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What to do with welfare?

We're still tinkering with the welfare system, and it still isn't doing much to make the poor self-sufficient.

When President Clinton pledged early this year to "end welfare as we know it," a sense of anticipation tempered by apprehension swept through the offices of legislators, social-service experts and welfare bureaucrats across the nation.

Call it deja vu: After all, Clinton's immediate predecessor, George Bush, had promised much the same thing in 1992 in a "strategy for transforming the welfare system into an opportunity system." And before that, Ronald Reagan had signed into law a program for "lasting emancipation from welfare dependency." That was in 1988.

We all know what followed: The economy fell into one of the deepest recessions on modern record. Unemployment exploded. Instead of shrinking, welfare rolls swelled. Between 1989 and 1991, the number of families collecting benefits jumped more than in all the previous 16 years. As 1993 dawned, some 5 million families had enrolled in the premiere assistance program, Aid to Families with Dependent Children (AFDC)--1.3 million more than in 1988.

The whipsaw of rising costs and falling revenues made hash of optimistic fiscal projections lingering from the go-go '80s; states were forced to choose between taxes and deep cuts. Most chose the latter, first reducing or eliminating state-run programs, like general assistance, followed by AFDC program changes and benefit cuts. The majority of states, 38, kept their AFDC benefits at FY 1992 levels. Vermont, South Carolina, Oklahoma, Nevada, Maryland and North Carolina reduced their FY 1993 basic welfare benefits below '92 levels. Nine states had already reduced these benefits in 1992. The remaining seven increased AFDC benefits.

Ultimately, welfare reform itself fell victim to the economic mess.

Rather than aggressively pursuing strategies to educate and train recipients, to support them with basic transitional services and to help them find jobs--all key goals of the Family Support Act and the Job Opportunities and Basic Skills (JOBS) program enacted during the Reagan-Bush years--many states retreated. At least 14 cut or froze JOBS-related initiatives last year. Worse, although $1 billion in federal JOBS funds were available, only Oregon was able to draw its full share. Most states lacked the required match.

It probably is true, as some have suggested, that no one could have forecast accurately the depth and breadth of the economic downturn that precipitated all of this. But experts say the experience nonetheless has resurrected fundamental questions about how welfare policy is crafted and how it is carried out--questions especially apropos as the nation prepares for yet another welfare overhaul.

Do we have a habit of designing welfare reform programs that ignore basic economic imperatives, like whether there will be a sustained commitment to providing money sufficient to support the reforms and whether there will be decent jobs for the intended beneficiaries?

Are state and federal welfare reform initiatives composed in a vacuum, isolated from planning in other realms ranging from economic development to health care to education?

Are programs launched with overstated expectations that only set them up for failure?

In many instances, the answer on all counts would seem to be "yes, " according to those across the political spectrum.

"There have been times when welfare |officials~ have not been sensitive to economic |and other~ realities," says Kathryn Porter, research director for the Washington, D.C.-based Center on Budget and Policy Priorities. "To a certain extent, the problems of the welfare system are problems that the welfare system didn't create--failures in the educational system, the poor employment market in cities, the pervasiveness of drug abuse. We try to fix the welfare system and think these problems will just go away."

"States are spending a lot of money per job with no guarantees that welfare recipients can find or handle those jobs," says Douglas Besharov, a welfare analyst at the American Enterprise Institute. "Even in the strongest economy, it's pretty hard to find a job that will support a mother with two children who has dropped out of high school and who is barely literate. That's not to say you shouldn't try. But that is the bottom line."

Says Oregon Senator William McCoy--who has grappled with welfare reform as chairman of that state's Senate Human Resources Committee: "We do a lot of things out of pressure just to let the public know we are trying to do something. But it's worthless, just a waste of time, to do this without planning and without a direction of where you're going, especially in an economy that is, for the most part, just going down."

Where's the Money?

The most obvious economic lesson from the welfare-to-work record of recent years--and perhaps the most difficult one to reconcile--is that, simply stated, without the dough, it's no go.

"The sad fact about all of these programs," says Porter, "is that they're all expensive. There is no free or cheap way to get people who are economically disadvantaged into the job market."

Besides targeted training, education and job search programs, it requires a range of transitional support services for participating recipients, including children's day care, extended health-care coverage (usually via Medicaid) and transportation aid.

