oversight

Welfare Reform: Three States' Approaches Show Promise of Increasing Work Participation

Published by the Government Accountability Office on 1997-05-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 United States General Accounting Office

GAO              Report to the Ranking Minority Member,
                 Committee on Finance, U.S. Senate



May 1997
                 WELFARE REFORM
                 Three States’
                 Approaches Show
                 Promise of Increasing
                 Work Participation




GAO/HEHS-97-80
      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Health, Education, and
      Human Services Division

      B-271515

      May 30, 1997

      The Honorable Daniel P. Moynihan
      Ranking Minority Member
      Committee on Finance
      United States Senate

      Dear Senator Moynihan:

      This report, prepared at your request, reviews states’ experiences under waivers with increasing
      the participation of welfare recipients in work and work-related activities. The report examines
      the policies and programs states initiated to increase participation in such activities, determines
      what participation rates states have achieved under their programs, and assesses whether states
      are likely to meet the work participation rates specified in the new welfare law.

      We are sending copies of this report to the Chairman, Committee on Finance, U.S. Senate; the
      Chairmen and Ranking Minority Members, Committee on Ways and Means and its
      Subcommittee on Human Resources, House of Representatives; the Secretary of Health and
      Human Services; the Assistant Secretary for Children and Families; and other interested parties.
      We will also make copies available to others on request.

      If you or your staff have any questions concerning this report, please call me at 202-512-7215 or
      David P. Bixler, Assistant Director, at 202-512-7201. Other GAO contacts and major contributors
      to this report are listed in appendix II.

      Sincerely yours,




      Mark V. Nadel
      Associate Director, Income Security Issues
Executive Summary


             The Personal Responsibility and Work Opportunity Reconciliation Act of
Purpose      1996 (P.L. 104-193) ended the individual entitlement to welfare benefits
             established by the Social Security Act in 1935. Under the new law, welfare
             benefits are time limited and recipients are required to participate in work
             and work-related activities. Moreover, the new law requires states to have
             a minimum percentage of their caseload participating in work or
             work-related activities to avoid a financial penalty. Even before passage of
             the act, many states were experimenting with ways to increase
             participation in work by reforming their welfare programs through waivers
             of Aid to Families With Dependent Children (AFDC) program rules, which
             allowed them to try innovative approaches beyond the rules.

             To get an early indication of likely state progress in meeting work
             participation requirements as well as issues facing welfare administrators
             under the new welfare law, the Ranking Minority Member of the Senate
             Committee on Finance requested that GAO review (1) the policies and
             programs states initiated under waivers to increase participation in work
             and work-related activities and (2) whether states with statewide waivers
             achieved participation rates comparable to those specified by the new
             federal law.


             AFDC  provided assistance to economically needy families with children
Background   who lacked support from one or both of their parents because of death,
             absence, or incapacity. Recipients typically were not required to prepare
             for, or look for, work and needed only to establish and maintain income
             eligibility to receive benefits. The federal and state governments shared
             the costs of AFDC. The states administered the program, and the
             Department of Health and Human Services (HHS) had oversight
             responsibility.

             As welfare caseloads grew and more women with young children entered
             the labor force, a major theme of welfare reform debates through the years
             was the need to increase the employability of welfare recipients to enable
             them to work their way off assistance. In the 1970s, the Congress changed
             the AFDC program to require certain recipients to participate in activities
             aimed at increasing their employability. In 1988, as part of the Family
             Support Act (FSA), it expanded these requirements by creating the Job
             Opportunities and Basic Skills Training (JOBS) program to provide
             education, training, and employment services to welfare recipients and to
             make AFDC a transitional path to self-sufficiency. In an attempt to focus
             their welfare programs more on work and increase participation further,



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                   Executive Summary




                   many states more recently requested waivers of federal law to reform their
                   programs. As of June 1996, HHS had granted 33 states waiver authority to
                   test policies intended to increase the number of welfare recipients
                   participating in work and work-related activities.

                   The new welfare reform law completely transforms AFDC by replacing the
                   individual entitlement to benefits with Temporary Assistance for Needy
                   Families (TANF) block grants to the states. In addition, the law includes
                   several provisions to ensure cash assistance is transitional and that those
                   receiving aid work, or prepare for work, in exchange for benefits. While
                   states have a great deal of discretion over the design of their programs, the
                   new law establishes a 5-year lifetime limit to assistance and requires
                   recipients to work after 2 years of benefit receipt. Furthermore, the law
                   requires states to achieve specified levels of recipient participation in
                   work activities to avoid financial penalty. In fiscal year 1997, 25 percent of
                   a state’s entire caseload—the all-families rate—must be participating in
                   work and work-related activities. The rate increases by 5 percent a year to
                   50 percent by fiscal year 2002. A separate and much higher minimum work
                   participation rate is specified for two-parent families: 75 percent in fiscal
                   year 1997 and 90 percent in fiscal year 1999. Each state’s minimum
                   participation rates are reduced by an amount equal to the percentage that
                   the state’s welfare caseload has declined since fiscal year 1995.

                   GAO  selected Massachusetts, Michigan, and Utah to review. These states
                   had statewide waiver programs with work requirements that were
                   sufficiently mature to allow for analysis of participation data.


                   The three states GAO reviewed—Massachusetts, Michigan, and
Results in Brief   Utah—initiated policy changes designed to increase the proportion of
                   welfare recipients participating in activities intended to move them toward
                   self-sufficiency. These states increased the percentage of those
                   participating and, at least in the first year, are almost certain to meet the
                   all-families participation rate specified by the new federal welfare law.

                   The three states changed their requirements regarding who must
                   participate and what constitutes participation. Michigan and Utah
                   eliminated prior exemptions, thereby requiring all recipients to participate
                   in some activity, while Massachusetts exempted a substantial portion of
                   the caseload, mandating only parents with school-age children to
                   participate in a work-related activity. Utah permitted a broad range of
                   activities to count as participation, tailoring activity to client



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                         Executive Summary




                         circumstances, while Massachusetts and Michigan limited the activities for
                         recipients required to participate to job search, followed by a job or, in the
                         case of Massachusetts, by community service if a job is not found after 60
                         days. All three states reported being able to provide the services specified
                         in their plans to support clients in their activities. They accomplished this
                         in different ways: by increasing available services, by limiting participation
                         requirements to fit the available resources, or by providing lower cost
                         services. The three states had a common strategy of strengthening
                         sanctions for noncompliance as a tool to increase participation.

                         Massachusetts, Michigan, and Utah were able to engage a substantial
                         number of welfare recipients in work and work-oriented activities. Most
                         recipients who counted as participating were working in unsubsidized
                         jobs, which reflects the emphasis placed on work in all three programs as
                         well as changes to the amount of income they can earn and continue to
                         receive benefits. Compared with prior participation in JOBS program
                         activities, the three states achieved higher participation rates under their
                         waiver programs.

                         On the basis of GAO’s analysis of state participation data, it is almost
                         certain that these three states will meet their all-families target
                         participation rate in the first year; but according to state officials, future
                         rates may prove more difficult to achieve. Furthermore, Massachusetts
                         and Michigan are concerned about their ability to meet the higher
                         two-parent families rates; and all three states are concerned about meeting
                         the future all-families rates, which not only are higher but require more
                         hours of work participation. State officials expressed concern that as
                         employable recipients find jobs, the remaining caseload will consist of
                         individuals with substantial barriers to employment, making the higher
                         future target rates difficult to achieve.



Principal Findings

States Took Different    Under waivers, many states attempted to increase welfare recipients’
Approaches to Increase   participation in work-related activities. The three states GAO
Participation            reviewed—Massachusetts, Michigan, and Utah—took different approaches
                         to increasing the participation of welfare recipients in work. Michigan and
                         Utah eliminated exemptions, expecting the entire caseload to participate
                         in some activity. In contrast, Massachusetts mandated that only parents of




                         Page 4                     GAO/HEHS-97-80 Welfare Work Participation Requirements
Executive Summary




school-age children participate—approximately 20 percent of its caseload.
Massachusetts and Michigan emphasized work-focused activities, such as
a short job search/job readiness program or simple job search; while Utah
allowed a broad range of activities tailored to individual needs, including
education and training.

To encourage employment, states used different strategies. First, they
informed individuals early in the application process of their obligation to
participate in an activity that would lead to employment. Then they
monitored and tracked client progress toward that goal and offered
needed supportive services, such as child care and transportation
assistance. To further promote employment, the states changed incentives
in the AFDC program by allowing working recipients to disregard more of
their earned income in the calculation of their benefits, thereby enabling
them to earn more before becoming ineligible. To help recipients who
earned their way off welfare make the transition to self-sufficiency, some
services such as transitional Medicaid and child care were extended
beyond the 12 months required by the JOBS program. Utah diverted needy
job-ready individuals from the welfare rolls by offering them a one-time
payment to cover emergency expenses until they received a paycheck.
Finally, these states used sanctions to enforce the participation
requirements by first reducing benefit amounts for failure to participate in
planned activities and, if the failure persists, terminating benefits entirely.

The three states’ different approaches reflect the strategies that they
believe work to help welfare recipients in their states move toward
self-sufficiency; consequently, these states plan to continue their
programs, with minor changes, under the new law. Michigan and Utah,
which attempted universal participation, are concerned about the welfare
recipients left behind after the job-ready clients become employed and
leave the rolls. They believe this group, which in the past generally was
exempted or deferred from participation requirements because of their
multiple barriers to employment, will require intensive services to be able
to participate in the activities that meet the restricted definition of work
participation under the new law.

Through their waiver programs, Massachusetts, Michigan, and Utah were
able to increase the percentage of their AFDC recipients participating in
activities designed to move them toward self-sufficiency. Reflecting the
underlying work focus of their programs, the largest percentage of all
participants in each of the three states were engaged in unsubsidized
employment. Counting only activities allowed by the JOBS program, GAO



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                              Executive Summary




                              compared the participation levels that these states achieved under their
                              statewide waiver programs in September/October 1996 to the levels that
                              they reported for their fiscal year 1995 JOBS program. GAO’s analysis found
                              that Massachusetts’ participation increased from 19 to 36 percent of the
                              adult caseload, Michigan’s from 21 to 42 percent, and Utah’s from 42 to
                              57 percent.


States Likely to Achieve      GAO’s  analysis showed that all three states are almost certain to meet the
Initial All-Families          first year all-families TANF participation rate requirement. Taking credit for
Participation Rate, but May   their caseload reductions since 1995, Massachusetts and Michigan officials
                              estimate that their actual target participation rate for fiscal year 1997 will
Be Challenged to Meet         be about 13 percent, while Utah officials believe their rate will be about
Other Rates                   14 percent. Using the definition of work participation in the new law, all
                              three states were achieving participation rates higher than their estimated
                              target rates under their waiver programs. GAO estimates that
                              Massachusetts was achieving an overall participation rate of 25.3 percent;
                              Michigan, 32.6 percent; and Utah, 30.9 percent. However, officials in
                              Massachusetts and Michigan reported they will have difficulty meeting the
                              separate two-parent families participation rate, and officials in all three
                              states expressed concern over their ability to meet the higher future rates.
                              As those recipients who are able become employed and move off the
                              welfare rolls, officials are concerned that the remaining caseload will
                              consist of less employable recipients, making it difficult to meet the higher
                              future participation rates. Furthermore, since these programs were
                              implemented under favorable economic conditions, which many believe
                              contributed to the large caseload reductions, officials are concerned that
                              an economic downturn could limit future program success. Also, as states
                              are left with a more difficult population to serve, they are concerned about
                              the cost and availability of services to meet this population’s multiple
                              needs in moving toward work and self-sufficiency.


                              GAO   is making no recommendations in this report.
Recommendations
                              GAO  received comments on a draft of this report from the three case study
Comments From HHS             states: Massachusetts, Michigan, and Utah. These states provided technical
and States                    clarifications about their programs and additional interpretations about
                              certain data, which were incorporated as appropriate. Comments were
                              requested from HHS, but none were received.




