. George W. Bush has been embroiled in a debate with the Texas Legislature over tightening the state's welfare requirements. Lawmakers had been considering an omnibus welfare bill that would have changed the state's program in a number of ways. But, a proposed provision backed by Bush to stiffen penalties for welfare recipients who fail to comply with the rules met strong opposition in the Texas House. With just a few days to go in the session, the bill appears doomed.

Still alive is a bill to allow parents who do find work to continue to collect cash assistance during their first months on the job. Under legislation pending in the House and Senate, adults who leave welfare may qualify for benefits for up to six months after they begin working. Bush supports the measure.

The Missouri Legislature this year passed a similar bill.

In New York, Governor George Pataki has announced a proposal to crack down on welfare recipients who refuse to help officials locate an absent parent. Pataki would cut all benefits to parents who refuse to comply with the state's child support collection efforts. At the same time, the governor would increase the amount of child support families on welfare are allowed to keep, from $50 to $100. Currently, New York retains all but $50 of a child support payment as reimbursement for welfare.

In West Virginia, Gov. Cecil Underwood announced in February an increase in the state's welfare cash allotment of $25 a month. A family of three, for example, will now receive $278 every month. West Virginia, which had denied welfare cash assistance to families that also received Supplemental Security Income, reversed that rule this year. About 6,600 families who had their benefits cut can now reapply for welfare in West Virginia.

Innovative Programs

Although more modest in scope than proposed increases in child care spending, a few states this year have announced plans to fund new programs for welfare recipients:

  • In North Carolina, Gov. Jim Hunt has announced a series of initiatives called Next Steps. He plans to spend $29 million in federal community development money on a host of new housing initiatives designed to boost the amount of affordable housing in North Carolina. Hunt also announced that $5 million in federal welfare money will go toward six new or existing programs, including: 1200 housing subsidies, skills courses at community colleges and financial management classes.
  • In Pennsylvania, Gov. Tom Ridge of Pennsylvania has asked the legislature to fund 16,000 temporary jobs for welfare recipients a program he estimates will cost $33 million next year.
  • Wisconsin, which began its welfare reforms years earlier than most states, is considering a number of new initiatives sponsored by Gov. Tommy Thompson. Thompson has proposed offering wages rather than welfare checks to participants in the state's Wisconsin-Works (W-2) community service program. Paychecks would qualify those workers for the federal earned income tax credit (EITC). The federal credit can amount to more than $3,750 for families earning up to $26,473, making the poorest families eligible for tax rebates. Thompson has not proposed extending the state's EITC to W-2 workers. Thompson has also proposed spending $20 million in federal welfare funds on a "community youth" fund, to finance programs for at-risk kids.
  • Kentucky has just announced it will spend $9 million between now and next October on new programs for welfare families. More than $4 million will go toward helping families improve their housing situations by providing low-cost loans for new homes.

Children's Health Insurance

The Texas legislature this year is also working on an expansion of the state's Children's Health Insurance Program. Last year, Texas expanded its Medicaid program to provide health coverage to older children in families whose income falls at or below the federal poverty level $13,880 for a family of three.

This year, the legislature is developing a bill to cover children in families earning too much to qualify for Medicaid but too little to afford private insurance.

Under the plans moving through the Texas House and Senate, the state will contribute $151 million a year in tobacco settlement funds and the federal government, under the Children's Health Insurance Program established in 1997, will kick in another $450 million. The current House bill calls for insuring all children under 19 up to 200 percent of the federal poverty level. The Senate bill would cut off eligibility for older children above 150 percent of poverty. The two houses are now working to reconcile their proposals.

Even under the less generous Senate version, Texas' CHIP plan will extend health coverage to an estimated 400,000 children.

Earlier this year, the Wyoming legislature approved its CHIP program.


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