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Most welfare reform efforts stem from national welfare reform legislation. We will first review the changes to national policy and programs, then present four examples of state welfare reform efforts.
The Temporary Assistance to Needy Families (TANF) is the cash-grant component of welfare reform and the main feature of the 1996 federal Personal Responsibility Work Opportunity Reconciliation Act. The 1996 federal welfare reform act significantly changes the way the federal government provides cash assistance to states and families. Most importantly, it replaces the Aid to Families with Dependent Children (AFDC) cash grant program as an entitlement based on income level and family size, and requires all recipients to work as a condition of receiving assistance. Secondly, it is a work-first program that promotes employment over education and job training.
Because public assistance is no longer an entitlement, federal funds are provided annually as block grants to the states; funding does not vary depending on the number of families in need of assistance. The federal welfare reform bill provides for a total of $16.38 billion in block grants for fiscal years 1997 to 2002.
Annual block grant levels for each state are generally based on the combination of 1994 federal expenditures on AFDC benefits and administration, Emergency Assistance, and the Job Opportunities and Basic Skills Training Program (JOBS). States may receive supplemental grant amounts of 2.5 percent if they have high population growth and/or low grant amounts per low-income person.
The primary purpose of TANF is "to provide assistance to needy families with children so they can be cared for in their own home, and to reduce dependency by promoting job preparation, work and marriage." The TANF block grant can be used in any "manner reasonably calculated to accomplish the purposes of the TANF." States are in charge of creating their own welfare-to-work programs, eligibility and benefit levels. The following is an overview of the federal TANF program.
States can use TANF funds to provide transit or other transportation assistance, although few states have aggressively pursued this option. A guidance paper detailing the options available to state planners for using TANF funds to support transportation initiatives was released by the U.S. Department of Labor in December of 1998 (Training and Employment Guidance Letter No. 10-98).
Minimum work requirements: One of the primary features of federal welfare reform is the requirement that those who receive assistance must work. States must meet the following work participation rates for "all families" receiving cash grants and who are non-exempt from work requirements. The term "all families" refers to all families headed by an adult (one or two-parent families) or a minor parent head of household receiving cash assistance under a state welfare program. States that do not meet these participation requirements face reductions in their federal block grants:
- 1997 - 25 percent of all families, 20 hours
- 1998 - 30 percent of all families, 20 hours
- 1999 - 35 percent of all families, 25 hours
- 2000 - 40 percent of all families, 30 hours
- 2001 - 45 percent of all families, 30 hours
- 2002 & beyond - 50 percent of all families, 30 hours
Participation rates are higher for families with two-parents. They are as follows:
- 1997 - 75 percent of two-parent families, 35 hours
- 1998 - 75 percent of two-parent families, 35 hours
- 1999 & beyond - 90 percent of two-parent families, 35 hours
States have set different work requirements for participation in TANF and related programs. Some states follow the federal legislation, while others have increased the required hours of participation in an approved activity (see the following).
Allowable work activities to meet the above work participation requirements: The emphasis of welfare reform is on full-time unsubsidized employment. However, additional activities qualify as work or work-related to promote job readiness. States may qualify the following as work activities for the first 20 hours of work (i.e., minimal number of hours required) for "all families" and the first 30 hours for "two-parent families."
- Subsidized private and public sector employment;
- Work experience;
- On-the-job training;
- Job search and job readiness assistance for up to six weeks;
- Community service programs;
- Vocational education for up to 12 months, with restrictions;
- Job-skills training directly related to employment;
- Remedial education (e.g., high school diploma) directly related to employment; and,
- Provision of childcare assistance to an individual who is participating in community service.
Hours in excess of the required 20 hours of work for all families (and 30 hours for two-parent families) may be counted when an individual participates in:
- Job search and job readiness assistance in excess of the specified limits (i.e., six weeks);
- Job skills training directly related to employment;
- Education directly related to employment in the case of a participant who has not received a high school diploma or high school equivalency; and,
- Satisfactory attendance at secondary school, or in a course of study leading to a certificate of general equivalency, in the case of a participant who has not completed secondary school or received a high school certificate.
Special rules and exemptions: While most families are expected to work, states may establish special rules and exemptions for those with special hardships. These include:
- Single parents with children under the age of one;
- A teen parent who is attending secondary school;
- Persons with disabilities; and,
- Families who cannot find child care.