                              Page 6                     GAO/HEHS-97-80 Welfare Work Participation Requirements
Page 7   GAO/HEHS-97-80 Welfare Work Participation Requirements
Contents



Executive Summary                                                                                       2


Chapter 1                                                                                              12
                         Past Legislative Efforts to Impose Work Requirements on AFDC                  12
Introduction               Recipients
                         TANF Work Participation Requirements                                          15
                         Objectives, Scope, and Methodology                                            16

Chapter 2                                                                                              17
                         States Changed Participation Requirements                                     17
States Increased         States Implemented Policies to Encourage Participation in Work                23
Participation Rates        and Work-Related Activities
                         States Implemented Stricter Sanctions for Noncompliance With                  31
Through Different          Participation Requirements
Approaches               States Achieve Higher Participation Rates Under Waiver                        33
                           Programs
                         Three States Also Increased the Percentage of the Caseload                    36
                           Participating in JOBS Activities Under Waivers
                         States Plan to Continue Programs Under TANF                                   38

Chapter 3                                                                                              40
                         Calculating Participation Rates Under TANF                                    40
States Likely to         Three States Likely to Achieve the All-Families Participation Rate            42
Achieve Initial TANF       in the Short Run
                         States May Have Problems Meeting the Two-Parent Participation                 43
All-Families               Rate
Participation Rate but   States May Have Difficulty Meeting Future Participation Rates                 44
May Be Challenged to
Meet Other Rates
Chapter 4                                                                                              47
                         Comments From HHS and States                                                  48
Conclusions and HHS’
and States’ Comments
Appendixes               Appendix I: Selected Characteristics of Welfare Reform Programs               50
                           in States With Waivers Changing Work Requirements
                         Appendix II: GAO Contacts and Staff Acknowledgments                           56




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                       Contents




Bibliography                                                                                        57


Related GAO Products                                                                                60


Tables                 Table 2.1: Work-Related Policy Changes Under Waivers in Three                18
                         States
                       Table 2.2: Participation in Allowable Activities in Three States’            34
                         Waiver Programs, September/October 1996
                       Table 2.3: Distribution of Participant Activities in Three States’           35
                         Waiver Programs, September/October 1996
                       Table 3.1: Estimated FY 1997 All-Families TANF Target                        42
                         Participation Rates and TANF Rates Achieved Under Waiver in
                         Three States in September/October 1996
                       Table 3.2: Estimated FY 1997 Two-Parent Families TANF Target                 43
                         Work Participation Rates and TANF Rates Achieved Under
                         Waiver in Three States in September/October 1996
                       Table I.1: Age of Youngest Child Exemptions Cited in Waivers for             50
                         States Changing Work Requirements
                       Table I.2: Expanded Activities Meeting the Participation                     51
                         Requirement in States Changing Work Requirements
                       Table I.3: Changes in Age of Youngest Child Exemption and                    52
                         Work-Related Activities Cited in Waivers for States Changing
                         Work Requirements
                       Table I.4: Diversions Cited in Waivers for States Changing Work              53
                         Requirements
                       Table I.5: Changes to Sanctions and Incentives Cited in Waivers              53
                         for States Changing Work Requirements
                       Table I.6: Changes to Transitional Child Care and Transitional               55
                         Medicaid Requirements for States Changing Work Requirements

Figures                Figure 2.1: Average Monthly Participation Rates in JOBS                      37
                         Activities and Comparable Activities in Three Statewide Waiver
                         Programs
                       Figure 3.1: Caseload Declines in Three States, FY 1994-96                    41




                       Page 9                    GAO/HEHS-97-80 Welfare Work Participation Requirements
Contents




Abbreviations

AFDC       Aid to Families With Dependent Children
AFDC-UP    Aid to Families With Dependent Children-Unemployed
                Parent
FEP        Full Employment Program
FIS        family independence specialist
FSA        Family Support Act
HHS        Department of Health and Human Services
JOBS       Job Opportunities and Basic Skills Training
SPED       Single Parent Employment Demonstration
TANF       Temporary Assistance for Needy Families


Page 10                 GAO/HEHS-97-80 Welfare Work Participation Requirements
Page 11   GAO/HEHS-97-80 Welfare Work Participation Requirements
Chapter 1

Introduction


                     From fiscal years 1989 through 1994, average monthly Aid to Families With
                     Dependent Children (AFDC) caseloads rose sharply, from 3.8 million
                     families to 5 million. Caseloads began to decline in 1994 and in fiscal year
                     1996, the federal and state governments spent over $20 billion on AFDC
                     benefit payments for about 4.6 million families. Concerned about the
                     growth in the number of recipients and believing that the permanent
                     guarantee of benefits contributed to welfare dependency, the Congress
                     fundamentally altered the nature of welfare when it passed the Personal
                     Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L.
                     104-193). This major welfare reform law ended the individual entitlement
                     to assistance under AFDC and replaced it with capped block grants to the
                     states called Temporary Assistance for Needy Families (TANF), making
                     cash benefits temporary and conditional upon work participation. The
                     new law promotes self-sufficiency through employment and time limits,
                     imposing obligations on welfare recipients to engage in work-related
                     activities after 2 years of benefit receipt—or sooner if a state determines
                     the recipient is ready to work—and limiting the length of time individuals
                     may receive federal assistance to 5 years. The law specifies the types of
                     activities that are considered work-related and establishes minimum
                     yearly requirements for the percentage of each state’s welfare caseload
                     that must be participating in one of these activities.

                     Before enactment of the new law, many states were experimenting with
                     work requirements for welfare recipients through waivers of AFDC program
                     rules that the Department of Health and Human Services (HHS) approved.
                     Section 1115 of the Social Security Act allows the Secretary of HHS to
                     waive provisions of the act for the purpose of permitting states to innovate
                     within the AFDC program. As of June 1996, 33 states had received waivers
                     to test policies aimed at increasing the participation of welfare recipients
                     in work and work-related activities.


                     AFDC provided assistance to economically needy families with children
Past Legislative     who lack support from one or both of their parents because of death,
Efforts to Impose    absence, or incapacity. The federal and state governments shared the costs
Work Requirements    of AFDC. States had discretion over the amount they paid to entitled
                     individuals. They administered the program, and HHS had oversight
on AFDC Recipients   responsibility.

                     Since AFDC’s beginning, a number of developments have generated
                     discontent with the program. First, by the early 1990s, close to 90 percent
                     of all AFDC families were headed by separated, divorced, or never-married



                     Page 12                    GAO/HEHS-97-80 Welfare Work Participation Requirements
Chapter 1
Introduction




mothers, rather than the widows who constituted most of the single-parent
population when the law was passed in the 1930s. Second, employment
rates for all women, including single parents and women with very young
children, have increased dramatically, making it difficult to defend the
equity of supporting poor mothers who are unemployed. Third, there was
a rapid increase in the size of AFDC caseloads, resulting in increased costs
both to states and the federal government. Finally, concern that welfare
fostered dependency was fueled by research that identified a substantial
portion of the caseload who remain poor and receive assistance for long
periods of time.

In the late 1960s, changes were made in AFDC eligibility requirements so
that certain groups of recipients were expected to take a job or participate
in activities designed to enhance their employability. In addition, attempts
were made to encourage work by excluding a portion of earnings from the
benefit calculation—a provision known as an earned income disregard.1
These efforts were not successful in stemming the increases in AFDC
caseloads during the 1970s; and, in 1981, the Congress passed legislation
that restricted the amount of money working welfare recipients could
disregard from their benefit calculations, resulting in many working
welfare recipients losing their eligibility for benefits.2

In 1988, the Congress passed the Family Support Act (FSA), which
established the Job Opportunities and Basic Skills Training (JOBS) program
to provide education, training, and employment-related activities to help
recipients support their families and avoid long-term welfare dependency.
However, approximately one-half of the adults receiving AFDC were exempt




1
 Initially, if a person on AFDC earned a dollar, their AFDC benefit would be reduced by that amount,
imposing a 100-percent marginal tax rate on earnings. This was viewed as a strong work disincentive,
since working would not necessarily result in increased income.
2
 In a 1985 report, An Evaluation of the 1981 AFDC Changes: Final Report (GAO/PEMD-85-4, July 2,
1985), we estimated that these changes decreased the national monthly AFDC caseload by 442,000
cases.



Page 13                             GAO/HEHS-97-80 Welfare Work Participation Requirements
Chapter 1
Introduction




from the JOBS program, usually because they were caring for a young child.3
FSA also expanded eligibility for AFDC to certain two-parent families.4


The JOBS program established explicit and gradually increasing
participation rates that states had to achieve to receive the full federal
match of JOBS funds. These participation rates allowed the federal
government to promote uniform goals among states with different
program models. Minimum participation requirements conveyed to both
welfare program administrators and recipients that welfare receipt was
conditioned on recipients’ involvement in employment-promoting
activities or in work itself. The JOBS participation rates started at 7 percent
of the nonexempt caseload in fiscal year 1991 and rose to 20 percent in
fiscal year 1995. While most states met the minimum participation rates
specified under JOBS, the number of AFDC recipients actually participating
was only about 13 percent of the entire adult AFDC caseload in fiscal year
1994. In addition, our previous work showed that the JOBS program was
not well focused on employment, despite its objective of preparing
recipients for work.5

Since passage of FSA, many states have been using waivers to change their
AFDC programs to increase work participation and decrease welfare
dependency. Waivers were designed to allow states to experiment with
programs and try out policies that were not allowed under current law.
States were required to evaluate these waiver programs to determine
whether they were successful and, therefore, worth continuing. In the
early 1990s, waiver authority was granted almost routinely to states
interested in reforming their welfare programs. States that reformed their
welfare programs to focus more on work and work-related activities made
changes in their JOBS program participation requirements, their sanctioning
policies, and their earned income disregards.



3
 Individuals aged 16 through 59 were exempt from the JOBS program if they were ill or incapacitated;
caring for a child under age 3 (or age 1 at state option); attending high school; in the second or third
trimester of pregnancy; caring for an ill or incapacitated family member; employed 30 hours or more
per week; residing in an area where the program was not available; or providing care to a child under 6
and child care could not be guaranteed. Teenagers with children under age 3 and who were not in
school were not exempt from JOBS.
4
 Under the original Social Security Act, two-parent families were ineligible for AFDC unless one parent
was incapacitated. However, in 1961, states were given the option to extend coverage to two-parent
families in which one parent was unemployed. In 1988, FSA required all states to offer an unemployed
parents provision to their AFDC programs. States that did not have an AFDC-Unemployed Parents
(AFDC-UP) program before FSA were allowed to place a time limit on benefits for these families. As of
February 1996, 12 states had time limits on eligibility, including Utah.
5
 Welfare to Work: Current AFDC Program Not Sufficiently Focused on Employment
(GAO/HEHS-95-28, Dec. 19, 1994).


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                Chapter 1
                Introduction




                While the new welfare law gives states broad discretion over program
TANF Work       design, states are required to meet minimum performance standards for
Participation   work participation to avoid financial penalty. States are required to have
Requirements    25 percent of their entire caseload participating in work and work-related
                activities in fiscal year 1997, a rate that will increase by 5 percent each
                succeeding year until it reaches 50 percent by fiscal year 2002. A second,
                substantially higher, participation rate applies to two-parent families:
                75 percent in fiscal years 1997 and 1998, and 90 percent in fiscal year 1999
                and thereafter. The required number of hours of participation each week
                for single heads of household is 20 hours in fiscal years 1997 and 1998, 25
                hours in fiscal year 1999, and 30 hours in fiscal year 2000 and thereafter.
                However, if the single parent has a child under the age of 6, the parent can
                meet the work requirement by participating 20 hours per week. For
                two-parent families, one parent must participate 35 hours and, in cases
                where a family receives federally funded child care, the second parent
                must participate 20 hours. States’ target work participation rates are
                lowered if they have had caseload reductions since fiscal year 1995.

                Activities that count toward participation under the new law are oriented
                toward work rather than education and training. The emphasis on
                activities directly related to work reflects the objective of the law to
                involve welfare recipients in employment-promoting activities or in work
                itself, so that they can leave welfare and become self-sufficient. Although
                actual movement off welfare through employment is not counted in the
                participation rate, to the extent that employment results in caseload
                reductions, states receive credit for these terminations through reductions
                in the target participation rates they are required to achieve. HHS can
                penalize states for failing to meet the federal participation requirement.
                The penalty starts at 5 percent of the state’s block grant amount and rises
                gradually to 21 percent of the grant if the state continues failing to satisfy
                the minimum participation requirements.

                TANF  funding is capped at $16.4 billion per year through fiscal year 2002.
                The amount of TANF funds that a state receives is based on recent federal
                expenditures for that state’s AFDC program. Consequently, states that spent
                more for AFDC in the past will receive more in TANF funds. However, states
                will not automatically receive additional funds should their caseloads
                increase. States are required to maintain at least 75 percent of their 1994
                level of AFDC spending on the new program. States that fail to meet
                required work participation rates must maintain 80 percent of their past
                spending.




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                     Chapter 1
                     Introduction




                     The Ranking Minority Member of the Senate Committee on Finance
Objectives, Scope,   requested that we review states’ early experiences with increasing the
and Methodology      participation of welfare recipients in work and work-related activities
                     under waivers. This review would provide an early indication of states’
                     progress in meeting work participation requirements as well as issues
                     facing welfare administrators under the new federal law. Specifically, we
                     were asked to examine (1) the policies and programs states initiated under
                     waivers to increase participation in work and work-related activities and
                     (2) whether three states with statewide waiver programs achieved
                     participation rates comparable with those specified by the new federal
                     law.

                     To determine what programs states initiated under waivers to increase the
                     work participation of welfare recipients, we analyzed the terms and
                     conditions of waivers, as of June 30, 1996, for all states that HHS indicated
                     had waiver provisions related to work participation. We also reviewed
                     three states in depth that had implemented their waiver programs
                     statewide. The three states selected—Massachusetts, Michigan, and
                     Utah—had programs in operation long enough to have generated data for
                     preliminary analysis. In addition, these states took distinctly different
                     approaches toward increasing participation. To review the strategies these
                     states used to implement their welfare reform, we analyzed program
                     reports and documents and met with state and local welfare officials, state
                     employment agency officials, service providers, welfare advocates in
                     Michigan, and program evaluators in Utah and Michigan.6 In addition, we
                     met with HHS officials responsible for monitoring these states’ waiver
                     programs as well as welfare policy experts familiar with these programs.
                     We also reviewed the published work of research organizations that
                     studied state welfare reform efforts. To determine why some recipients do
                     not participate, we conducted reviews of case records in Michigan and
                     Utah. To estimate JOBS and TANF participation rates for the waiver
                     programs in Massachusetts and Utah, we relied on aggregate data
                     submitted to us by the states; program administrators in these states
                     helped us interpret their data and calculate their participation rates. For
                     Michigan, we worked with Abt Associates, the contract evaluator for the
                     state, using data supplied by the state to calculate the participation rates.

                     We conducted our work between March 1996 and March 1997 in
                     accordance with generally accepted government auditing standards.



