Welfare Reform: States' Implementation Progress and Information on Former Recipients

Published by the Government Accountability Office on 1999-05-27.

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

                          United States General Accounting Office

GAO                       Testimony
                          Before the Subcommittee on Human Resources,
                          Committee on Ways and Means, House of Representatives

For Release on Delivery
Expected at 10:30 a.m.
Thursday, May 27, 1999
                          WELFARE REFORM

                          States’ Implementation
                          Progress and Information
                          on Former Recipients
                          Statement of Cynthia M. Fagnoni, Director
                          Education, Workforce, and Income Security Issues
                          Health, Education, and Human Services Division

Welfare Reform: States’ Implementation
Progress and Information on Former
               Madam Chair and Members of the Subcommittee:

               Thank you for inviting me here today to discuss our work on state
               implementation of welfare reform and information on families who have
               left welfare. The Personal Responsibility and Work Opportunity
               Reconciliation Act of 1996 (PRWORA) (P.L. 104-193) significantly changed
               federal welfare policy for low-income families with children, building upon
               and expanding state-level reforms. The act ended the federal entitlement
               to assistance for eligible needy families with children under Aid to
               Families With Dependent Children (AFDC) and created the Temporary
               Assistance for Needy Families (TANF) block grant, designed to help
               low-income families reduce their dependence on welfare and move toward
               economic independence. Under TANF, states have much greater flexibility
               than before to design and implement programs that meet state and local
               needs. At the same time, states must impose federal work and other
               program requirements on most adults receiving aid and enforce a lifetime
               limit of 5 years, or less at state option, on the length of time federal
               assistance is received.

               These recent federal and state reforms represent significant departures
               from previous policies for helping needy families with children. To better
               understand states’ program changes and the status of families who have
               left welfare, your Subcommittee, in concert with the Senate Finance
               Committee, asked us to review and report on state implementation of
               welfare reform and information on families who have left welfare. To
               respond to your requests, in June 1998 we issued a report on
               implementation of welfare reform in seven states,1 and today the
               Subcommittee has released a second report that reviews and summarizes
               state-sponsored studies of families who left the welfare rolls during or
               after 1995.2 Today I will summarize these reports’ findings, discussing
               (1) states’ implementation of welfare reform, (2) what state-sponsored
               studies tell us about the status of children and families leaving welfare,3
               and (3) key issues involved in assessing the success of welfare reform.

               In summary, our work shows that states are transforming the nation’s
               welfare system into a work-focused, temporary assistance program for

                See Welfare Reform: States Are Restructuring Programs to Reduce Welfare Dependence
               (GAO/HEHS-98-109, June 18, 1998). States reviewed in depth were California, Connecticut, Louisiana,
               Maryland, Oregon, Texas, and Wisconsin.
                See Welfare Reform: Information on Former Recipients’ Status (GAO/HEHS-99-48, Apr. 28, 1999).
                For the purposes of this report, the term “welfare” will refer to cash assistance received under AFDC
               or TANF.

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                 needy families. Many states are refocusing their programs on moving
                 people into employment rather than signing them up for monthly cash
                 assistance. To better support this new work focus, many states are
                 changing how their offices and workers do business, expanding the roles
                 of welfare workers to include helping clients address and solve problems
                 that interfere with employment. These changes, made in times of strong
                 economic growth, have been accompanied by a 45-percent decline in the
                 number of families receiving welfare—from a peak of about 5 million
                 families in 1994 to fewer than 3 million families as of December 1998.

                 Caseload reductions serve as only one indication of progress in meeting
                 the goals of welfare reform, however. An essential question is: What do
                 these program changes and caseload reductions mean for needy families
                 with children? Early indications from our review of state-sponsored
                 studies in seven states conducted at various periods from 1995 to 1998 are
                 that most of the adults who left welfare were employed at some time after
                 leaving the rolls, often at low-paying jobs. There was little evidence of
                 increased incidence of homelessness or of children entering foster care
                 after families left welfare, in the few cases in which these studies
                 addressed these issues. However, much remains unknown about the
                 economic status and well-being of most former welfare families

                 Many efforts are under way to provide more information on the families
                 who have left welfare and the effects of welfare reform. As this
                 information becomes available, it will permit a more comprehensive
                 assessment of welfare reform, which will need to address the following
                 key issues:

             •   How do low-wage earners and their families fare after leaving welfare for
             •   What is happening to eligible families seeking welfare who are provided
                 other forms of aid, such as job search assistance, instead of welfare or
                 other aid?
             •   How effectively are states working with hard-to-serve welfare recipients
                 who remain on the TANF rolls?
             •   How would an economic downturn affect states’ welfare reform

