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Welfare reform's passage ushers in new era for entitlements: municipalities could become only safety net.

Municipalities could end up shouldering more of the burden and the costs of dealing with local welfare populations once welfare reform legislation is signed into law. The House approved its version of welfare reform on Wednesday by a vote of 328-101, followed by a 78-21 Senate approval. The President announced Wednesday that he would sign the legislation.

In a letter to House and Senate negotiators to the welfare measure, NLC President Greg Lashutka noted the concern of cities in the welfare bills being considered: "We are deeply concerned that any (welfare reform bill) provide specific protections and equity for these cities and their children so that they are not allocated a disproportionately smaller share of the sharply reduced resources proposed. These changes have important implications for credit quality, for local revenues, and for upsurges in demands for public health, safety and education needs at the local level."

The heart of the GOP plan includes an end to the 61-year-old federal guarantee of providing welfare checks to all eligible mothers and children. The combination welfare reform/budget balancing measure would save $55 billion over six years. States would run their own welfare programs, with several restrictions. In general, welfare recipients would be limited to five years of benefits and required to work within two years of receiving aid.

An Overview of the Legislation

The following are aspects of the conference report agreement which are significant for local governments.

Effective Date: June 1997

Local Provisions: The bill contains a local consultation provision requiring that states give local governments an opportunity to comment on the design and implementation plans of state-created welfare programs. Also, the bill contains a "maintenance of effort" provision requiring a state to spend at least 75 percent of what it spent in fiscal year 1994. For states that do not meet the work requirements, the maintenance of effort requirement is increased to 80 percent.

Cash Assistant Block Grant: The bill creates a single cash welfare block grant, called the Temporary Assistance for Needy Families Block Grant, to replace the current AFDC, AFDC Administration; Job Opportunities and Basic Skills (JOBS) program; and the Emergency Assistance programs. Capped spending for this block grant will be $16.4 billion in each of the fiscal years 1996 through 2001. The amount a state received under the block grant would be based on the amount it received under the AFDC, AFDC Administration, Emergency Assistance and JOBS programs.

In general, states would receive the highest of 1) the average amount they received for these programs in fiscal years 1992 through 1994; 2) the total received in FY 1994; or 3) the amount received in FY 1995.

Additional State Funding Sources: In addition to the amount they receive under the basic block grant, states could receive additional funding from the following three new sources created by the measure: a $1 billion fund that would reward states that effective in moving people from welfare to work, preserving two-parent families, and reducing out-of-wedlock birthrate; an $800 million fund to assist poor states that have high population growth rates; and a $2 billion contingency fund to help states with high levels of economic distress.

Limitations on States: States that misuse block grant funds would be required to repay those amounts, using state funds. States cannot use block grant funds to provide cash welfare payments to the following: families with no minor children, parents that do not cooperate on child support, unmarried parents under age 18 who have a child and do not live with an adult and stay in school, parents who do not work after they receive cash welfare for two years, and families that receive cash welfare benefits for five years. The measure, however, permits states to exempt up to 20 percent of their caseload from this five year, lifetime limit in hardship cases.

Legal immigrants: About 40 percent of the savings in the bill come from denying a wide range of benefits to legal immigrants. SSI and Food Stamps are restricted for most noncitizens. The state has the option to restrict Medicaid for current resident noncitizens and for noncitizens arriving in the U.S. in the future after five years. Both the House and Senate have already approved NLC-opposed immigration reform bills that include provisions which impose mandates on states and localities.

Work requirements: The bill requires states to establish welfare-to-work programs, and requires recipients of cash welfare benefits to work after two years, or their benefits would end. It requires that 50 percent of the families receiving welfare payments must be in work programs by FY 2002. The bill imposes a graduated penalty on each consecutive failure of a state to meet the work participation standards. Under the bill, a state's block grant funds would be reduced by 5 percent the first year it failed to meet work participation standards. If a state continued in consecutive years to fail to meet these work participation requirements, this penalty would be increased by 2 percent, up to a level of 21 percent.

Denial of Benefits: The bill generally requires all able-bodied recipients between the ages of 18 and 50 who have no dependents to work at least half-time (ie. 20 hours per week), or engage in a workfare or training program in order to be eligible for Food Stamps. The bill also permits the Agriculture Department to waive the work requirement for some or all individuals in part or all of a state if the department determines that the area's unemployment rate exceeds 10 percent or that there are insufficient jobs to provide employment to those subject to this requirement.

Food Stamp provisions: The bill cuts an estimated $23.3 billion from the Food Stamp programs over six years. In a victory for cities and the President, the bill does not establish an optional food assistance state block grant program. However, new restrictions are in place for eligibility of able-bodied adults for Food Stamps.

Child Protection Services: The bill retains open-ended entitlement funding for foster care maintenance, adoption, and training and administration programs. The retention of the entitlement status of these programs is important to cities because these programs fund the services necessary to remove children from unsafe homes, place them in appropriate settings and recruit and train foster parents or parents wishing to adopt.

Child Care: The bill repeals the current AFDC Work-Related Transitional Child Care programs, an open-ended entitlement program that provides child care to welfare recipients, as well as the At-Risk Child Care program, a mandatory block grant to states to help individuals who are at-risk of going on welfare if they do not get help in paying for child care. The bill replaces these programs with a new capped child care block grant.

Vouchers for Children: The bill prohibits states from providing vouchers for children whose families reach the time limit, but does permit states to use their own funds or federal Social Services Block Grant (SSBG) funds for this purpose. SSBG funds, however, have been cut 15 percent in the bill.
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Author:Dimas, Jose
Publication:Nation's Cities Weekly
Date:Aug 5, 1996
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