                     6
                      Massachusetts has yet to contract with an evaluator to do their waiver evaluation.



                     Page 16                              GAO/HEHS-97-80 Welfare Work Participation Requirements
Chapter 2

States Increased Participation Rates
Through Different Approaches

                          When the Personal Responsibility and Work Opportunity Reconciliation
                          Act was enacted, Massachusetts, Michigan, and Utah already had
                          implemented statewide programs designed to increase the work
                          participation rates of welfare recipients. All three states had changed their
                          programs to be more work-focused, supporting participation in activities
                          designed to help recipients move off the welfare rolls and into
                          self-sufficiency. These states had changed the rules regarding the
                          categories of recipients required to participate and the activities in which
                          they were allowed to participate; actively encouraged participation by
                          providing incentives and support services as well as information
                          emphasizing the obligation to work; and enforced participation by
                          establishing stricter sanctions for nonparticipation in agreed-upon
                          activities. These approaches were also found in other states’ waiver
                          programs. Through their redesigned programs, Massachusetts, Michigan,
                          and Utah increased the proportion of their caseloads participating in
                          activities designed to promote self-sufficiency.


                          The three states we reviewed changed their policies regarding who must
States Changed            participate, as defined under their respective programs, and the activities
Participation             in which they must participate, in two cases eliminating exemptions and
Requirements              requiring all adult AFDC recipients to engage in some activity as a condition
                          of benefit receipt. Thus, while the JOBS program exempted many recipients
                          from participation, both Michigan and Utah eliminated exemptions while
                          Massachusetts strictly mandated a smaller segment of the caseload to
                          participate than under the JOBS program. Moreover, while JOBS broadly
                          defined the activities states could require to meet the participation
                          requirement, Utah further expanded allowable activities, while
                          Massachusetts and Michigan restricted activities to those more closely
                          linked to work. Eliminating exemptions can enable states to achieve
                          greater levels of participation by including a larger portion of the caseload.
                          Restricting activities to those closely linked to work can enable states to
                          more quickly move job-ready recipients into employment.


States Changed Policies   The three states reviewed took different approaches to required
Regarding Who Must        participation. Michigan and Utah expanded participation requirements to
Participate               the entire caseload as a way to increase participation, while Massachusetts
                          required only a fraction of its caseload to engage in a work-related activity
                          but strictly enforced the requirement in an effort to increase participation
                          of those recipients mandated to participate. Table 2.1 and the following




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                                            pages summarize the work-related policy changes made under waivers in
                                            Massachusetts, Michigan, and Utah.


Table 2.1: Work-Related Policy Changes Under Waivers in Three States
                                Massachusetts                 Michigan                                 Utah
Program name                     Welfare Reform ’95                 Family Independence Program        Single Parent Employment
                                                                                                       Demonstration Program
Participation requirements       60 days of job search followed     4 weeks of job search followed     Activity based on individualized
                                 by a job, subsidized               by unsubsidized employment         self-sufficiency plan
                                 employment, or community
                                 service
Activities that count as         — Unsubsidized employment          — Unsubsidized employment          — Unsubsidized employment
participation
                                 — Community service                — Community service                — Job search

                                 — Subsidized employment            — Job search                       — Training

                                 — Job search for 60 days only                                         — Education

                                                                                                       — Mental health and substance
                                                                                                       abuse counseling, among others
Exemptions                       — Disabled or caring for a         — VISTA volunteer                  Children under 16
                                 disabled person
                                                                    — Dependent under 16
                                 — Third trimester of pregnancy
                                                                    (Others are deferred for
                                 — Child in assistance unit is      reasons such as having a child
                                 under mandatory full-time          under 3 months old or caring for
                                 school-age, usually age 6, or      an incapacitated household
                                 child not in assistance unit but   member, or being ill, under age
                                 living with recipient is under 3   16, or over age 65; however,
                                 months old                         they are required to participate
                                                                    in a social contract activity)
Time limit                       2 years in any 5-year period for   No change                          No change
                                 families with no children under
                                 age 2
Sanction                         Eliminate conciliation             25-percent grant reduction for 1 Extensive conciliation/case
process                                                             year, followed by termination of staffing/home visit; $100 grant
                                 Parent’s benefit removed first,    the entire family’s benefit      reduction for 2 months, then
                                 then entire family’s benefit                                        termination of the entire family’s
                                 eliminated                                                          benefit
Amount of earned income           First $30 of earnings + 1/2 of   First $200 of earnings + 20         First $100 of earnings + 50
excluded from benefit calculation remainder excluded with no       percent of remainder excluded       percent of remainder excluded
                                  time limit for families with no  with no time limit                  with no time limit
                                  children under age 2; for
                                  families with children under age
                                  2 there is no change in
                                  disregard amount but it is no
                                  longer time limited
Eliminate 100-hour rule          Yes                                Yes                                Yes
                                                                                                                            (continued)

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                                   Massachusetts                       Michigan                          Utah
Transitional child care (TCC) and Eliminate requirement that           No change                         Eliminate requirement that
transitional Medicaid (TM)        recipient have received welfare                                        recipient have received welfare
                                  benefits for “3 of last 6 months”                                      benefits for “3 of last 6 months”
                                  to be eligible for TCC and TM                                          to be eligible for TCC and TM

                                                                                                         Extend TCC until family income
                                                                                                         exceeds sliding fee schedule;
                                                                                                         extend TM for 24 months if still
                                                                                                         income-eligible
Unique features                    One-stop career centers                                               Postemployment services

                                   AFDC benefit of families with no                                      One-time diversion from AFDC
                                   children under age 2 reduced
                                   by 2.75%

                                              Note: VISTA stands for Volunteers in Service to America.



                                              Utah, which has a history of work requirements for welfare recipients,
                                              achieved higher JOBS participation rates than most other states between
                                              fiscal years 1991 and 1995 and was attempting, under its waiver program,
                                              to place 95 percent of its caseload in activities that ultimately would lead
                                              to self-sufficiency. Under its Single Parent Employment Demonstration
                                              (SPED) program, implemented in part of the state in January 1993, Utah
                                              required all recipients to participate in an activity, even those with
                                              significant barriers such as drug abuse and mental health problems. Since
                                              this expansion meant working with recipients who had been exempted or
                                              deferred from participation in the past, Utah was exploring new territory
                                              in terms of what is required to enable these recipients to move toward
                                              self-sufficiency. The SPED program director believes that the greatest
                                              savings come from moving recipients with multiple barriers into
                                              employment because these are the recipients most likely to become
                                              long-term welfare recipients. Like many other states, Utah has
                                              experienced substantial caseload declines over the last several
                                              years—attributable, according to officials, in part to its good economy and
                                              low unemployment rates—freeing up resources for recipients who may
                                              need more than a strong economy and the more traditional JOBS services to
                                              help them exit welfare through employment. Utah does excuse some
                                              recipients from participation for reasons such as lack of transportation or
                                              child care, or the existence of a family medical condition or emergency;
                                              however, the program’s self-sufficiency worker and the recipient are
                                              expected to work on resolving problems so that the recipient can
                                              ultimately participate. If recipients do not participate, they are subject to
                                              sanctions and the possibility of benefit termination.




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Under Michigan’s Family Independence Program, established in
March 1996, all adult welfare recipients have an obligation to engage in an
activity leading to self-support, referred to as their social contract.7 In
contrast to this universal participation requirement, approximately
35 percent of Michigan’s recipients were exempted from JOBS participation
requirements in fiscal year 1994.8 Although the goal is for all recipients to
work, they can be deferred from job search if they are not immediately
employable, for example, if they have children under 3 months of age, are
under 16 years of age, are ill, or are caring for an incapacitated household
member. They are, however, still obligated to participate in some activity
defined in their social contract. Recipients required to participate in work
activities are subject to sanctions and benefit termination for failure to
participate.

In contrast to Michigan and Utah, Massachusetts mandates only a small
segment of its caseload to participate in a work-related activity as a
condition of eligibility for benefits. Under Welfare Reform ’95,
implemented starting in November 1995, recipients with children under
the age of 2—that is, approximately 46 percent of the caseload on
October 31, 1996—are not required to work in order to keep their benefits.
Recipients with children aged 2 to 6—approximately 34 percent of the
caseload—are expected to work but are not subject to sanctions for
failure to participate in a work-related activity.9 Only recipients with
school-aged children—approximately 20 percent of the caseload—are
strictly mandated to work. If they fail to comply with the work
requirements, they are subject to a progressive set of sanctions for
continued noncompliance after which the entire benefit is eliminated.

Like Michigan and Utah, other states with work requirement waivers
changed exemptions, requiring a larger portion of the caseload to
participate than in the past. Eleven states, including Michigan and Utah,
extended the participation requirement to include parents with children



7
 Michigan began its reform effort in 1992 with the demonstration program To Strengthen Michigan
Families. Additional waivers granted in 1994 eliminated exemptions from work participation and
instituted Work First, a mandatory job search program.
8
 During the period that To Strengthen Michigan Families was in effect, the state was required to report
JOBS participation rates to HHS.
9
 Recipients with children between the ages of 2 and 6 who volunteer to participate in the work
program and complete an employment development plan are subject to sanctions for failure to
participate. Furthermore, all recipients with no children under the age of 2 are subject to a need and
benefit payment standard that is 2.75 percent lower than that used for families with children under the
age of 2.



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                          under 1 year of age (see table I.1).10 In contrast, seven states, including
                          Massachusetts, increased the age for the youngest child exemption,
                          thereby decreasing the number of adults required to participate because of
                          the age of their youngest child. The age for the youngest child that
                          exempts a parent from participation in states with work requirement
                          waivers ranges from under 12 weeks in Indiana, Maryland, Michigan,
                          Nebraska, Oregon, Utah, and Vermont to under 6 years in Ohio and New
                          Hampshire.11


States Changed Policies   In addition to changing who must participate, states changed the activities
Regarding Allowable       allowed to meet the participation requirement. Their choices regarding
Activities                which activities to allow reflect their approach toward moving welfare
                          recipients into self-sufficiency as well as their fiscal situations. Some
                          states chose “labor force attachment” models emphasizing rapid entry into
                          the labor market, believing the market to be the best indicator of who is
                          employable. Other states chose a human capital development approach
                          that provides education and training to support employment at higher
                          wages. In general, waiver programs have reflected states’ move toward
                          more work-focused models. Massachusetts and Michigan implemented
                          programs in which mandated individuals participate in short-term,
                          work-focused activities. In contrast, Utah tailored activities to the
                          individual, reflecting the notion that there is no one route to
                          self-sufficiency appropriate for all. Consequently, in Utah, a client’s
                          employment plan may consist of immediate job search or it may consist of
                          education or training.

                          Recognizing that not all welfare recipients are immediately ready to enter
                          the labor market and find a job, Utah permits participation in a range of
                          activities aimed at getting previously exempted or deferred families with
                          multiple barriers to participate in some activity. Consequently, Utah has
                          expanded allowable activities to include activities such as substance abuse
                          and mental health counseling in addition to the more traditional
                          employment, job search, training (including on-the-job training), and
                          education (including 2 years of college). Believing that recipients should
                          be able to compete in the labor market for unsubsidized jobs, Utah does
                          not allow subsidized employment to count as participation. The number of
                          hours of participation required is individualized. For example, a client with


                          10
                           Under the JOBS program states were to exempt parents with children under the age of 3 with an
                          option to exempt only parents of children under the age of 1.
                          11
                           Some states have a separate rule for children conceived while the mother is receiving AFDC. For
                          example, in Massachusetts, such children are not eligible for a welfare benefit and can exempt the
                          mother from a work participation requirement only while they are under the age of 3 months.


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a mental health problem might be required to see a therapist for 1 hour a
week to meet the participation requirement, while another client could be
expected to conduct a job search for 20 hours a week. The emphasis of the
program is on making progress toward self-sufficiency. For a person with
a mental health problem, dealing with that particular condition is viewed
as an essential first step toward self-sufficiency.

Michigan, like Utah, attempts to include the entire adult caseload in some
activity; however, unlike Utah, Michigan requires all applicants and
recipients, unless deferred or considered not immediately employable, to
participate in Work First, a short mandatory job readiness/job search
program. After 4 weeks in the program, Work First participants who do
not find a job are reassessed and engage in further job search activity, but
officials expect most recipients to succeed in finding a job within the
allotted period. Recipients who are deferred from Work First are required
to engage in productive activities leading to their personal growth or to
their community’s enhancement. The activity in which a deferred recipient
agrees to participate is established by a social contract between the client
and the welfare agency; actual participation in the agreed-upon activity is
self-reported and not closely monitored. A final group of recipients,
including teen parents, for whom immediate employment is not
appropriate, participate in Michigan’s JOBS program, where they can, for
example, continue their educations. Originally, under its waiver, Michigan
did not provide on-the-job training or subsidized employment; however,
effective January 1997, on-the-job training will be available to two-parent
families. Officials indicated that when attempts to find a job have failed, a
client may be placed in community service for a maximum of 6 months, at
which point the client is assessed for further appropriate
employment-related activities.

Massachusetts requires all nonexempt recipients with no children under
school-age to conduct a 60-day job search.12 Those who do not find
employment at the end of the job search period must participate in
community service or one of two subsidized work programs, the Full
Employment Program (FEP) or supported work. The community service
must be 20 hours or more per week as an uncompensated volunteer in a
public, quasi-public, or nonprofit organization. For example, a recipient
could be a volunteer in his or her child’s school or at a hospital. Under FEP,
the Massachusetts Department of Transitional Assistance provides a direct
subsidy to employers who hire welfare recipients. Designed to benefit

12
 In Massachusetts, aliens who are not allowed to work in the United States are not subject to the
60-day job search requirement; they are assigned directly to community service sites.



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                        individuals with no prior work experience, the subsidy is intended to allow
                        the employer to provide on-the-job training to the recipient. Under the
                        supported work program, the Department pays contractors to work with
                        recipients and place them in jobs. The contractor supplies a “shadow” to
                        continually supervise the participant.13 Some officials believe that
                        subsidized work or supported work may be more successful than
                        community service at moving welfare recipients into paid employment.