By some estimates, the Clinton administration's plan to bring 1.5 million young, able-to-work welfare mothers into such programs across the nation could cost as much as $3,400 per person per year ($5.1 billion) just for child care services and administrative monitoring--"about the same as the average (AFDC) grant to families," Besharov wrote in a recent article.

During the fiscally flush '80s, when states began designing experiments in this realm, cost was not a major object. Two states in particular--California and New Jersey--made substantial investments, and they reaped some encouraging preliminary results.

A study of New Jersey's REACH education and training program by Mathematica Policy Research Inc. of Princeton found that most of the 300 participants who were tracked in 1988 had found jobs and that 70 percent were still employed 16 to 18 months after "graduation."

A broader study completed last year of California's GAIN program by the Manpower Demonstration Research Corp. found that participants in the six counties examined earned 17 percent more and received 5 percent less welfare than single parents in a nonparticipating control group.

By last fall, though, the fiscal focus in both states had shifted radically--from welfare reform to welfare cuts. California lawmakers, grappling with an $11 billion budget deficit, reduced maximum AFDC benefits by 5.8 percent on top of a 4.5 percent cut in 1991. A similar crunch in New Jersey prompted cuts not only in the REACH budget, but also in an ambitious new mix of welfare-to-work incentives and sanctions--the Family Development Act--enacted early in 1992 in an effort to encompass even more able-bodied recipients. The FDA's initial $13.5 million appropriation was halved, delaying its implementation for at least a year.

There were some notable exceptions to this trend. In Oregon, the only state that funds JOBS programs above the federal match, state legislators endorsed $69 million through 1993 to fully support an education and training program for teen mothers.

But across the nation, the funding commitment for genuine reform has slipped, says Mark Greenburg, senior staff attorney for the Washington, D.C.-based Center for Law and Social Policy. "There has been a failure to bridge the gulf," he says, "between the rhetoric accompanying the passage of welfare reform and the resources that are ever committed to carrying out the programs."

Where will this key economic ingredient in the welfare-reform formula come from? Many are looking to the new engine in Washington, D.C.

"When we require a welfare mother to train for employment as a matter of national policy, it is incumbent upon national policymakers to accept the task," Kevin Concannon, Oregon's human resources chief told Congress last year in urging passage of an additional $4.5 billion in federal JOBS program funds. "I believe more states would devote significant resources to support |such~ programs if the resources were available. Given the discouraging economic environment, however, most states simply cannot do so."

What Jobs?

Throwing more money at a problem doesn't guarantee a solution. That's one major reason why it has become politically fashionable over the past several years to combine financial incentives with sanctions in hopes of altering behavior and moving recipients from welfare to work.

Ohio, for example, has a demonstration program that pays lower benefits to teen mothers who fail to attend school, and Wisconsin is experimenting with a program that pays lower benefits to families whose kids don't stay in school.

New Jersey has received waivers to tie job training to benefits in a program that will start in August. Those who refuse to cooperate in mandatory JOBS program activities can lose benefits for 90 days. New Jersey also has a controversial program that denies additional AFDC benefits to women who bear children while on welfare. Virginia recipients who are unresponsive to intensive counseling services face a 10 percent benefit cut.

For his part, President Clinton promised during the campaign to "end welfare as we know it." Among his proposals is a plan to require AFDC recipients to work, (at some sort of government make-work) for their benefits if they fail to find a job within two years of receiving training.

But what then?

Experts say legislators and policymakers need to think carefully, in advance, of what awaits former recipients on the other side of such programs. "Putting a time limit, for example, on the receipt of public assistance," says Porter, "and then expecting people to go out and find employment is realistic only if the job market is able to support those additional people."

It is also crucial to look at the nature of jobs generally available to those with low skill levels and little experience--even after they undergo carefully structured training programs. The studies of welfare reform programs in New Jersey and California provide a case in point: While they did produce encouraging results in terms of the sheer number of recipients who moved into the labor force, there were some troublesome footnotes in terms of job quality.

For example, graduates of New Jersey's REACH program earned more than the minimum wage--an average of $6.19 an hour--but half failed to make more than poverty-level income from their jobs. In California, the average yearly earnings of GAIN program participants in the six counties surveyed did increase--but by only $271, for total yearly earnings that averaged $1,902.

"Things are being done," says Besharov, "without a lot of recognition of what the jobs pay and what it takes for the average woman with two children to make a decent living."