                 PRWORA specified that the goals of TANF include providing assistance to
Background       needy families so that children may be cared for in their own homes or in

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                      the homes of relatives; ending the dependence of needy parents on
                      government benefits by promoting job preparation, work, and marriage;
                      preventing and reducing the incidence of out-of-wedlock pregnancies; and
                      encouraging the formation and maintenance of two-parent families. In
                      fiscal year 1998, states expended or obligated $12.2 billion of the
                      $14.8 billion in federal funds available for TANF.4 In addition, states spent
                      $11 billion of their own funds on needy families with children, meeting the
                      requirement to maintain a specified minimum level of their own spending
                      to receive federal TANF funds. The Department of Health and Human
                      Services (HHS) oversees TANF at the federal level.

                      Before PRWORA, many states received waivers from federal rules under the
                      AFDC program to allow them to strengthen work requirements for adults,
                      impose time limits on the receipt of aid, and change other aspects of their
                      programs. As a result, at the time PRWORA was enacted, states were at
                      different stages of implementing their reform efforts. State programs
                      continue to evolve at different paces. The great extent of state
                      experimentation and sweeping changes at the federal level have generated
                      interest among program administrators, state and local policymakers,
                      welfare advocates, and the public in general about state and local welfare
                      programs and the status of families no longer receiving cash assistance
                      under AFDC or TANF.

                      States’ have made progress in restructuring their programs to emphasize
States Are Changing   work and to reduce families’ dependence on welfare. State efforts include
Their Welfare         requiring more welfare recipients to look for work or participate in work
Programs to           activities; providing other forms of aid, such as child care and
                      transportation, to keep families from needing monthly cash assistance;
Emphasize Work        and focusing more on helping families solve problems that interfere with
                      employment. Although caseloads have declined, it is not yet clear to what
                      extent states’ program changes, rather than the strong economy, have
                      contributed to the decline.

                      Our work and other studies show that many states and localities are
                      transforming their welfare offices into job placement centers. The seven
                      states we reviewed in depth generally had increased the percentage of
                      their clients required to participate in work-related activities from an
                      average of 44 percent in 1994 to 65 percent in the early months of TANF

                       The Department of Health and Human Services (HHS) awarded states a total of $16.6 billion under
                      TANF. After some states transferred some of their TANF funds to the Child Care and Development
                      Fund or the Social Services Block Grant, as allowed under TANF, $14.8 billion remained available for

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                           implementation in 1997. In some instances, applicants are now expected to
                           engage in job search activities as soon as they apply for assistance. To
                           emphasize the importance of work, five of the seven states have more
                           strongly enforced work requirements by adopting provisions for
                           terminating assistance to the entire family for noncompliance with
                           program requirements. In addition, we recently reported that 17 states are
                           drawing upon their existing workforce development systems to help
                           welfare clients get jobs, often through the use of the Department of
                           Labor’s one-stop career center system.5

Many States Are Using      Requiring applicants to search for work as soon as or before they apply for
New Strategies to Divert   aid is part of a major new strategy many states are using to divert some
Families From Welfare      applicants from monthly cash assistance. With the end of the entitlement
                           to cash aid and the increased flexibility now granted states under TANF,
                           states are sometimes providing other forms of assistance—such as
                           one-time, lump-sum payments; support services, such as child care and
                           transportation; and assistance with job searches—in an attempt to keep
                           families from needing monthly cash assistance. One-time cash payments
                           can help families to catch up on rent, repair their car, or get through a
                           medical emergency, allowing adults within the families to be more able to
                           obtain or retain a job. Support services such as child care and
                           transportation may also enable families to maintain their self-sufficiency
                           without going on the welfare rolls. A study sponsored by HHS showed that,
                           as of August 1998, 31 states had reported using at least one “diversion”
                           strategy in at least part of the state.6 A 1999 Rockefeller Institute review of
                           20 states’ welfare programs found that states and localities have developed
                           a range of diversion programs.7 For example, a diversion program in Texas
                           allows caseworkers to provide families with employment counseling or
                           refer them to public or private agencies for a variety of services, while
                           Arizona’s diversion program offers families emergency shelter, rent or
                           mortgage assistance, or assistance with utility payments.

                            See Welfare Reform: States’ Experiences in Providing Employment Assistance to TANF Clients
                           (GAO/HEHS-99-22, Feb. 26, 1999).
                            See Kathleen Maloy and others, A Description and Assessment of State Approaches to Diversion
                           Programs and Activities Under Welfare Reform (Washington, D.C.: George Washington University,
                           Aug. 1998) and Diversion as a Work-Oriented Welfare Reform Strategy and Its Effect on Access to
                           Medicaid: An Examination of the Experiences of Five Local Communities (Washington, D.C.: George
                           Washington University, Mar. 1999).
                            See Richard P. Nathan and Thomas L. Gais, Implementing the Personal Responsibility Act of 1996: A
                           First Look (Albany, N.Y.: Federalism Research Group, The Nelson A. Rockefeller Institute of
                           Government, 1999).