                        A total of 13 states expanded the definition of “work activity” under
                        waivers to include activities that did not meet the participation
                        requirement under the JOBS program, such as family counseling or drug
                        and alcohol abuse counseling. Twelve of the 13 states added parenting or
                        family skills training as an option (see table I.2). In addition, 19 states
                        waived the JOBS program limits on job search, extending the time they
                        could require individuals to look for work.14 Under the new law, job search
                        is limited to a total of 6 weeks, which cannot be continuous for more than
                        4 weeks. However, if the state’s unemployment rate is 50 percent greater
                        than the U.S. rate, the allowable job search period is extended to 12
                        weeks. Eighteen states also increased their use of subsidized work
                        programs or community services jobs (see table I.3).


                        In addition to redefining what constitutes participation under their waiver
States Implemented      programs, states implemented policies designed to encourage recipients to
Policies to Encourage   meet the new requirements and thereby increase actual participation in
Participation in Work   work and work-related activities. Strategies included providing emergency
                        assistance to divert applicants from becoming welfare recipients,
and Work-Related        delivering a strong work message to clients early during the application
Activities              process, continually reinforcing the work message through close
                        monitoring to ensure clients attend work-related activities, and allowing
                        recipients to keep more of their earnings once they become employed.
                        Additionally, the states structured their programs to provide the support
                        services clients needed to work, such as child care and transportation.

                        13
                          The Manpower Demonstration Research Corporation’s evaluation of the Supported Work
                        Demonstration found this approach increased the employment of long-term welfare recipients. Sites
                        included in the study were Atlanta, Chicago, Hartford, Newark, New York City, Oakland, and Fond du
                        Lac and Winnebago counties in Wisconsin. See Stanley H. Masters and Rebecca Maynard, The Impact
                        of Supported Work on Long-Term Recipients of AFDC Benefits (New York: Manpower Demonstration
                        Research Corporation, Feb. 1981).
                        14
                          Under the JOBS program, states could require up to 8 weeks of job search for applicants and
                        recipients each year, resulting in a possible 16 weeks of required job search in the first year, with 8
                        weeks per year thereafter. Additional job search could not be required unless combined with some
                        other activity designed to improve a participant’s prospects for employment, and in no case could a
                        state require a recipient to participate in more than 3 weeks of job search before conducting an
                        employability assessment.



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States Prevent Welfare        One way some states encourage work is to divert job-ready individuals
Receipt by Diverting          from becoming welfare recipients. In Utah, individuals applying for
Potential Participants With   assistance who have immediate job prospects or other sources of income
                              are offered job placement assistance and a one-time financial payment to
One-Time Payments             meet immediate needs, such as car repair or rent. The purpose of the
                              diversion is to provide the family with financial security until a paycheck
                              arrives, thereby curtailing the family’s need for welfare. Utah also makes
                              these diverted families eligible for transitional child care and Medicaid,
                              benefits that usually are only available to individuals who have earned
                              their way off welfare. According to Utah’s program director, about
                              20 percent of eligible applicants are diverted from ever going on assistance
                              in this manner. Five other states divert individuals from AFDC with lump
                              sum payments. In most cases, if individuals do apply for assistance before
                              a specified period, the amount of the diversion is taken into account in
                              determining the amount of the family’s benefit. Massachusetts and
                              Michigan did not have a diversion component in their programs. (See
                              table I.4.)


Clients Informed During       To emphasize their obligation to participate in activities that will help
Application Process of        them become employed, clients in the three states we visited are told early
Participation Requirement     in the application process that they must engage in a work-related activity
                              as a condition of benefit receipt. In Michigan, an assistance payment
                              worker explains at the time of application that all recipients must
                              participate, even clients who typically had been exempted or deferred in
                              the past. For example, recipients with a child under 3 months of age who
                              are deferred from Work First might be expected to attend parenting
                              classes or medical appointments to meet their obligation to participate
                              under the social contract. The obligation to participate is again discussed
                              at orientation to Work First. To address the chronic problem of welfare
                              recipients failing to show up for orientation, beginning in October 1996,
                              Michigan made attendance a condition of eligibility for benefits.

                              In Utah, applicants for assistance meet with a self-sufficiency worker
                              before income eligibility is determined. They are shown a special slide
                              presentation, developed by the state, that emphasizes the client’s
                              responsibility to participate and take immediate steps toward achieving
                              self-sufficiency. The self-sufficiency worker establishes a self-sufficiency
                              plan with the individual. If an individual is determined to be eligible for
                              cash benefits, the benefit is viewed as a support enabling the individual to
                              meet the participation requirements spelled out in the self-sufficiency plan.
                              Caseworkers commented that early participation in some activity is



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                          crucial for program success. Their experience shows that clients not
                          assigned to an activity within 2 months will conclude that the new
                          program is the same as the old program and disregard the mandate to
                          participate.

                          Our review of state waivers found that other states used similar strategies
                          to inform individuals of their obligation to participate in a work-related
                          activity. In Indiana, for example, the state developed a script for staff to
                          use at the initial eligibility meeting with applicants that focuses the
                          meeting on job placement and assistance rather than entry into the welfare
                          system.15 In addition, states such as Florida, Indiana, Virginia, and
                          Wisconsin require clients to sign personal responsibility agreements that
                          set forth the expectation that the client will participate in activities leading
                          to self-sufficiency.


Caseworkers Responsible   Caseworkers in the states we visited also encourage work by monitoring
for Monitoring Client     client participation in work-related activities. Under the previous AFDC
Activities                program, most of the caseworkers’ time was spent determining eligibility,
                          and they had little ongoing contact with recipients. Utah has a
                          self-sufficiency worker position whose primary functions have changed
                          over the years as the state’s program changed. Currently, these workers
                          negotiate a self-sufficiency plan and monitor client progress with frequent
                          follow-up calls to ensure that clients participate in the activities agreed to
                          in the self-sufficiency plan. The self-sufficiency workers have smaller
                          caseloads than income maintenance workers to enable them to make the
                          additional client contacts. Utah officials have found that many of the
                          recipients they currently serve require a lot of time and attention because
                          they are the more difficult cases left behind after the employable
                          recipients have found jobs. To become self-sufficient, these recipients may
                          need assistance in addressing a number of problems, including drug or
                          alcohol abuse, physical or mental disabilities, family responsibilities,
                          domestic violence, and learning disabilities. In the past, many of these
                          recipients would have been exempted or deferred from participation.
                          Officials commented that working with such clients requires more skill
                          and education, such as a degree in social work.

                          The Michigan Family Independence Agency is in the process of converting
                          the assistance payments worker position to the position of family
                          independence specialist (FIS). The FIS workers will have a target caseload

                          15
                           Welfare Waivers Implementation: States Work to Change Welfare Culture, Community Involvement,
                          and Service Delivery (GAO/HEHS-96-105, July 2, 1996). We reviewed the changes made under waiver
                          programs to implement time limits and work requirements in Florida, Indiana, Virginia, and Wisconsin.



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                            of 65, compared with the average caseload of 200 for the traditional
                            assistance payments worker. If a client fails to attend a Work First
                            appointment, the workers are responsible for learning why and attempting
                            to remove any barriers to participation. While Michigan is making an effort
                            to monitor recipients in Work First, the state does not closely monitor
                            recipients assigned to social contract activities, who self-report their
                            participation.

                            In Massachusetts, the caseworker role has been expanded to include
                            responsibility for making referrals to employment and training services.
                            Caseworkers contact recipients by telephone or scheduled office visit
                            after 30 days and again after 45 days into their 60-day job search period to
                            discuss the clients’ progress and to remind them of the approaching
                            deadline for finding a job. Although caseworkers inform clients of the job
                            search services available, it is the client’s responsibility to request needed
                            services and assistance in their job search. On day 60, any client who does
                            not have a job is given 10 days in which to select or be assigned to a
                            community service position. Participation in community service is tracked
                            through automatically generated attendance sheets that the client fills out
                            and the supervisor at the community service site signs.

                            Other states also encourage clients’ participation through close monitoring
                            to ensure they are making progress toward self-sufficiency. Florida
                            created a case manager position to coordinate and broker a
                            comprehensive set of services clients might need to become employed.
                            Escambia County in Florida expanded the responsibility of its existing
                            staff to include both eligibility and case management functions. Former
                            eligibility workers now are responsible for overseeing client activity and
                            coordinating support services. Other states also report an increased
                            monitoring of clients’ participation. For example, in Fond du Lac County,
                            Wisconsin, caseworkers monitor certain clients’ participation in activities
                            by receiving daily attendance reports from the local technical college.


States Allow Participants   In an attempt to encourage recipients to work, the three states we
to Keep More of Their       reviewed disregard a larger portion of their earnings in determining
Earnings                    eligibility and benefits, thereby enabling more recipients to combine work
                            and welfare and, thus, to be better off financially than when only receiving
                            welfare or earnings. These states not only changed the amount of the
                            earnings disregard, but also allowed it to remain in effect indefinitely. Utah
                            allows recipients to disregard the first $100 of income plus 50 percent of
                            the remainder, Michigan allows $200 plus 20 percent of the remainder, and



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                             Massachusetts allows $30 plus 50 percent of the remainder for working
                             recipients with no children under the age of 2. Families with children
                             under age 2 receive the traditional $30 and one-third disregard with no
                             time limit. Twenty-four other states with work requirements also changed
                             the amount of earned income disregarded in determining eligibility and
                             benefit amounts (see table I.5).


States Eliminate 100-Hour    Some states waived the special rules that affected AFDC eligibility for
Rule to Increase             two-parent families. Federal regulations specified that poor two-parent
Two-Parent Families’         families in which neither adult was disabled could receive aid only if the
                             principal wage earner was working less than 100 hours per month and had
Participation in Work        a significant work history. This restriction was believed to have a negative
                             effect on recipients’ work effort since families would lose eligibility if one
                             parent worked more than 100 hours a month, regardless of how much they
                             earned. By abolishing the 100-hour rule, more two-parent families with
                             earnings qualify for assistance. These are poor families that are already
                             working part time that would have been ineligible for AFDC because they
                             were working more than 100 hours a month, rather than because they had
                             made enough money to be ineligible for benefits. The three states we
                             visited eliminated the 100-hour rule so that poor two-parent families could
                             work more hours and still receive welfare until they earned enough to no
                             longer be eligible for benefits. Of all states with expanded work
                             requirements under waiver, 25 states eliminated the 100-hour rule for
                             two-parent families.


States Use Different Means   To make the transition from welfare to work, many recipients need
to Provide Needed Support    services such as training or job search and job readiness activities, child
Services                     care, and transportation assistance. The three states we reviewed reported
                             they were able to provide the services their programs were designed to
                             offer and did not need to exempt clients because resources were
                             unavailable. They achieved this outcome in different ways as discussed
                             below.

Tailoring Services to Fit    Both Massachusetts and Michigan stressed immediate movement into
Available Resources          work after a period of job search. This labor force attachment approach
                             allows states to serve larger numbers of clients because recipients
                             generally participate in job search for shorter periods of time than they do
                             in education and training programs. Manpower Demonstration Research
                             Corporation results show that labor force attachment programs increase
                             the number of recipients who leave the rolls because of employment,



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                               which can result in welfare savings because recipients leave the rolls
                               sooner than they would have without the program. Savings can also occur
                               when recipients’ earnings reduce AFDC benefits.16

                               Massachusetts officials said the state has not experienced shortages of
                               resources needed to meet its participation goals. Costs are contained by
                               providing services during the 60-day job search to only those recipients
                               who request them. Furthermore, only parents of school-aged children are
                               required to participate and they are expected to work or perform
                               community service during school hours whenever possible.

Expanding and Enhancing        In contrast to Massachusetts and Michigan, Utah’s approach is
Services for More Recipients   individualized. The state provides a broader range of services tailored to
                               individual need, allowing recipients to engage in longer-term activities,
                               such as postsecondary education and training, for a maximum of 2 years.
                               State officials believe that the cost of Utah’s range of services is offset by
                               the savings resulting from moving more difficult-to-serve clients into
                               employment since they tend to become long-term recipients. Officials
                               indicated that the savings resulting from the caseload decline allow Utah
                               to provide more intensive services to its remaining caseload. To be able to
                               serve everyone, Utah began its program at only three sites and gradually
                               phased in the remaining areas of the state. Furthermore, funds were added
                               to pay for work activity programs and supportive services. At one of the
                               initial sites in the Salt Lake City area, the state hired 13 new workers for
                               the program.17

                               Child care is an important support in the welfare-to-work transition, and
                               Utah has used savings from caseload declines to ensure that child care
                               resources are adequate. According to an Urban Institute report, the overall
                               reduction in AFDC expenditures 10 months after the Utah demonstration
                               was implemented greatly exceeded the increase in child care
                               expenditures. As a result, total expenditures on child care and AFDC
                               payments actually declined by 20 percent.18


                               16
                                 Stephen Freedman and Daniel Friedlander, The JOBS Evaluation: Early Findings on Program Impacts
                               in Three Sites (New York: Manpower Demonstration Research Corporation, Sept. 1995). Study sites
                               were Atlanta, Georgia; Grand Rapids, Michigan; and Riverside, California. According to the study, most
                               of the savings appear to be associated with recipients’ having left the rolls sooner rather than with
                               lower grants for recipients who did not earn enough to become ineligible for welfare.
                               17
                                 Though the program added staff at the beginning, during its 1997 session, the state’s legislature
                               eliminated 40 positions in Utah’s Office of Family Support as a result of caseload declines.
                               18
                                LaDonna Pavetti and Amy-Ellen Duke, Increasing Participation in Work and Work-Related Activities:
                               Lessons from Five Welfare Reform Demonstration Projects (Washington, D.C.: The Urban Institute,
                               Sept. 1995). States studied were Colorado, Iowa, Michigan, Utah, and Vermont.