That "mismatch," as Besharov calls it, widened during the recession and not strictly as a function of diminished job opportunities across the board. In the effort to stretch scarce resources, many states shifted the mix of services for employable welfare recipients. They moved away from intensive skills training and education to less costly activities emphasizing things like resume preparation and counseling about what to wear for an interview, according to "The States and the Poor," a report issued in February by the Center on Budget and Policy Priorities and the Center for the Study of the States.

"These relatively inexpensive services allow states to enroll a larger number of participants," the report says. "But because these efforts do not enhance recipients' skills, they are unlikely to increase the employment rates or earnings of those recipients who have the least skills and greatest barriers to employment."

State legislators who have grappled with welfare reform for years are, at this juncture, particularly concerned with how the welfare population is to fit in with public-works-style job-creation program a la the Clinton administration's economic stimulus package. Much of that $16.3 billion proposal is expected to be aimed at infrastructure development--building and repairing roads, bridges and mass transportation systems.

"Much of the talk about job creation is oriented toward the building trades," says New Jersey Assemblyman Rodney Frelinghuysen, chairman of the state's Assembly Appropriations Committee. "But those are not the sorts of jobs that very many people on traditional welfare are going to have a crack at."

On the Same Wavelength?

It doesn't have to be that way.

In Oregon, Senator Bill McCoy, the chairman of the Senate Human Resources Committee, points to a project in the works at Portland International Airport. A new aircraft maintenance shop will be staffed, in part, by former welfare recipients who have undergone special training via a multi-agency, public/private partnership that took an advance accounting of the jobs to be filled and how to fill them.

"We have looked at everything in this state from an economic point of view," say says McCoy. "We have learned over the years that unless you do, you end up with somebody who has some kind of certificate or something, but who can't get a job."

The experience in Oregon also points up the advantages of integrating various elements of the bureaucracy in the push for systemic welfare reforms--making sure, in other words, that the social-service bureaucrats are talking to the economic development bureaucrats and likewise to their counterparts in education and health-care planning.

"It is difficult," says Porter, "to get existing agencies to work together. There is a big need in particular for coordination between jobs and the education side of things."

Other states that have made strides in multi-level policy coordination include California, where efforts have been made to link the GAIN program in San Diego with local schools via workshops on parent involvement. They stress home teaching techniques and other ways to help children succeed in school. In Kentucky, efforts have been made to enroll JOBS program parents in that state's family literacy program.

Beyond government bureaucracy, though, it is just as crucial for welfare policymakers to ensure that the public at large is on the same wavelength. Historically, it has been easy to oversell welfare reform and not as easy to explain its inherent limitations.

"People's expectations for the success of these programs," says Porter, "should be sensitive to the larger economic realities. It is unrealistic to expect that you can run any employment and training program so successfully that welfare will disappear."

Study Tracks Welfare Trends in Washington

How long do people stay on welfare? What are the characteristics of mothers who successfully leave welfare for the workforce? What factors increase chances that women will stay on assistance programs?

Representative June Leonard of Seattle answered these and other questions about Washington state's welfare population in recent testimony before the U.S. Senate Finance Committee. Long involved in state reform efforts, Representative Leonard reported on Washington's Family Independence Program, a welfare-to-work demonstration project, and her state's effort to collect precise information on the welfare population through a study of family income.

"We've seen that if we give AFDC recipients a good program of education and vocational training and provide them with the tools to earn a decent living, they will be on public assistance a shorter period of time," Leonard pointed out. "And they won't go back to the welfare rolls."

Leonard said the Legislature commissioned the income study so lawmakers could make informed decisions on welfare reform. Two thousand low-income households were tracked by the Washington State Institute of Public Policy. The research found that 41 percent of the women on public assistance left in less than two years. Of these, 68 percent were able to stay off welfare for at least a year.

The five most important factors enabling a woman to leave public assistance were:

* Working more months in the year before leaving welfare.

* Marriage.

* A post-secondary certificate or degree.

* Living in a household with other adults.

* Being divorced rather than separated or never married.

"Women on AFDC (Aid to Families with Dependent Children) have a great attachment to the labor force and employment is the most important factor in their leaving welfare, even if they married within a year after leaving assistance," Leonard said.