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                          Along with this new emphasis on diverting families from receiving
                          monthly cash assistance comes concern among some policymakers,
                          program administrators, and others that families in need of and eligible for
                          Medicaid and food stamps may not be receiving these benefits. To ensure
                          continued Medicaid coverage for low-income families, PRWORA generally
                          preserves the Medicaid entitlement, setting eligibility standards at the AFDC
                          levels in effect on July 16, 1996.8 Moreover, many families who do not meet
                          state-defined eligibility criteria for TANF can still be eligible for food
                          stamps. We have ongoing work for Representatives Levin and Coyne
                          addressing Medicaid and food stamp issues that we will be reporting on
                          later this year.

States Are Providing      As many welfare offices have increased their emphasis on work activities,
Supportive Services to    welfare offices and workers are also focusing more on helping clients
Families to Decrease      address and solve problems that interfere with employment. The seven
                          states we visited used some of the additional budgetary resources
Welfare Dependence        available under TANF9 to provide services to help families address barriers
                          to employment, including lack of child care,10 lack of transportation,11 and
                          more complex mental and physical health problems. States are also
                          continuing to provide services to families that have left the welfare rolls as
                          a result of employment, including, in some cases, providing case
                          management services to help ensure that families can deal with problems
                          that might put parents’ jobs at risk. In addition, some states are providing
                          services to low-income working families not receiving cash.

States Are Anticipating   As states require larger percentages of their welfare caseloads to
Difficulty in Serving     participate in work-related activities—including some recipients who were
Families Still on the     previously exempted because of a determination of physical or mental
                          disability—and as the most readily employable recipients leave welfare for
Welfare Rolls             employment, states are concerned that they will be left with a more
                          difficult-to-serve population. Finding ways to involve these recipients in

                           For more information, see Medicaid: Early Implications of Welfare Reform for Beneficiaries and
                          States (GAO/HEHS-98-62, Feb. 24, 1998).
                           For more information, see Welfare Reform: Early Fiscal Effects of the TANF Block Grant
                          (GAO/HEHS-98-137, Aug. 18, 1998).
                           For more information on welfare reform and child care, see Welfare Reform: State Efforts to Expand
                          Child Care Programs (GAO/HEHS-98-27, Jan. 13, 1998).
                           See Welfare Reform: Transportation’s Role in Moving From Welfare to Work (GAO/RCED-98-161,
                          May 29, 1999) and Welfare Reform: Implementing DOT’s Access to Jobs Program (GAO/RCED-99-36,
                          Dec. 8, 1998).

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                          work activities was one of the most challenging and widespread
                          implementation issues cited in the seven states we visited.

                          Studies of these hard-to-serve recipients have found that, in addition to
                          being less likely to have prior work experience and more likely to have
                          lower literacy levels, they tend to have multiple problems that make
                          participation in work-related activities more difficult. These problems
                          include physical and mental health issues such as depression, anxiety,
                          personality disorders, substance abuse, and domestic violence. To move
                          these recipients toward economic self-sufficiency, states have sought to
                          enhance their capacity to provide mental and physical health services. For
                          example, in our June 1998 report, we noted that Oregon officials had
                          estimated that about 50 percent of the state’s welfare caseload requires
                          drug or alcohol treatment services. Oregon introduced mental health and
                          drug and alcohol services by integrating them into some of their training
                          classes for welfare recipients and by placing counselors on-site at welfare

Welfare Caseloads Have    States’ implementation of more work-focused programs, undertaken under
Declined, but No          conditions of strong economic growth, has been accompanied by a
Consensus Exists on the   45-percent decline in the number of families receiving welfare—from a
                          high of about 5 million families in 1994 to 2.7 million families as of
Cause of the Decline      December 1998. A large part of the reduction occurred after enactment of
                          federal reform in August 1996: the national caseload declined 32 percent
                          between January 1997 and December 1998 alone. Thirty-five states had
                          caseload reductions of 25 percent or more during that same time period.
                          While economic growth and state welfare reforms have been cited as key
                          factors to explain nationwide caseload declines, there is no consensus
                          about the extent to which each factor has contributed to these declines. In
                          any case, it is important to view caseload reductions as only one measure
                          of progress in meeting the goals of welfare reform. As stated, the goals of
                          PRWORA include ending the dependence of needy parents on government
                          benefits by promoting job preparation, work, and marriage; encouraging
                          two-parent families; and helping families care for their children in their
                          own or relatives’ homes. As a result, outcomes for families in the areas of
                          economic status, family composition, and family and child well-being need
                          to be assessed.