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                        During the first year of its welfare reform, Massachusetts increased
                        spending on child care for welfare recipients and transitional assistance
                        for former recipients by 13 percent. Michigan’s child care expenditures
                        increased by 26 percent from fiscal year 1995 to fiscal year 1996 with the
                        average monthly number of child care cases increasing by over 3,000.
                        However, Michigan has not run out of child care funds and officials report
                        no increase in the use of child care funds by recipients subject to
                        participation requirements. Other states initiating welfare reform also
                        increased available resources for child care. Wisconsin, for example,
                        dramatically increased expenditures for child care since implementation
                        of its waiver demonstration, Pay for Performance, from $12 million in 1987
                        to $52 million in 1995.19 Under a new program, Wisconsin Works, the
                        exemption for age of youngest child will be reduced from 1 year to 12
                        weeks, and officials anticipate child care expenditures to triple to
                        $158 million. To decrease demand for child care generated by its welfare
                        reform, Iowa lowered the income level qualifying a family for a child care
                        subsidy, thereby reducing the number of low-income working families
                        eligible for subsidies.

Reorganizing Services   The states structured their delivery of services in different ways to
                        emphasize recipients’ responsibility to become self-sufficient. Utah
                        provided services through its social service agency, the Department of
                        Human Services. Employment counselors and mental health/drug
                        counselors are co-located in the local social service agency. This
                        client-centered approach may be most appropriate in states, such as Utah,
                        that have succeeded in assisting the most job-ready clients to earn their
                        way off welfare, leaving behind harder-to-serve recipients. Clients who
                        receive all services in one location coordinated by the same caseworker as
                        they do in Utah may be less likely to fall through the cracks than when
                        they are referred to other agencies for services.20

                        Michigan’s Family Independence Program provides services to clients
                        through two agencies. The Michigan Jobs Commission, a newly created
                        agency responsible for all economic development programs in the state,

                        19
                         We visited these two states as part of a companion assignment on welfare benefit termination,
                        Welfare Reform: States’ Early Experiences With Benefit Termination (GAO/HEHS-97-74, May 15, 1997).
                        20
                          As part of its seven-site JOBS program evaluation, the Manpower Demonstration Research
                        Corporation evaluated the impact of different case management approaches on client participation.
                        They found that in Columbus, Ohio, an integrated case management approach in which one case
                        manager did both benefit determination and monitoring of employment and training activities resulted
                        in significantly higher levels of client participation in orientation and JOBS activities than the case
                        management approach that separated income maintenance and JOBS activities. See Two Approaches
                        to JOBS Case Management in Columbus, Ohio: Implementation, Participation, and Impact Findings
                        (New York: Manpower Demonstration Research Corporation, Nov. 1996).



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                        provides job search services, while the Family Independence Agency
                        oversees the case and tracks client compliance. With its large caseload,
                        organizing the delivery system along functional lines may allow Michigan
                        to provide services more efficiently and at lower cost per client served.

                        Massachusetts recently added one-stop career centers as an available
                        source of assistance during the 60-day job search period for recipients
                        who are required to work. The centers are funded through demonstration
                        grants from the U.S. Department of Labor, and the Private Industry
                        Council/Regional Employment Boards have contracting and oversight
                        responsibility for the centers that are accessible to all citizens. The
                        Department of Transitional Assistance negotiates agreements with the
                        centers to serve an expected number of welfare recipients; however, the
                        centers are reimbursed only for recipients actually served. When welfare
                        recipients visit the center, they usually attend an orientation and meet with
                        a career counselor to develop and sign an action plan for searching for a
                        job. The Department of Transitional Assistance assists the client with
                        health insurance, child care, and housing; the career center develops job
                        search strategies for the client.

                        Other states have made similar efforts to structure their programs to
                        deliver services differently to emphasize the responsibility to become
                        self-sufficient. In addition to Utah, for example, Florida and Wisconsin
                        brought together a variety of staffs at one location and formed case
                        management teams to quickly help provide a comprehensive set of
                        services that clients need to participate. Indiana adopted a policy requiring
                        that local public assistance offices co-locate with workforce and job
                        placement agencies as well as other social service agencies. Like Michigan,
                        Iowa reorganized its service delivery along functional lines. Its Department
                        of Economic Development contracted with workforce development
                        agencies to provide job services such as assessment, job club, job search,
                        education and training, and support services, while its Department of
                        Human Services maintained responsibility for eligibility determination.


Transitional Services   To aid the transition from welfare to self-sufficiency, Utah extended
Expanded to Encourage   supportive assistance to recipients who earned their way off welfare. This
Work                    extra support is designed to help recipients stay off welfare. For example,
                        the state extended Medicaid coverage to 2 years after a recipient leaves
                        welfare and transitional child care for as long as the family is eligible
                        based on income. In addition, Utah created a new caseworker position,
                        called transitional caseworker, to continue assisting individuals who have



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                         earned their way off financial assistance. These case management services
                         are available to individuals for 2 years after leaving welfare. While
                         Michigan and Massachusetts provide transitional child care and Medicaid
                         to individuals for 1 year after they leave welfare, this does not represent a
                         change from JOBS, which required states to offer 1 year of transitional child
                         care and Medicaid.

                         Of states with work requirement waivers, 11 states extended transitional
                         child care, most increasing the period from 12 months to 24 months after a
                         client becomes ineligible for AFDC because of earnings; and 7 states waived
                         the former requirement that a recipient have received AFDC for 3 of the last
                         6 months to be eligible for transitional child care (see table I.6). Ten states
                         also extended transitional Medicaid, most increasing the period to 24
                         months, and 10 states waived the “3 of the last 6 months” requirement for
                         Medicaid.


                         Strict sanctions for failure to comply with work requirements are intended
States Implemented       to encourage reluctant recipients to participate to retain their benefits.
Stricter Sanctions for   The three states we visited implemented tougher sanctions than they had
Noncompliance With       in the past for failure to comply. After varying lengths of time under a
                         progressive set of sanctions, the states terminate the entire family’s
Participation            benefit, called a full-family sanction, for not cooperating with the program
Requirements             requirements. In contrast, under the JOBS program, only the parent’s
                         portion of the grant was removed as a sanction and the family continued
                         to receive the child’s portion of the benefit until the parent complied. For
                         the first noncompliance, the sanction lasted until the participant complied.
                         For the second and subsequent cases of noncompliance, the sanction
                         lasted for 3 months or 6 months, respectively, or until compliance,
                         whichever was longer. As a result of these rules, a client could remain in
                         sanction status with a reduced benefit indefinitely.

                         Officials from all three states viewed the full-family sanction as a way to
                         get a participant’s attention and eliminate from the rolls those who do not
                         participate because they have other sources of support. Caseworkers
                         report that clients often ignore all attempts to contact them until they are
                         notified their grant will be terminated. Furthermore, officials in all three
                         states said a grant reduction was not sufficient to get all recipients to
                         comply and that the ultimate consequence of benefit termination was
                         useful in some cases.




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As part of the sanction procedure in Michigan and Utah, a process called
conciliation is used to discover and help alleviate reasons for
nonparticipation previously not disclosed to caseworkers. Conciliation, a
requirement of the JOBS program, protects clients against unwarranted
benefit terminations by providing an opportunity to resolve
misunderstandings or disagreements before they result in a sanction. Both
Michigan and Utah do home visits to ensure that clients understand their
obligations prior to benefit termination for failure to participate.
Massachusetts eliminated its conciliation process, allowing a client to be
sanctioned for failure to participate with no formal procedure for dispute
resolution. Massachusetts replaced conciliation with a set of progressive
sanctions prior to benefit termination.

Utah requires an extensive conciliation process before terminating a
recipient’s benefits. A meeting called a case staffing is held to discuss
barriers to employment and offer additional assistance. This meeting to
which the client is invited, is attended by the case manager and other
Department of Human Services and allied agency representatives familiar
with the case. Home visits are made in some cases. Officials said the
conciliation process was established to ensure the client understands the
choice that is being made: to not participate and to have benefits
terminated. They indicated the process is expensive because it is
labor-intensive. In November 1995, Utah initiated the sanction policy of
full benefit termination for noncompliance with work requirements.
Before that time, clients who did not participate received a $100 reduction
in their benefit amount indefinitely. This could lead to recipients
remaining in sanction status for long periods; for example, one case we
reviewed had been in sanction status for 3 years. From the time the first
family’s benefits were terminated in December 1995 through December
1996, 180 families had their benefits terminated for failure to comply with
the new program requirements.21

Michigan’s conciliation process involves phone contact, scheduled office
visits, and home visits if necessary. Clients can resume receiving full
benefits at any point if they agree to comply, subject to a 5- or 10-day
compliance test. If the client still does not comply after repeated attempts
at contact, the grant is reduced 25 percent. After 12 months of receiving a
reduced grant, the case is closed. Michigan terminated the benefits of its
first cases for failure to participate in April 1996, and as of December 31,



21
  A small number of these cases—three as of June 30, 1996—had their benefits terminated for failure
to comply with child support enforcement requirements.



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                           1996, 765 cases had their benefits terminated for failure to comply with the
                           work requirements.

                           Massachusetts imposes stringent sanctions for failure to comply on the
                           group of recipients mandated to work. Clients are given an opportunity to
                           discuss any hardship or barriers to participation when they are assessed,
                           and agency workers are expected to review legitimate reasons for not
                           participating, called good cause, before mandating employment or
                           imposing sanctions. However, once a client fails to comply, there is no
                           formal opportunity for conciliation and the adult portion of the grant is
                           removed after a 10-day notice is sent. For an average grant of $468 per
                           month, this results in a reduction of about $84. If the noncompliance
                           continues, a second 10-day notice is sent and the entire grant is terminated
                           unless participation occurs within the 10-day period. No home visit is
                           required before benefits are terminated. Clients can return to assistance at
                           any time if they comply with their participation requirements for 2 weeks.
                           Furthermore, the sanction process stops if the recipient demonstrates an
                           exemption or good cause, or files a timely appeal. As of December 31,
                           1996, Massachusetts had terminated the benefits of 1,322 families for an
                           adult’s failure to comply with the work participation requirements.22

                           Under waiver, many additional states increased the duration and severity
                           of sanctions imposed on mandatory participants who do not comply.
                           Twenty-two states with expanded work requirements now allow the entire
                           benefit to be terminated for failure to comply with work requirements (see
                           table I.5).


                           By changing the rules and strengthening sanctions for noncompliance,
States Achieve Higher      Massachusetts, Michigan, and Utah were able to involve a substantial
Participation Rates        portion of their welfare recipients in some activity they believe will move
Under Waiver               them toward self-sufficiency.

Programs
Most Participants Are in   During September and October 1996, when all three states had their
Work-Related Activities    waiver programs operational statewide, 11 percent of the caseload in
                           Massachusetts, 32 percent in Michigan, and 90 percent in Utah were


                           22
                             An estimated 386 additional families had their benefits terminated for noncompliance by a dependent
                           child aged 16 to 18 required to participate in JOBS. Benefits can be terminated for reasons other than
                           failure to comply with work requirements, such as the failure to comply with requirements for teen
                           living arrangements or school attendance. For detailed discussion of benefit termination under waiver,
                           see GAO/HEHS-97-74, May 15, 1997.



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                                        participating in activities that count as participation under the
                                        requirements of the states’ waiver programs. (See table 2.2.) The largest
                                        percentage of those participating in all three states were engaged in
                                        unsubsidized employment, reflecting the work focus of these programs.

Table 2.2: Participation in Allowable
Activities in Three States’ Waiver                                                           Massachusetts         Michigan             Utah
Programs, September/October 1996        Average number participating                                    8,491a        43,271           9,813
                                        Average monthly adult caseload                                 79,521        136,852          10,881
                                        Percentage of adult caseload participating                          11%            32%               90%
                                        Note: Percentages are rounded to nearest whole number.
                                        a
                                         In Massachusetts, only individuals who are strictly mandated to participate and are participating
                                        for 20 hours are counted as participating in the work program. During this same period,
                                        approximately 19,793 additional recipients not subject to the work requirement or not
                                        participating for 20 hours a week were participating in a work-related activity.



                                        Utah has the highest overall participation rate, reflecting the fact that its
                                        program requires almost all recipients to participate and more broadly
                                        defines participation, allowing a range of activities to meet the
                                        participation requirement that are not counted in other states. Of those not
                                        participating, the largest number, over 5 percent of the caseload, were
                                        excused because of a family medical condition. Utah also has no minimum
                                        required number of hours of participation for some activities, tailoring the
                                        required hours to the recipient and the activity.

                                        Although Michigan also has a universal participation requirement, it defers
                                        a substantial number of recipients from work participation whose
                                        participation in social contract activities is neither counted toward
                                        participation nor monitored. In addition, Michigan requires 20 hours per
                                        week of participation in most work activities. If Michigan counted
                                        everyone who was participating in an activity for any number of hours
                                        during a week, its participation rate would be closer to 42 percent for the
                                        same period.

                                        Massachusetts had the lowest participation rate reflecting the fact that
                                        only one-fifth of its caseload is strictly mandated to participate and the
                                        state only counts the participation of that mandated group as meeting the
                                        participation requirement for its work program. However, the
                                        participation for this group is substantial. In September and October 1996,
                                        for example, an average of 15,734 individuals were mandated to
                                        participate in a work activity. During that period, 8,491, approximately




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                                         54 percent, of these individuals were participating in an activity meeting
                                         their participation requirement. Table 2.3 shows that of those
                                         participating, 58 percent were employed, 23 percent were in community
                                         service, 13 percent were in their 60-day job search period, and 6 percent
                                         were grandfathered into educational activities. Reflecting the different
                                         definitions of participation in the three states, table 2.3 shows the
                                         percentage of those participating in the different countable activities.