Additional children: States may deny assistance to additional children born while the parent is receiving welfare assistance.
Limitations and penalties: Not more than 20 percent of all families may count toward the work participation rate by attending vocational education.
- Education and training activities will generally not count toward meeting the first 20 hours of work participation for "all families" (with the exception of teen parents) or the first 30 hours for "two-parent families" (states differ in interpretations of educational or training activities that meet minimal work participation requirements);
- A state may reduce or terminate grant assistance to families who fail to comply with work participation requirements. The exception is for families who are unable to work for lack of finding child care;
- States will be penalized by a reduction of five percent in their TANF block grant the first year they fail to meet work participation rates. Penalties increase by two percent a year up to 21 percent. Exceptions may be made for states in recession or for which "reasonable cause" has been established.
Key prohibitions: Central to welfare reform is what it does not permit. Prohibitions include:
- No assistance of any form past five years (60 months). A state, however, may exempt up to 20 percent of its average caseload from the five-year clock for reasons of "hardship."
- No assistance to legal non-citizens, with some exceptions as described below under "Immigrant Provisions."
- Unmarried teen parents may not receive assistance unless they are in school for at least 12 hours a week and living at home or in an approved adult-supervised housing arrangement.
- Grants must be reduced by a minimum of 25 percent if an adult fails to cooperate in establishing paternity or establishing or modifying a support order.
- No assistance can be provided to anyone convicted of a drug felony. States may modify this prohibition through state law.
- TANF funds must not be used for medical services, except for pre-pregnancy planning.
Maintenance of Effort: States must meet an 80 percent Maintenance of Effort (MOE) to receive their full block grant allocations, meaning they cannot reduce their overall welfare assistance levels below 80 percent of current expenditures. The MOE will be reduced to 75 percent for states that meet the work participation requirement.
Contingency Fund: $2 billion is available in federal matching funds for the period 1997 - 2001 for states experiencing an economic downturn. This is defined by an unemployment rate of at least 6.5 percent and/or if the eligible number of food stamp recipients for the most recent three months is 10 percent greater than the monthly average number of recipients in 1994 or 1995 (whichever is lower) in the corresponding three-month period. An additional Rainy Day Fund of $1.7 billion is available as a revolving loan. Maximum loans of 10 percent of a state's block grant amount can be requested for up to three years.
Performance Bonuses: These are awarded to states meeting the goals of the program by 2002. A $20 million Illegitimacy Reduction Bonus Fund will be awarded to the states with the greatest success in reducing out-of-wedlock births.
State administrative rules:
- States must submit plans every two years;
- States are required to expend their own funds to replace reductions in their block grants from any penalties;
- States must submit quarterly reports regarding case record information on families receiving assistance; and,
- Native American tribes may receive and administer block grants directly.
Immigrant Provisions: All immigrants who reside in the United States without legal status are ineligible to receive any federal assistance, with the exception of medical emergency assistance. In general, legal immigrants (i.e., those who reside in the United States legally, but do no have citizenship) are no longer eligible for federal TANF, Food Stamps, Medical Assistance or Supplemental Security Income (SSI) benefits until they become citizens, with the following exceptions:
- Those with official refugee or asylum status;
- Those who have lived and worked in the U.S. with 40 qualifying quarters (10 years) of work;
- Veterans or active duty military personnel.
Immigrants arriving after August 22, 1996, are no longer eligible for federally funded means tested programs with the following exceptions:
- Emergency medical assistance.
- School lunch assistance.
- Disaster relief.
- Immunizations.
- Foster care and adoption assistance.
- Higher education assistance.
- Head Start.
- Job Training Partnership Act assistance.
Changes in SSI for legal non-citizen: Before welfare reform, all U.S. residents and citizens were eligible to receive SSI if they qualified based on age and disability. Most legal non-citizens who were receiving SSI benefits on August 22, 1996, can keep their SSI benefits, and those not receiving SSI benefits remain eligible to receive benefits. Most legal non-citizens arriving after August 22, 1996, are ineligible to receive SSI for their first seven years in the country. States have the option of providing state benefits to legal non-citizens who lose federal benefits.
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