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                        There are no federal requirements for states to report on the status of
Several Studies Show    former welfare recipients. As a result, the only systematic data currently
Most Adults in Former   available on families who have left welfare come from research efforts
Welfare Families Were   initiated by states. We identified a total of 18 state-conducted or
                        -sponsored studies in 17 states—2 studies in Wisconsin and 1 in each of
Employed at Some        the other 16 states—that reported on the status of families who left
Time After Leaving      welfare in 1995 or later. (See app. I for a list of the studies.) These state
                        studies differed in important ways, such as when they were conducted, the
Welfare; Little Is      categories of families tracked, the length of time families were tracked,
Known About Family      and the extent to which the families for whom data were available were
Well-Being              representative of all families in the population from which the sample was

                        Taking these factors into account, we determined that only 8 of the 18
                        tracking studies, covering seven states, had sufficient data on a sample of
                        families to conclude that the sample represented the population from
                        which it was taken.12 These states are Indiana, Maryland, Oklahoma, South
                        Carolina, Tennessee, Washington, and Wisconsin. The eight studies from
                        these states had data on at least 70 percent of the sample of families from
                        the population of interest in the state or included a nonresponse analysis
                        that showed no important differences between the respondents and the
                        nonrespondents. We estimated that these seven states accounted for about
                        8 percent of the families who left welfare nationwide between October
                        1993 and June 1997. (See app. II for more information on the seven states’

                        Because the seven states’ studies differ in key ways, including time periods
                        covered and categories of families studied, the results are not completely
                        comparable. However, the studies provide information on the status of
                        families who had left welfare in these states at the time of the studies and,
                        because certain results are consistent across the studies, suggest a pattern
                        of what is happening to such families.

                          While the Iowa study had an 85-percent response rate, results could be generalized only to families
                        assigned to an alternative assistance program for AFDC recipients who did not comply with program
                        rules and for some who volunteered to be in the program, and not to families leaving welfare for other
                        reasons. None of the 18 studies were able to locate all families included in the samples to be tracked.
                        The nonresponse rates ranged from 15 percent to 88 percent for the studies using surveys; for the two
                        studies using administrative data only, information about 8 percent and 18 percent of the families
                        being tracked could not be found in the data being used.

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Adults Had Employment               Seven of the state studies reported that most of the adults in families
Rates of 61 Percent to 87           remaining off the welfare rolls were employed at some time after leaving
Percent, but Little Is              welfare. As shown in table 1, employment rates ranged from 61 percent to
                                    87 percent for adults in these families. However, these employment rates
Known About Household               were measured in different ways. Studies measuring employment at the
Income                              time of follow-up reported employment rates from 61 percent to
                                    71 percent. Studies measuring whether an adult in a family had ever been
                                    employed since leaving welfare reported employment rates from
                                    63 percent to 87 percent. These employment rates generally exclude
                                    families who returned to welfare, which can be a substantial portion of the
                                    families who leave welfare.13 The percentages of families who initially left
                                    welfare and then returned to the rolls were significant, ranging from
                                    19 percent after 3 months in Maryland to 30 percent after 15 months in
                                    Wisconsin. The issue of families’ needing to return to welfare will become
                                    more important as increasing numbers of recipients reach their time limit
                                    on aid, since returning to the rolls will no longer be an option for them.

Table 1: Employment and Earnings
Data From Studies in Seven States                                                      Ever
                                                                                  employed                    Estimated
                                    State and period           Employed at            since                     average      Estimated
                                    during which                     time of        leaving   Average          earnings        average
                                    families studied              follow-up         welfare    hourly               per       earnings
                                    left welfarea              (percentage)    (percentage) wage rateb          quarterc      per year
                                    Indiana (1995-96)d                 64.3           84.3          $6.34         $2,637       $10,548
                                    Maryland (1996-97)                                63.0f               e
                                                                                                                   2,384f         9,536
                                    (1996-97)                          64.5                          6.51          2,877        11,508
                                    South Carolina
                                    (1997)                             61.8           85.6           6.45          3,019        12,076
                                                           g                               e
                                    Tennessee (1997)                   61.0                          5.67          2,727        10,908
                                    Washington (1998)                  71.0           87.0           8.09          3,786        15,144
                                    (1995-96)h                             e
                                                                                      82.1                e
                                                                                                                   2,378i         9,512
                                                       j                                                                 i
                                    Wisconsin (1998)                   62.0           83.0           7.42          3,473        13,892

                                                                                                              (Table notes on next page)

                                     Removing families who return to welfare from the employment rate calculations results in higher
                                    employment rates, since many former recipients who return to the welfare rolls are not employed.