Table 2.3: Distribution of Participant
Activities in Three States’ Waiver       Activity                                                Massachusetts         Michigan               Utah
Programs, September/October 1996         Unsubsidized employment                                                56%             76%            34%
                                         Subsidized employment                                                    2%             1%            NA
                                         Community service/community work experience                            23%              1%a            2%
                                         Job search/job readiness                                               13%             13%            23%
                                         Vocational education and job training                                  NA               8%             6%
                                         Education                                                                6%             2%            12%b
                                         Life skills training                                                   NA             NA               9%c
                                         Being assessed                                                         NA             NA              14%
                                         Average number participating                                        8,491d        43,271         9,813
                                         Note: Percentages are rounded to nearest whole number. NA means that either the state does not
                                         have this component or it is not counted as participation.
                                         a
                                          Only Michigan has a community work experience program.
                                         b
                                             In Utah, 32 percent of the participants in this category are in postsecondary education.
                                         c
                                          Life skills includes such activities as parenting, mental health, drug, and alcohol abuse
                                         counseling.
                                         d
                                             In Massachusetts, only individuals who were mandated to participate are included in the total.



                                         In each of the three states we reviewed, the largest percentage of all
                                         participants were engaged in unsubsidized employment. This pattern
                                         reflects the work focus of these programs and the fact that the income
                                         disregards were changed, allowing more recipients to simultaneously
                                         work and receive welfare benefits.23 Of those participating in an activity,
                                         56 percent in Massachusetts, 76 percent in Michigan, and 34 percent in
                                         Utah were in unsubsidized employment. After unsubsidized employment,
                                         the percentage of recipients engaged in other activities varied, reflecting

                                         23
                                           Increasing the amount of the earned income disregard can simultaneously increase recipients’ total
                                         income while allowing them to count toward states’ work participation rate under the new law.
                                         However, in states with low benefit levels, small amounts of earned income can lead to ineligibility for
                                         welfare benefits, leaving smaller numbers of working welfare recipients to count toward the work
                                         participation rate. The time recipients receive benefits, even while they are working, may count toward
                                         their time limit on benefit receipt.



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                         the different program designs. In Michigan and Utah, the second largest
                         group was engaged in job search/job readiness activities; but in
                         Massachusetts, a significant group participated in community service.
                         While Massachusetts had 6 percent in education,24 many of these were
                         grandfathered in from the previous JOBS program. Participation in
                         subsidized employment was very low in Massachusetts and Michigan and
                         nonexistent in Utah.


                         To determine whether states had actually increased participation under
Three States Also        their waiver programs over what they had been achieving in the prior year
Increased the            under the JOBS program, we assessed participation rates using the JOBS
Percentage of the        program definition of allowable activities. In addition to
                         employment-related activities such as job search, community work
Caseload Participating   experience, on-the-job training, and job entry, JOBS activities include high
in JOBS Activities       school or high school equivalency, remedial education, English as a
                         second language, higher education, jobs skills training, and vocational
Under Waivers            training.

                         In comparison to reported participation in their JOBS programs for fiscal
                         year 1995, all three states increased the percentage of their AFDC recipients
                         participating in JOBS activities under their statewide waiver programs
                         during September/October 1996. Through their waiver programs,
                         Massachusetts increased the proportion of its caseload participating in
                         such activities for any number of hours from 19 to 36 percent, Michigan
                         from 21 to 42 percent, and Utah from 42 to 57 percent, as illustrated in
                         figure 2.1.




                         24
                          These recipients are in English as a second language, adult basic education, and postsecondary
                         education programs.



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                                         States Increased Participation Rates
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Figure 2.1: Average Monthly
Participation Rates in JOBS Activities   Adult Caseload (in Percent)
(FY 1995) and Comparable Activities in   60
Three Statewide Waiver Programs
                                         55
(September and October 1996)
                                         50

                                         45

                                         40

                                         35

                                         30

                                         25

                                         20

                                         15

                                         10

                                          5

                                          0

                                                Massachusetts          Michigan            Utah



                                                         FY 1995

                                                         September/October 1996




                                         We used the percentage of the caseload participating in a federally defined
                                         JOBS activity for any number of hours as a consistent benchmark. To
                                         calculate comparable rates, we included in the numerator any welfare
                                         recipient active in a JOBS activity for any number of hours, and in the
                                         denominator we used total adult caseload for the comparable period.
                                         Consequently, although the absolute number of recipients participating in
                                         Utah actually declined slightly from fiscal year 1995 to
                                         September/October 1996, because of substantial reductions in the overall
                                         caseload, the number participating was a larger percentage of the
                                         caseload. Both Massachusetts and Michigan had large increases in the
                                         absolute numbers of recipients participating as well as caseload declines.




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                    Since the enactment of the new welfare reform law, states no longer need
States Plan to      to use waivers of AFDC rules as a vehicle for instituting policies aimed at
Continue Programs   increasing the number of welfare recipients participating in work-related
Under TANF          activities.25 The policies that Massachusetts, Michigan, and Utah pursued
                    under waivers provide an indication of what strategies they believe are
                    effective in attaining greater participation. First, to overcome recipients’
                    frequent failure to attend program activities, these states deliver a stronger
                    message to clients regarding their obligation to participate in required
                    activities and then monitor their participation.26 All three states also
                    changed the disregard for earned income to remove financial disincentives
                    in the AFDC program. In addition, officials emphasize that these efforts
                    must be coupled with the threat of benefit termination for failure to
                    comply with work participation requirements. All three states underscored
                    the importance of sanctions in achieving increased participation.

                    Massachusetts, Michigan, and Utah plan to continue their welfare
                    programs relatively unchanged under TANF. The major change that
                    Massachusetts will be making to its program is limiting benefit receipt for
                    all nonexempt recipients—two-parent families and single heads of
                    household with no children under the age of 2—to 24 months in any
                    60-month period, a policy that had been denied in the state’s request for
                    waivers. Otherwise, Massachusetts will continue to require that mandatory
                    recipients work or perform community service for 20 hours per week and
                    not increase the hours to 30 as specified in the new law. In addition,
                    Massachusetts will not limit the length of job search to 6 weeks as
                    required in the new law. These differences between the state’s plan and
                    the law require that waivers stay in force until the scheduled end of the
                    waiver demonstration, at which time the state will be required to comply
                    with requirements of the new welfare law. Utah had no time limit in its
                    waiver program but plans to implement a 36-month limit on benefit
                    receipt, from which a maximum of 20 percent of the caseload can be
                    exempted for hardship. Eligible individuals who are employed at least 80
                    hours a month in unsubsidized employment and had worked at least 80
                    hours per month in 6 of the past 24 months can have their benefits
                    extended on a month-to-month basis beyond the 36th month up to the 60th
                    month. Michigan added a 2-year work requirement and a 5-year limit on

                    25
                      TANF provides that if a state had a waiver in effect on the date of enactment, it can continue the
                    waiver until its expiration and will not be required to comply with provisions of the act that are
                    inconsistent with the waiver. If a state had a waiver pending on the date of enactment and the waiver
                    is approved on or before July 1, 1997, the state may not be required to comply with provisions of the
                    act that are inconsistent with the waiver though the state will be subject to the work participation
                    requirements of the act.
                    26
                      See Pavetti and Duke, pp. 43 and 46.



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benefit receipt, the same work requirements and time limits specified in
TANF, and is reducing from 12 months to 4 months the length of time a
client can be noncompliant before benefits are terminated. The state is
considering using state funds to support certain unemployed recipients
beyond the end of the 5-year limit.




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Chapter 3

States Likely to Achieve Initial TANF
All-Families Participation Rate but May Be
Challenged to Meet Other Rates
                          Massachusetts, Michigan, and Utah are likely to meet the TANF work
                          participation rate for all families in the short run. However, state officials
                          in Michigan and Massachusetts are concerned about their ability to meet
                          the initial two-parent families’ rate, and officials in all three states are
                          concerned about the higher future rates for all families and two-parent
                          families.


                          Under the new law, states are required to meet a participation rate for the
Calculating               entire caseload—the “all-families rate”—and a separate participation rate
Participation Rates       for families with two parents—the “two-parent families rate.” For the
Under TANF                all-families rate, the numerator includes the number of families receiving
                          assistance in which an adult or a minor child head of household is engaged
                          in work. The denominator includes the total number of families receiving
                          assistance reduced by the number of families who are being sanctioned for
                          failure to participate. States have the option to exclude from the
                          denominator families with children under the age of 1. For the two-parent
                          families rate, the numerator includes only families in which both parents
                          meet their participation obligation and the denominator includes all
                          two-parent families except those being sanctioned.

                          To count as a participant for purposes of calculating the all-families rate in
                          the first year, a single head of household must work at least 20 hours per
                          week, and one adult in a two-parent family must participate 35 hours a
                          week, at least 30 hours of which must be in one of the following activities:

                      •   unsubsidized employment,
                      •   subsidized public or private sector employment,
                      •   work experience,
                      •   on-the-job training,
                      •   community service,
                      •   provision of child care to an individual participating in community service,
                      •   vocational education, not to exceed 12 months for any individual, or
                      •   job search and job readiness assistance, but not to exceed 6 weeks.

                          If a two-parent family receives federally funded child care and an adult in
                          the family is not disabled or caring for a severely disabled child, the
                          second parent must participate for 20 hours for the family to be counted as
                          participating.

                          The minimum participation rates specified in the law for each year are
                          lowered to the extent that state caseloads have declined since 1995. Given



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                                         All-Families Participation Rate but May Be
                                         Challenged to Meet Other Rates




                                         that all but three states nationwide have experienced declines in their
                                         caseloads beginning in 1994, the majority of states should have target
                                         participation rates for fiscal year 1997 that are lower than the minimum
                                         25 percent specified in the law. Figure 3.1 illustrates the caseload decline
                                         since 1994 in Massachusetts, Michigan, and Utah.


Figure 3.1: Caseload Declines in Three
States, FY 1994-96                       Average Monthly Number of Cases (in Thousands)

                                         220

                                         200

                                         180

                                         160

                                         140

                                         120

                                         100

                                          80

                                          60

                                          40

                                          20

                                           0

                                                 Michigan             Massachusetts       Utah



                                                            FY 1994

                                                            FY 1995

                                                            FY 1996




                                         Under the new law, caseload reductions not only provide states a lower
                                         target work participation rate, they also contribute to states having more
                                         money per recipient than in the past. This results from the fact that TANF
                                         block grant amounts are based on federal expenditures in prior years,
                                         when most states had higher caseloads, and remain fixed until fiscal year
                                         2002. Recent statistics compiled by the U.S. House of Representatives’
                                         Committee on Ways and Means estimate the average benefit available per
                                         family in fiscal year 1998 will be $5,662 compared with $3,624 in fiscal year
                                         1994.



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                                         Using the new law’s definition of work participation and reducing the
Three States Likely to                   minimum participation rate by the caseload reduction credit, all three of
Achieve the                              the states we reviewed should be able to meet the all-families participation
All-Families                             rate for fiscal year 1997. Table 3.1 shows the target participation rates the
                                         three states will need to achieve under the new law in fiscal year 1997,
Participation Rate in                    taking into account the reductions in the caseloads these states have had
the Short Run                            from 1995 to 1996.27 The table also shows the participation rates the three
                                         states would have achieved if the TANF participation rules were applied to
                                         their welfare programs in September/October 1996.

Table 3.1: Estimated FY 1997
All-Families TANF Target Participation   Percent
Rates and TANF Rates Achieved Under                                                                                        Participation rate
Waiver in Three States in                                                    Estimated target rate with               achieved using TANF
September/October 1996                   State                            credit for caseload reduction           definition of participation
                                         Massachusetts                                                     13                               25.3
                                         Michigan                                                          13                               32.6
                                         Utah                                                              14                               30.9

                                         Since Massachusetts has had a caseload decline of over 12 percent from
                                         fiscal year 1995 to fiscal year 1996, its first-year TANF participation rate is
                                         estimated to be about 13 percent. Michigan’s caseload reduction over the
                                         same period is just under 12 percent, and Utah’s is just over 11 percent.
                                         Therefore, Michigan’s first-year TANF target will be about 13 percent, and
                                         Utah’s about 14 percent.

                                         Table 3.1 also shows that Michigan and Utah, the two states with a
                                         universal participation requirement, would easily make the all-families
                                         participation rate in the first year, even without the adjustment for the
                                         caseload decline. Massachusetts, which exempts a substantial portion of
                                         the caseload from participation requirements and is the only state of the
                                         three opting to exclude families with children under age 1 from the TANF
                                         work participation requirement, has a lower estimated work participation
                                         rate but would also meet the minimum 25-percent all-families participation
                                         rate in the first year. Since Massachusetts’ target rate is estimated to be
                                         13 percent, officials are confident about meeting this target. Because the


                                         27
                                           As of March 1997, HHS had not yet promulgated regulations telling states how to calculate caseload
                                         reductions for purposes of TANF participation rates. However, state program administrators are using
                                         the law and their own data to project what they think their reductions will be. According to the law,
                                         the minimum participation rate for a year is reduced by the number of percentage points equal to the
                                         number of percentage points by which the average monthly number of families that received
                                         assistance during the immediately preceding fiscal year is less than the number of families receiving
                                         assistance in fiscal year 1995. Therefore, the 1997 credit is equal to the percentage change between the
                                         1996 and 1995 average monthly caseloads.