The study found a woman was more likely to stay on welfare if she had been receiving assistance for a long time, her grant constituted a large share of her income, she became a mother before age 18 or if she had a child under 12 months at home.

The study found 41 percent of women on public assistance in Washington had neither a high school diploma nor a GED. "Educational programs have a direct, positive impact on wages," Leonard reported. An associate of arts degree boosted wages 26 percent over those paid a worker without a high school diploma and 12 percent over wages for a high school graduate. A four-year degree increased salary 52 percent.

The Washington study also found that women on welfare had the same number of children as women in the same age group who did not receive assistance. New welfare applicants who came from other states came from areas with both higher and lower benefit levels than Washington, the study found.

Presidential Words Ignite New Round of Welfare Debate

We will scrap the current welfare system and make welfare a second chance, not a way of life. We will empower people on welfare with the education, training and child care they need for up to two years so they can break the cycle of dependency."

President Bill Clinton's words have reignited a policy debate on welfare reform. Although administration officials say that "health care reform goes first," welfare debate has already spawned a series of federal and state task forces, as well as congressional action.

The last major reform effort, the Family Support Act of 1988, did not anticipate the recession that brought increased caseloads and state budget deficits. Under the act's JOBS program, only Oregon has been able to fully fund the required match. Forty percent of the federal JOBS money remains untouched.

The president is now enlisting the help of state officials to further reform the system by "ending welfare as we know it." In a February speech to the National Governors' Association (NGA), he announced his principles that will guide development of his welfare reform proposal:

* Education, employment and training.

* Time-limited benefits.

* Mandated work.

* Tougher child support enforcement.

* Making work pay.

* Flexibility for state experimentation.

"I believe that two years after a training program is completed, you have to ask people to take a job," Clinton said. "And there is a lot of work out there to be done."

Efforts to make work pay include expansion of the earned income tax credit, health care and child care.

"We should be able to lift parents who work 40 hours a week out of poverty," he said. "If we control health care costs and expand coverage so that no one has to stay on welfare just to take care of medical needs, I think you will see a dramatic breakthrough in our efforts to liberate people from their dependency."

As far as state programs are concerned, Clinton has promised to approve waivers--even those he doesn't necessarily agree with. In return, he asks states to measure their experiments honestly. "If it works, let's tell everybody it works so we can all do it. If it doesn't, let's have the courage to quit and admit it didn't."

The president also announced creation of an interagency task force to work with a new state bipartisan task force convened by NGA, the National Conference of State Legislatures and the American Public Welfare Association.

Congressional welfare reform plans are also on the table. As Clinton was outlining his reform plans to the nation's governors, Republican members of the House Ways and Means Committee were introducing their own plan, HR 741, that would place time limits on welfare benefits and a 35-hour-per-week workfare requirement for recipients of Aid to Families with Dependent Children (AFDC) for more than two years.

"There is nothing in this bill that is inconsistent with anything that President Clinton has said publicly on welfare reforms," said Pennsylvania Congressman Rick Santorum, one of the sponsors.

In the Republican plan, states could drop AFDC recipients after three years in the workfare program.

Senate Finance Committee Chairman Daniel Patrick Moynihan of New York has reintroduced S16, the JOBS funding bill he proposed last year. It provides an uncapped entitlement with no state matching requirements for the JOBS program and has higher participation requirements.

The Community Works Progress Act of 1993, S239 introduced in January by Senators David Boren of Oklahoma and Paul Simon of Illinois, would provide WPA-style public work programs for AFDC recipients, noncustodial parents of children on AFDC and recipients of unemployment insurance.

So far, however, debate on reforming the federal welfare system brings up more questions than answers. Those include the cost of reform, as well as finding and monitoring public and private work.

During his campaign, Clinton estimated his program would cost $4 billion; his proposed earned income tax credit expansion, $2 billion.

Bruce Reed, deputy assistant to the president, told reporters in a White House briefing that those numbers "would not necessarily be in the president's budget" and that "we did not lay out a timetable during the campaign ... Welfare reform legislation and health care legislation go through the same committees on the Hill. Health care we hope to introduce first; welfare reform would come shortly after that."

Lee Seglem is managing editor of New Jersey Reporter magazine.
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Title Annotation:The Problems of Poverty; includes related articles
Author:Seglem, Lee
Publication:State Legislatures
Date:May 1, 1993
Previous Article:Putting the future on the high (skills) road.
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