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Note: Except where noted, these data include only families who did not return to welfare.
 The year noted indicates the period during which the families studied left welfare. For more
detailed information on the different time periods covered and frequency and length of follow-up
of these studies, see app. II.
These figures represent the mean wage. While the mean wage tends to be higher than the
median wage, we did not have the median wage for all studies.
 For all studies except Maryland’s and the first Wisconsin study, we had to estimate quarterly
earnings on the basis of reported average hourly wages and average number of hours worked
per week. Because it is unlikely that all members of the sample worked all 13 weeks in a quarter,
most of these estimates are likely to be somewhat higher than the actual average earnings per
 Wage and earnings data for Indiana include those of recipients with earned income who were
also on welfare. Because Indiana did report that average wage rates were significantly higher for
former welfare recipients than for those combining work and welfare, the average wage rate for
the combined groups may underestimate the wage rate for former recipients who are no longer
on welfare.
    Data were not available.
    This figure also includes individuals who returned to welfare.
 The Tennessee study reported separately for families who left welfare for noncompliance and for
those who were employed, whether on or off welfare. Employment rates presented here are for
both groups, whereas wage data and earnings estimates are for the employed group only.
 These data are based on a study using administrative data for families leaving welfare from
July 1995 to July 1996.
 Caution must be used in comparing these earnings figures because the earlier study used
administrative data and the later one used survey responses. The administrative data may
underestimate earnings because not all earnings were included. The survey data may be more
inclusive of earnings but, because these date were self-reported, they could understate or
overstate earnings.
    These data are based on interviews with families leaving welfare from Jan. 1998 to Mar. 1998.

Turning to the incomes of those who left welfare, average quarterly
earnings ranged from $2,378 to $3,786 in the studies that either reported
quarterly earnings or for which we estimated quarterly earnings, as shown
in table 1. Extrapolating these quarterly earnings to a year results in
estimated average annual earnings for former welfare recipients in the
seven states that range from $9,512 to $15,144, as also shown in table 1.
These amounts of annual earned income are greater than the maximum
annual amount of cash assistance and food stamps that a three-person
family with no other income could have received in these states.14
However, if these earnings were the only source of income for families

  As of Jan. 1997, in these seven states, the maximum annual amount of cash assistance and food
stamps combined for a single-parent, three-person family with no income ranged from $6,000 in
Tennessee to $9,744 in Washington.

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after they left welfare, many of them would remain below the federal
poverty level.15

While the tracking studies provide information on individuals’ earned
incomes, much remains unknown about families’ total household incomes.
For example, the studies generally do not provide complete information
on other forms of household income, such as earnings by other household
members, child support payments, and financial assistance from relatives
and friends. Three of the eight state studies provided some information on
total household income. In the Oklahoma study, 57 percent of the former
welfare families reported household incomes at or below the federal
poverty level. In the Indiana study, 57 percent of the families off welfare at
follow-up reported monthly household income below $1,000. In contrast,
the Washington study reported average total family income, including
child support payments, equal to 130 percent of the federal poverty level
for a family of three. In addition, the 1995-96 Wisconsin study, which
focused on earnings rather than income, found that the proportion of
families who had left and remained off welfare for at least 1 year who had
earnings above the federal poverty level varied by family size. While
35 percent of the families with one child and 24 percent of the families
with two children had earnings above the poverty level, only 11 percent of
the families with three or more children did.

In addition to information on total household income, information on the
receipt of government supports is key to understanding the condition of
former welfare recipients and the extent to which they continue to rely on
government aid and have not become economically self-sufficient. Five of
the seven states’ studies had some information on the receipt of benefits.
For example, between 44 and 83 percent of the families who left welfare
received Medicaid benefits, and between 31 and 60 percent received food
stamps. As we discussed earlier, some policymakers and administrators
are concerned that families seeking assistance and being diverted from
welfare may be inappropriately diverted from receiving Medicaid and food
stamps and that those who leave welfare may not receive Medicaid and
food stamps even though they continue to be eligible for those programs.
For example, families that leave TANF for employment generally may
continue to receive Medicaid for 12 months. In addition, Medicaid
coverage is also available for many low-income children even if their
parents are not eligible.

  For 1998, the federal poverty level for a family of three was $13,650.