                                         Page 42                              GAO/HEHS-97-80 Welfare Work Participation Requirements
                                       Chapter 3
                                       States Likely to Achieve Initial TANF
                                       All-Families Participation Rate but May Be
                                       Challenged to Meet Other Rates




                                       three states are experiencing continued caseload declines in fiscal year
                                       1997, their targets for fiscal year 1998 should also be lower than those
                                       specified in the law.


                                       The two-parent families participation rate under the new law is higher
States May Have                        than the two-parent rate under the JOBS program, both in terms of the
Problems Meeting the                   hours of participation required and the percentage of the two-parent
Two-Parent                             families required to participate. Though Massachusetts, Michigan, and
                                       Utah reported meeting the JOBS program’s two-parent participation rates in
Participation Rate                     1994 and 1995, many states failed to meet them.28 As shown in table 3.2,
                                       Michigan is unlikely to meet the initial two-parent TANF work participation
                                       rate of 75 percent for fiscal year 1997 without some program changes.
                                       Massachusetts was not able to provide us data to estimate a TANF
                                       two-parent family participation rate.

Table 3.2: Estimated FY 1997
Two-Parent Families TANF Target        Percent
Work Participation Rates and TANF                                                                                        Participation rate
Rates Achieved Under Waiver in Three                                       Estimated target rate with               achieved using TANF
States in September/October 1996       State                            credit for caseload reduction           definition of participation
                                       Massachusetts                                                      66                                   NA
                                       Michigan                                                           60                                   35
                                       Utah                                                               53                                   87
                                       Note: NA means data were not available.



                                       Michigan’s concern over meeting the two-parent families participation rate
                                       has led the state to develop an on-the-job training program specifically for
                                       this population. Of the three states we visited, Utah is the most likely to
                                       meet the two-parent rate in the first year. The state has a very small
                                       two-parent family caseload, approximately 110 cases, and has required this
                                       population to work in exchange for benefits since 1983. One parent is
                                       required to participate 40 hours per week and the other parent 20 hours.
                                       Also, Utah limits the length of time the benefit can be received to 6 months
                                       in any 12-month period. Utah officials estimate the state’s current work
                                       participation for two-parent families using the criteria established by the
                                       new law would be 87 percent. Consequently, Utah officials are not
                                       concerned about meeting their estimated target rate for two-parent
                                       families of 53 percent in the first year.


                                       28
                                        The JOBS participation rate target for AFDC-UP families was 40 percent in 1994 and 50 percent in
                                       1995. Forty-three states failed to make the rate in 1994, and 28 states failed to meet the 1995 rate.



                                       Page 43                              GAO/HEHS-97-80 Welfare Work Participation Requirements
                        Chapter 3
                        States Likely to Achieve Initial TANF
                        All-Families Participation Rate but May Be
                        Challenged to Meet Other Rates




                        Massachusetts plans to maintain its waiver provision requiring 20 hours a
                        week of work participation for its mandatory work participants, including
                        two-parent families, rather than the higher number of hours specified in
                        the new law. Consequently, Massachusetts officials are not as concerned
                        about their ability to meet the initial two-parent participation rates as are
                        Michigan officials. However, they are concerned about the future rate
                        increase to 90 percent and the fact that when their waiver authority
                        expires in 2005 they will be required not only to meet the minimum
                        participation rates but also the increased hours of participation specified
                        in the law.


                        Officials in the three states we visited are concerned about their ability to
States May Have         meet higher future participation rates established under the new law
Difficulty Meeting      because of the requirement that larger numbers or recipients work more
Future Participation    hours, the possibility of a future recession undermining employment
                        opportunities, and the unique employment problems in urban areas.
Rates                   Finally, there is concern that as those who are more employable get jobs
                        and move off welfare, the remaining caseload will be increasingly difficult
                        to employ and participation rates increasingly difficult to achieve.


Increases in Hours of   According to state officials, it may be easier for recipients to find part-time
Participation May Be    employment than full-time employment because employers may not want
Difficult to Achieve    to pay the fringe benefits associated with full-time employment. Initially,
                        states can count recipients engaged in employment for 20 hours per week;
                        however, as the required hours increase to 30 hours in the year 2000, the
                        officials said it may be more difficult for recipients to find employment for
                        at least this many hours. Moreover, in many states, especially those with
                        low benefit levels, working 30 hours or more is likely to make a family
                        ineligible for benefits. Once recipients have earned their way off the rolls,
                        they will not count toward the participation rate. In Utah, during
                        September and October 1996, only about 16 percent of the caseload
                        participated over 30 hours a week, whereas about 31 percent participated
                        over 20 hours in activities that would count toward the TANF participation
                        rate. In Michigan, approximately 24 percent of the caseload participated 30
                        hours per week compared with almost 33 percent participating 20 or more
                        hours per week in activities that meet the TANF participation requirements.
                        The concern may be mitigated to some degree by the fact that TANF limits
                        required work participation to 20 hours a week for single parents with a
                        child under the age of 6. Furthermore, since these three states did not
                        require more than 20 hours of participation under their waivers, the low



                        Page 44                         GAO/HEHS-97-80 Welfare Work Participation Requirements
                               Chapter 3
                               States Likely to Achieve Initial TANF
                               All-Families Participation Rate but May Be
                               Challenged to Meet Other Rates




                               levels of participation for more hours may not reflect what can be
                               achieved in the long run.


Changes in the                 Many observers believe that low unemployment rates have contributed to
Employment Outlook             the dramatic decline in welfare caseloads during the past several years. A
Could Affect States’ Ability   recent study of caseload declines concluded that most of the changes in
                               the AFDC single-parent caseload since 1994 are attributable to factors such
to Meet the TANF               as the unemployment rate and demographic trends, including the number
Participation Rates            of children under age 18 in a state.29 There are a number of factors beyond
                               the control of policymakers and program officials that could contribute to
                               changes in the caseload. Should the economy deteriorate in the future and
                               unemployment rates go up, states may not receive the target rate
                               reduction associated with a caseload drop and they will be trying to
                               achieve higher target participation rates under less favorable economic
                               conditions.


States With Welfare            Many argue that the urban poor on welfare tend to have significant
Populations Concentrated       barriers to employment. Frequently lacking in education and prior work
in Urban Areas May Have        history, they are uniquely unsuited to the jobs available, which
                               increasingly demand more skills. The estimated TANF work participation
Difficulty Meeting the         rate in Wayne County, Michigan, which includes Detroit, is 23 percent,
Participation Rates            approximately 19 percent lower than for the rest of Michigan.30
                               Furthermore, early results from Project Zero, a Michigan initiative to have
                               the entire caseload employed in demonstration sites, suggests that a site in
                               Detroit is experiencing greater difficulty getting participants employed
                               than are other Michigan sites.


Recipients Who Do Not          Officials in the three states expressed concern that recipients who do not
Find Jobs Tend to Have         find employment have multiple barriers and therefore are considered hard
Multiple Barriers to           to serve. In Utah, where all welfare recipients are required to participate,
                               approximately 30 percent of the caseload is described by the program
Employment                     director as being hard to serve. Studies of recipients in this group have
                               found that, in addition to being less likely to have prior work experience
                               and being more likely to have lower literacy levels, they have multiple
                               problems that make program participation difficult. The problems include

                               29
                                David J. Fein, Understanding Recent Declines in State AFDC Caseloads: An Analysis of Cross-State
                               Variation (Cambridge, Mass. : Abt Associates, Oct. 1996).
                               30
                                For October 1996, the estimated TANF participation rate for Wayne County was 23 percent compared
                               with 42 percent for the remaining Michigan counties and 33 percent for the entire state.



                               Page 45                            GAO/HEHS-97-80 Welfare Work Participation Requirements
Chapter 3
States Likely to Achieve Initial TANF
All-Families Participation Rate but May Be
Challenged to Meet Other Rates




mental health issues, such as depression, anxiety, and personality
disorders; domestic violence; substance abuse; behavior problems with
children; and legal problems. Since the new law allows states to exempt
20 percent of their caseload from the time limit, they may choose to
exempt these hard-to-serve individuals; however, they will be included in
the denominator of the participation rate calculation.

While Utah’s waiver program is the only one of the three state programs
we reviewed that allows participation in mental health or substance abuse
treatment programs to meet the work participation requirement, Michigan
will temporarily defer from work participation a recipient who is receiving
such treatment. Officials reported services were insufficient to meet client
need in this area. Even if clients cannot participate because they need, but
do not receive, such services, they will remain in the denominator of the
participation rate calculation, potentially lowering a state’s participation
rate.




Page 46                         GAO/HEHS-97-80 Welfare Work Participation Requirements
Chapter 4

Conclusions and HHS’ and States’
Comments

              One of the goals of the Personal Responsibility and Work Opportunity
              Reconciliation Act of 1996 is to end the dependence of needy parents on
              government benefits by making welfare a transitional program that moves
              recipients into employment and off the rolls. To this end, the act
              encourages states to increase the proportion of those receiving cash
              assistance in work and work-related activities, ultimately requiring
              recipients to work as a condition of benefit receipt and limiting the total
              time of benefit receipt. The three states we reviewed were attempting to
              accomplish this goal under waiver and, although these states were taking
              different approaches, they all appeared to have been able to increase
              participation. While we cannot conclude whether any of the specific policy
              changes were linked to changes in participation, we did observe some
              common elements across programs. For example, although these states
              differed on their participation requirements, they used similar strategies to
              get recipients to meet the requirements. The sanction of benefit
              termination as a way to motivate client participation was found in all three
              programs we reviewed and in 19 other states with waivers to increase
              work participation. Officials in the three states viewed sanctions as a
              powerful tool to increase participation rather than as a punishment for
              noncompliant behavior.

              While the new law limits the types of activities that count as work
              participation, the experience of states, such as Utah and Michigan, that are
              trying to engage the entire caseload in self-sufficiency activities has been
              that some portion of the caseload requires more than job search and
              assistance with child care and transportation to be able to engage in a
              strictly defined work-related activity. To the extent that states move the
              more job-ready recipients into employment, they will be challenged to
              provide the services necessary to help clients with multiple barriers move
              into employment. Since these are the recipients who would have been
              exempted or deferred from participation in the past, states have limited
              experience in what is required to enable them to become employed, earn
              sufficient wages, and sustain employment in order to exit welfare
              permanently.

              The experience of the three states we reviewed demonstrates that, with
              the programs they had in place and with credit for caseload reductions
              since fiscal year 1995, the initial all-families participation rate should be
              attainable. However, these states are unsure of their capacity to reach
              higher rates in the future, in part because they believe that their success in
              moving families off the rolls will make it increasingly difficult to meet
              future participation rates. As states assist recipients who are employable



              Page 47                     GAO/HEHS-97-80 Welfare Work Participation Requirements
                    Chapter 4
                    Conclusions and HHS’ and States’
                    Comments




                    into jobs and off the rolls, they are concerned that they will be left with
                    recipients who are essentially unemployable or at least in need of multiple
                    supportive services. On the other hand, the large reductions in caseload
                    that appear to be continuing not only will lower states’ target participation
                    rates, but also will result in more money per recipient under the block
                    grant, providing an opportunity for states to develop the range of services
                    required to help the least job-ready make the transition to employment.

                    If a state chooses to provide the services necessary to enable recipients
                    with multiple employment barriers to participate in an activity that will
                    ultimately lead to self-sufficiency, the particular activity may not meet the
                    strict definition of work participation under the new law. Consequently,
                    even though the state may actually assist many of these recipients in
                    getting jobs and leaving the rolls, it may not appear to be successful in
                    meeting the participation requirements of the new law during the time it is
                    preparing the least employable to make the transition from welfare to
                    work. To ensure that participation rates are promoting the desired
                    program outcome, they need to be carefully studied and monitored in the
                    future.


                    We obtained comments on a draft of this report from our three case study
Comments From HHS   states: Massachusetts, Michigan, and Utah. The states provided technical
and States          clarifications about their programs and data interpretation. We
                    incorporated their comments in the report as appropriate. We requested,
                    but did not receive, comments from HHS.




                    Page 48                        GAO/HEHS-97-80 Welfare Work Participation Requirements
Page 49   GAO/HEHS-97-80 Welfare Work Participation Requirements
Appendix I

Selected Characteristics of Welfare Reform
Programs in States With Waivers Changing
Work Requirements
Table I.1: Age of Youngest Child
Exemptions Cited in Waivers for States   State            Parent exempt from participating if age of youngest child is...
Changing Work Requirements               Arizona          Under 1 year old
                                         Colorado         No change requested in waiver
                                         Connecticut      Under 1 year old
                                         Delaware         Under 13 weeks old
                                         Florida          Under 6 months old
                                         Georgia          Under 5 years old
                                         Hawaii           Under 6 months old
                                         Illinois         Under 5 years old
                                         Indiana          Under 12 weeks old
                                         Iowa             Under 3 months old
                                         Louisiana        No change requested in waiver
                                         Maryland         Under 12 weeks old
                                         Massachusetts    Under mandatory school-age, usually 6 years old, if child is
                                                          included in the assistance unit, under 3 months old if the child was
                                                          conceived while the parent was receiving AFDC
                                         Michigan         Under 12 weeks olda
                                         Mississippi      No change requested in waiver
                                         Missouri         No change requested in waiver
                                         Montana          Under 1 year old
                                         Nebraska         Under 12 weeks old
                                         New Hampshire    Under 6 years old if child is included in the assistance unit, under
                                                          3 months old if the child was conceived while the parent was
                                                          receiving AFDC
                                         North Carolina   Under 5 years old
                                         North Dakota     Under 3 years old or at the state option, less than 3 but not less
                                                          than 1 year old
                                         Ohio             Under 6 years old
                                         Oklahoma         No change requested in waiver
                                         Oregon           Under 3 months old
                                         South Carolina   Under 1 year old; no exemptions for parents under 25 years old
                                                          who have not completed high school
                                         South Dakota     No change requested in waiver
                                         Texas            Under 5 years old; after September 1997, exemption changes to
                                                          children under 4 years old
                                         Utah             No exemptions
                                         Vermont          Under 6 months old
                                         Virginia         Under 18 months old; temporary 6-week extension granted for
                                                          children conceived while the parent was receiving AFDC
                                         West Virginia    No change requested in waiver
                                                                                                                    (continued)




                                         Page 50                   GAO/HEHS-97-80 Welfare Work Participation Requirements
                                         Appendix I
                                         Selected Characteristics of Welfare Reform
                                         Programs in States With Waivers Changing
                                         Work Requirements




                                         State                    Parent exempt from participating if age of youngest child is...
                                         Wisconsin                Under 1 year old for one parent
                                         Wyoming                  Under 1 year old; 3-month exemption for children conceived while
                                                                  the parent was receiving AFDC

                                         a
                                          Originally, under Michigan’s waiver, all exemptions were eliminated; however, the state legislaure
                                         made single parents with children under the age of 12 weeks exempt from the work requirement.