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                             In addition to interest in welfare recipients who have left welfare and are
                             employed, there is great interest in how those families who have left
                             welfare and are not employed are faring. The South Carolina and
                             Wisconsin surveys asked nonworking former recipients what stopped
                             them from working for pay. In both states, the most frequently mentioned
                             reason was their own physical or mental illness, followed by the inability
                             to find a job, lack of transportation, and lack of child care. The Wisconsin
                             study attempted to determine how these families were supporting
                             themselves. Of the 142 former recipients not currently working, 18 percent
                             were living with employed spouses or partners. Sixty-five percent of the
                             families of the remaining nonworking former recipients were receiving
                             Social Security, state unemployment insurance, child support, or foster
                             care payments; 23 percent were not receiving cash assistance but were
                             receiving noncash assistance, such as free housing, rent subsidies,
                             Medicaid, or food stamps.

Studies in Seven States      The seven states’ studies generally provided no information on changes in
Provided Limited             family composition, such as changes in marital status or formation of
Information on the           two-parent families, and provided little information on how former welfare
                             children and families were doing relative to housing, health, education,
Well-Being of Children and   and nutrition.16 However, preliminary evidence from a few of these studies
Families                     shows no increased incidence in homelessness or entry of children into
                             foster care at the time of follow-up.

                             Three studies—from Maryland, Oklahoma, and Washington—reported on
                             the number of children in former recipient families that had ever been
                             involved with child protective services and found few cases in which
                             children had been involved with child protective services since leaving
                             welfare. For example, the Maryland study reviewed state data from its
                             foster care program to determine the number of children placed in foster
                             care after their families left welfare. This study reported that less than
                             one-half of 1 percent of the children studied entered foster care after their
                             families left cash assistance. In addition, South Carolina, in separate
                             analyses, compared the number of incidents of maltreatment reported to
                             the Child Protective Services’ Central Registry for a sample of families
                             who had left welfare with the number of incidents for families still on
                             welfare; it also compared the number of incidents of maltreatment in a
                             sample of former welfare families before and after leaving welfare. The
                             differences were not statistically significant for either comparison.

                               These and other factors are considered indicators of well-being.

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                                        Two studies, South Carolina’s as well as Wisconsin’s recent survey of
                                        families leaving welfare during the first quarter of 1998, asked former
                                        recipients to compare several aspects of their general well-being after
                                        leaving welfare with their situation when they were on welfare. Because
                                        Wisconsin used a modified version of the interview schedule developed in
                                        South Carolina, the data are comparable, even though the programs that
                                        the recipients participated in are not. Table 2 shows the results from the
                                        two states’ surveys. Former welfare recipients in both states more often
                                        experienced deprivations after leaving welfare than while on welfare. At
                                        the same time, 76 percent and 68 percent of respondents in South Carolina
                                        and Wisconsin, respectively, disagreed or strongly disagreed with the
                                        statement that “life was better when you were getting welfare.”
                                        Regarding housing status, an important aspect of well-being, the limited
                                        information from the studies did not suggest increased incidence of
                                        homelessness at the time of follow-up.

Table 2: Recipients’ Comparisons of
Deprivations While on and After Being                                                    South Carolinaa            Wisconsinb
on Welfare                                                                                (percentage               (percentage
                                                                                       responding “yes”)         responding “yes”)
                                        Question                                     On welfare Off welfare On welfare Off welfare
                                        Did you ever get behind in rent or
                                        house payments?                                         13          15         30              37c
                                        Did you ever get behind on a utility
                                        bill?                                                   16          18         49              47
                                        Was there ever a time when you
                                        could not buy food?                                       6         9          22              32c
                                        Was there ever a time when you
                                        could not afford child care when
                                        needed in order to work?                                11          9          22              33c
                                        Did somebody in your home ever
                                        get sick or hurt when you could not                       1
                                        get medical care?                                                   7c          8              11
                                        Did you have to go to a homeless
                                        shelter?                                                  2         1           5               3
                                        Based on a sample of 403 former welfare recipients.
                                            Based on a sample of 375 former welfare recipients.
                                        These differences are statistically significant at the .05 level.

                                        Sources: South Carolina’s Survey of Former Family Independence Program Clients: Cases Closed
                                        During July Through September 1997 and Wisconsin’s Survey of Those Leaving AFDC or W-2
                                        January to March 1998, preliminary report.

                                        Page 12                                                                    GAO/T-HEHS-99-116
                         Welfare Reform: States’ Implementation
                         Progress and Information on Former

                         While we were able to learn some things about the status of former
Efforts Are Under        welfare recipients in several states, we could not draw conclusions about
Way to Further Assess    the status of most families that have left welfare nationwide. In our
the Success of Welfare   attempt to describe the condition of former welfare families, we were
                         constrained by the data available from these early state tracking studies.
Reform                   However, efforts are under way at both the federal and state levels to
                         improve the usefulness of the data being collected to assess the status of
                         former welfare families. A total of 39 states and the District of Columbia
                         already are tracking or plan to track families leaving welfare. In addition,
                         HHS has recently funded 14 projects to track and monitor families who
                         have left welfare as part of its overall strategy to evaluate welfare reform
                         and to respond to the Congress’ earmarking of $5 million for HHS to study
                         the outcomes of welfare reform. The HHS projects will cover families who
                         leave welfare in 10 states, five counties in 2 other states, and the District of
                         Columbia and, in some cases, will study eligible families diverted from
                         welfare. The limited nature of the information currently available
                         emphasizes the importance of additional state efforts such as those funded
                         by HHS. HHS is funding other efforts also, including 23 studies in 20 states of
                         welfare reforms that began under waivers of the AFDC program. Most of
                         these efforts are looking at issues such as duration and amount of welfare
                         receipt and measures of employment, earnings, and income. Five of these
                         states’ studies also will include information on outcomes for children.17

                         Other efforts are also under way to provide information to better
                         understand the effects of welfare reform on families. For example, to
                         assess the post-reform status of all low-income families, not just former
                         welfare families, the U.S. Census Bureau at the direction of the Congress is
                         conducting a longitudinal survey of a nationally representative sample of
                         families called the Survey of Program Dynamics. The survey particularly
                         asks about eligibility for and participation in welfare programs,
                         employment, earnings, out-of-wedlock births, and adult and child
                         well-being. In addition, the Urban Institute is conducting a multiyear
                         project monitoring program changes and fiscal developments along with
                         changes in the well-being of children and families. As part of this project,
                         the Urban Institute has surveyed nearly 50,000 people to obtain
                         comprehensive information on the well-being of adults and children as

                          For more information, see Web sites http://www.acf.dhhs.gov/programs/opre/rd&e.htm and

                         Page 13                                                                    GAO/T-HEHS-99-116
                             Welfare Reform: States’ Implementation
                             Progress and Information on Former

                             welfare reform is being implemented in the various states.18 A second
                             survey is planned for 1999. Full results from the Census Bureau and Urban
                             Institute surveys may not be available until the year 2000. In addition, a
                             multitude of other studies—some by us, HHS, and other federal agencies;
                             states and localities; and other researchers—that will be providing
                             information in the future on various aspects of welfare reform are under
                             way or planned.19 In the near and long term, these efforts promise to
                             provide more data to help us understand the effects of welfare reform on

                             In the meantime, our work shows that states have clearly made progress in
                             restructuring their programs to emphasize the importance of employment
                             to both clients and welfare workers. In addition, the information currently
                             available from several states consistently shows that most families who
                             have left welfare have at least some attachment to the workforce. In the
                             longer term, the information that becomes available from ongoing and
                             future studies will permit a more comprehensive assessment of welfare
                             reform. Such an assessment will need to take into account some key

How Do Families Fare After   Our work and other studies consistently show that many of the individuals
Leaving Welfare for Work?    in families who have left welfare are employed in low-wage jobs. While
                             they are now employed, these families’ prospects for achieving some
                             measure of economic stability remain an important issue in light of prior
                             research showing that AFDC mothers, who often found jobs with low
                             wages, generally experienced little rise in wages over time after they began
                             working.20 To the extent that these families’ earnings do not increase over
                             time and their employment-based fringe benefits are limited, the families’
                             ability to maintain employment and support themselves may depend to a
                             great extent on the availability of income supports, such as Medicaid, food
                             stamps, subsidized child care, and the earned income credit. The recently

                              The Urban Institute, a research organization located in the District of Columbia, is analyzing the
                             devolution of responsibility for social programs from the federal government to the states, focusing
                             primarily on health care, income security, job training, and social services. Initial results from the 1997
                             National Survey of America’s Families are available at the Urban Institute’ Web site: www.urban.org.
                             The survey is representative of the nonelderly population in the nation as a whole and in 13 states:
                             Alabama, California, Colorado, Florida, Massachusetts, Michigan, Minnesota, Mississippi, New Jersey,
                             New York, Texas, Washington, and Wisconsin.
                               For a listing of completed and ongoing studies of welfare reform, see the Web site
                             www.researchforum.org, created and maintained by the Research Forum on Children, Families and
                             the New Federalism, National Center for Children in Poverty, 154 Haven Avenue, New York, NY
                              See Gary Burtless, “Employment Prospects of Welfare Recipients,” The Work Alternative: Welfare
                             Reform and the Realities of the Job Market, eds. Demetra Smith Nightingale and Robert H. Haveman
                             (Washington, D.C.: The Urban Institute Press, 1995).