                                         Source: The terms and conditions in the state waivers, HHS.



Table I.2: Expanded Activities Meeting
the Participation Requirement in                                             Parenting or                      Drug and         Mental
States Changing Work Requirements                          Life skills       family skills Family              alcohol          health
                                         State             training          training      counseling          counseling       counseling
                                         Delaware                            X
                                         Florida                             X
                                         Georgia                             X
                                         Iowa                                X
                                         Nebraska                            X
                                         North Dakota                        X                X                X
                                         Oregon                                                                X                X
                                         South Carolina                      X                                 X
                                         Texas                               X
                                         Utah                                X                X                X                X
                                         Vermont                             X
                                         Wisconsin         X                 X
                                         Note: Other states that changed their work requirements did not count these activities, if
                                         provided, as meeting the participation requirements under their waivers.

                                         Source: The terms and conditions in the state waivers, HHS.




                                         Page 51                             GAO/HEHS-97-80 Welfare Work Participation Requirements
                                         Appendix I
                                         Selected Characteristics of Welfare Reform
                                         Programs in States With Waivers Changing
                                         Work Requirements




Table I.3: Changes in Age of Youngest
Child Exemption and Work-Related                              Changed age
Activities Cited in Waivers for States                        of youngest         Extended job         Subsidized   Community
Changing Work Requirements                                    child               search               work         service
                                         State                exemption           component            component    component
                                         Arizona              X                                        X
                                         Colorado
                                         Connecticut          X                   X                                 X
                                         Delaware             X                   X
                                         Florida              X                                        X
                                         Georgia              X                   X
                                         Hawaii               X                   X
                                         Illinois             X                   X                    X
                                         Indiana              X                   X                    X            X
                                         Iowa                 X                   X
                                         Louisiana
                                         Maryland             X                   X
                                         Massachusetts        X                   X                    X            X
                                         Michigan             X                   X
                                         Mississippi                                                   X
                                         Missouri                                                                   X
                                         Montana              X                                                     X
                                         Nebraska             X                   X
                                         New Hampshire        X                   X                    X            X
                                         North Carolina       X                   X                    X
                                         North Dakota         X                   X
                                         Ohio                 X                                        X
                                         Oklahoma
                                         Oregon               X                   X                    X
                                         South Carolina       X                   X
                                         South Dakota                                                               X
                                         Texas                X                   X                                 X
                                         Utah                 X
                                         Vermont              X                   X                    X            X
                                         Virginia             X                   X                    X            X
                                         West Virginia
                                         Wisconsin            X                                        X            X
                                         Wyoming              X
                                         Source: The terms and conditions in the state waivers, HHS.




                                         Page 52                            GAO/HEHS-97-80 Welfare Work Participation Requirements
                                         Appendix I
                                         Selected Characteristics of Welfare Reform
                                         Programs in States With Waivers Changing
                                         Work Requirements




Table I.4: Diversions Cited in Waivers
for States Changing Work                 State                 Diversion amount available              Waiting period to reapply
Requirements                             Maryland              Not to exceed 3 times the monthly Not eligible for the number of
                                                               benefit amount unless determined months covered by the one-time
                                                               to be warranted by the local      payment
                                                               department, but in no case to
                                                               exceed 12 months’ AFDC benefit
                                                               amount
                                         Montana               Not to exceed 3 times the monthly Ineligible to receive 2 months of
                                                               benefit amount                    future AFDC benefits for each
                                                                                                 month’s AFDC benefit received as
                                                                                                 part of the one-time payment
                                         North Carolina        Not to exceed 3 times the monthly Required to repay these benefits
                                                               benefit amount                    following procedures used for
                                                                                                 AFDC overpayments
                                         Texas                 $1,000 regardless of family size        12 months
                                         Utah                  Not to exceed 3 times the monthly 3 months; eligible for prorated
                                                               benefit amount                    AFDC benefits if reapplies before
                                                                                                 3-month period
                                         Virginia              Not to exceed 120 days’ benefit         160 days
                                                               amount
                                         Note: Other states changing work requirements did not cite diversions in their waivers.

                                         Source: The terms and conditions in the state waivers, HHS.



Table I.5: Changes to Sanctions and
Incentives Cited in Waivers for States                                      Changed                                            Allow
Changing Work Requirements                                                  earned                            Changed          individual
                                                           Full-family      income           Changed          vehicle          development
                                         State             sanctionsa       disregards       asset limit      value limit      accounts
                                         Arizona                            X                X                                 X
                                         Colorado                           X                X                X
                                         Connecticut       X                X                X                X
                                         Delaware          X                                 X                X                X
                                         Florida                            X                X                X
                                         Georgia                            X                                 X
                                         Hawaii                             X                X                X
                                         Illinois          X                X                X
                                         Indiana           X                                 X
                                         Iowa              X                X                X                X                X
                                         Louisiana         X
                                         Maryland          X                X                X                X
                                         Massachusetts X                    X                X                X                X
                                         Michigan          X                X                                 X
                                         Mississippi       X                X                X                                 X
                                                                                                                                   (continued)


                                         Page 53                             GAO/HEHS-97-80 Welfare Work Participation Requirements
Appendix I
Selected Characteristics of Welfare Reform
Programs in States With Waivers Changing
Work Requirements




                                     Changed                                              Allow
                                     earned                             Changed           individual
                   Full-family       income           Changed           vehicle           development
State              sanctionsa        disregards       asset limit       value limit       accounts
Missouri                             X                X                 X
Montana                              X                X                 X
Nebraska           X                 X                X                 X
New                X                 X                X                 X
Hampshire
North Carolina                       X                X                 X
North Dakota       X                 X                X                 X
Ohio               X                 X                                  X
Oklahoma                                                                X
Oregon             X                 X                X                 X                 X
South Carolina X                     X                X                 X                 X
South Dakota       X                 X                X                 X
Texas                                X                X                 X                 X
Utah               X                 X                X                 X
Vermont            X                 X                X                 X
Virginia           X                 X                X                 X                 X
West Virginia      X
Wisconsin          X                 X                X                 X                 X
Wyoming                                               X

a
  Table shows states with full-family sanctions for failure to comply with work requirements. Four
other states, Idaho, Kansas, Minnesota, and Tennessee, which did not change work requirements
with waivers, did initiate full-family sanctions for failure to comply with existing work requirements.
Full-family sanctions can be applied for other reasons, for example, failure to comply with teen
living arrangement requirements. For a detailed discussion see Welfare Reform: States’ Early
Experiences With Benefit Termination (GAO/HEHS-97-74, May 15, 1997).

Source: The terms and conditions in the state waivers, HHS.




Page 54                              GAO/HEHS-97-80 Welfare Work Participation Requirements
                                       Appendix I
                                       Selected Characteristics of Welfare Reform
                                       Programs in States With Waivers Changing
                                       Work Requirements




Table I.6: Changes to Transitional
Child Care and Transitional Medicaid                           Changed 3 of last 6 months            Transitional benefits extended
Requirements for States Changing                              participation requirement for             after AFDC case closed
Work Requirements                                                  transitional benefits             because of increased earnings
                                       State                Child care          Medicaid             Child care         Medicaid
                                       Arizona                                                       24 months          24 months
                                       Colorado                                 Eliminated
                                       Connecticut          Eliminated          Eliminated           Extended until  24 months
                                                                                                     family’s income
                                                                                                     exceeds 75% of
                                                                                                     state median
                                                                                                     income
                                       Delaware                                                      24 months          24 months
                                       Florida                                                       24 months
                                       Illinois             Eliminated                               24 months          24 months
                                       Iowa                                                          24 months
                                       Massachusetts        Eliminated          Eliminated
                                       Mississippi          Eliminated          Eliminated
                                       Montana              Changed to 1        Eliminated
                                                            month
                                       Nebraska                                                      24 months          24 months
                                       New Hampshire                            Eliminated
                                       Ohio                                                          18 months
                                       South Carolina       Eliminated          Eliminated           24 months          24 months
                                       Texas                                    Eliminated                              18 months
                                       Utah                 Eliminated          Eliminated           Extended until  24 months
                                                                                                     family income
                                                                                                     exceeds sliding
                                                                                                     fee scale
                                       Vermont                                                                          36 months as
                                                                                                                        long as income
                                                                                                                        does not
                                                                                                                        exceed 185% of
                                                                                                                        poverty line
                                       Virginia                                 Eliminated           24 months          24 months
                                       a
                                        Other states that changed their work requirements through waiver did not change their
                                       transitional benefits.

                                       Source: The terms and conditions in the state waivers, HHS.




                                       Page 55                            GAO/HEHS-97-80 Welfare Work Participation Requirements
Appendix II

GAO Contacts and Staff Acknowledgments


                  David P. Bixler, Assistant Director, (202) 512-7201
GAO Contacts      Margaret Boeckmann, Senior Social Science Analyst, (202) 512-6992


                  In addition to those named above, the following individuals also made
Staff             important contributions to this report: Ellen Soltow, Evaluator, conducted
Acknowledgments   fieldwork in Massachusetts, Michigan, and Utah and contributed to the
                  data analysis and report writing; Karen Brown, Evaluator, conducted the
                  analysis of the terms and conditions of state waivers; and Rachel
                  Rosenthal, Intern, assisted in the early design phase of the assignment.




                  Page 56                   GAO/HEHS-97-80 Welfare Work Participation Requirements
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Nightingale, Demetra Smith, and Robert H. Haveman, eds. The Work
Alternative: Welfare Reform and the Realities of the Job Market
(Washington, D.C.: The Urban Institute Press, 1995).

Olson, Krista, and LaDonna Pavetti. Personal and Family Challenges to the
Successful Transition from Welfare To Work (Washington, D.C.: Urban
Institute report prepared for HHS, May 1996).

Pavetti, LaDonna, and Amy-Ellen Duke. Increasing Participation in Work
and Work-Related Activities: Lessons From Five Welfare Reform
Demonstration Projects (Washington, D.C.: Urban Institute report
prepared for HHS, Sept. 1995).

Pavetti, LaDonna, Krista Olson, Nancy Pindus, and others. Designing
Welfare-to-Work Programs for Families Facing Personal or Family
Challenges: Lessons From the Field (Washington, D.C.: Urban Institute
Report prepared for HHS, Dec. 1996).

Wilson, William Julius. When Work Disappears: The World of the New
Urban Poor (New York: Alfred A. Knopf, 1996).




Page 58                   GAO/HEHS-97-80 Welfare Work Participation Requirements
Bibliography




Page 59        GAO/HEHS-97-80 Welfare Work Participation Requirements
Related GAO Products


              Welfare Reform: States’ Early Experiences With Benefit Termination
              (GAO/HEHS-97-74, May 15, 1997).

              Welfare Waivers Implementation: States Work to Change Welfare Culture,
              Community Involvement, and Service Delivery (GAO/HEHS-96-105, July 2,
              1996).

              Employment Training: Successful Projects Share Common Strategy
              (GAO/HEHS-96-108, May 7, 1996).

              Welfare to Work: Approaches That Help Teenage Mothers Complete High
              School (GAO/HEHS/PEMD-95-202, Sept. 29, 1995).

              Welfare to Work: Child Care Assistance Limited; Welfare Reform May
              Expand Needs (GAO/HEHS-95-220, Sept. 21, 1995).

              Welfare to Work: State Programs Have Tested Some of the Proposed
              Reforms (GAO/PEMD-95-26, July 14, 1995).

              Welfare to Work: Most AFDC Training Programs Not Emphasizing Job
              Placement (GAO/HEHS-95-113, May 19, 1995).

              Welfare to Work: Participants’ Characteristics and Services Provided in
              JOBS (GAO/HEHS-95-93, May 2, 1995).


              Welfare to Work: Measuring Outcomes for JOBS Participants (GAO/HEHS-95-86,
              Apr. 17, 1995).

              Welfare to Work: Current AFDC Program Not Sufficiently Focused on
              Employment (GAO/HEHS-95-28, Dec. 19, 1994).

              Child Care: Current System Could Undermine Goals of Welfare Reform
              (GAO/HEHS-94-238, Sept. 20, 1994).

              Families on Welfare: Sharp Rise in Never-Married Women Reflects Societal
              Trend (GAO/HEHS-94-92, May 31, 1994).

              Families on Welfare: Teenage Mothers Least Likely to Become
              Self-Sufficient (GAO/HEHS-94-115, May 31, 1994).

              Families on Welfare: Focus on Teenage Mothers Could Enhance Welfare
              Reform Efforts (GAO/HEHS-94-112, May 31, 1994).



(106609)      Page 60                   GAO/HEHS-97-80 Welfare Work Participation Requirements
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