                             Page 14                                                                            GAO/T-HEHS-99-116
                                  Welfare Reform: States’ Implementation
                                  Progress and Information on Former

                                  expanded earned income credit, for example, can increase the incomes of
                                  qualified low-income families by as much as $2,271 for families with one
                                  child and $3,756 for families with two or more children.21 In some
                                  instances, states and localities have undertaken efforts to help these
                                  low-wage workers upgrade their skills to improve their job prospects.22
                                  Federal and state policies and programs for assisting low-income working
                                  families are likely to play a critical role in the future success of welfare

What Is Happening to Families     In recent years, welfare caseloads have dropped dramatically. While we
Who Sought but Were Diverted      have focused in this testimony on families who have left welfare, states’
From Cash or Other                diverting eligible families from receiving cash assistance may have
Assistance?                       contributed to the large decline. Any comprehensive assessment of
                                  welfare reform and outcomes for families will need to explore state and
                                  local practices of diverting families from aid and the impact of these
                                  practices on families.

How Effective Are States in       Another issue that has emerged as states have experienced large caseload
Working With Welfare              reductions is that many of the remaining recipients have multiple barriers
Recipients Who Are Difficult to   to participation in work activities, such as mental health and substance
Employ?                           abuse problems and domestic violence. As a result, even if economic
                                  conditions remain favorable, states’ initial successes with moving
                                  applicants and recipients into employment will probably slow over time. In
                                  response, states will need to adjust their approaches to better enable
                                  families with a range of problems to take steps toward becoming more
                                  self-supporting. More research will be needed to identify promising
                                  approaches for working with these welfare families.

How Would an Economic             In many states, favorable economic conditions appear to have facilitated
Downturn Affect States’           implementation of more work-focused approaches. It is not yet known,
Welfare Reform Programs?          however, how states’ welfare reform programs will perform under weaker
                                  economic conditions. For example, some adults who had previously left
                                  welfare for work could become unemployed. While they could be eligible
                                  for unemployment insurance, some could once again apply for cash
                                  assistance after their unemployment insurance ran out. Furthermore, if
                                  caseloads did increase significantly in a worsening economy, it is unclear

                                    The earned income credit is a refundable tax credit for qualified working people who have earned
                                  incomes below certain specified levels.
                                   See Rebecca Brown and others, Working Out of Poverty: Employment Retention and Career
                                  Advancement for Welfare Recipients (Washington, D.C.: National Governors’ Association and HHS,
                                  1998); Mark Elliott, Don Spangler, and Kathy Yorkievitz, What Next After Work First? (Philadelphia:
                                  Public/Private Ventures, spring 1998); and Brandon Roberts and Jeffrey D. Padden, Welfare to Wages:
                                  Strategies to Assist the Private Sector to Employ Welfare Recipients (Chevy Chase, Md.: Brandon
                                  Roberts and Associates, Aug. 1998).

                                  Page 15                                                                        GAO/T-HEHS-99-116
Welfare Reform: States’ Implementation
Progress and Information on Former

what budgetary responses states would take in an environment of fixed
federal TANF funding.

While welfare agencies’ increased emphasis on employment, the large
number of welfare recipients transitioning into jobs, and caseload
reductions indicate progress in meeting the goals of welfare reform,
additional information from ongoing and future studies will help us better
understand the evolving story of welfare reform and its impact on families
and children.

Madam Chair, this concludes my formal remarks. I will be happy to answer
any questions you or other Members of the Subcommittee may have.

Page 16                                                   GAO/T-HEHS-99-116
Page 17   GAO/T-HEHS-99-116
Appendix I

Reports From States’ Studies of Families
Who Left Welfare

               Project Self-Reliance TAFI Participant Closure Study (II), Idaho
Idaho          Department of Health and Welfare, spring 1998.

               The Indiana Welfare Reform Evaluation: Assessing Program
Indiana        Implementation and Early Impacts on Cash Assistance, Abt Associates,
               Inc., Aug. 1997.

               The Indiana Welfare Reform Evaluation: Who Is On and Who Is Off?
               Comparing Characteristics and Outcomes for Current and Former TANF
               Recipients, Abt Associates, Inc., Sept. 1997.

               The Indiana Welfare Reform Evaluation: Program Implementation and
               Economic Impacts After Two Years, Abt Associates, Inc., and The Urban
               Institute, Nov. 1998.

               Iowa’s Limited Benefit Plan: Summary Report, Mathematica Policy
Iowa           Research, Inc., and the Institute for Social and Economic Development,
               May 1997.

               A Study of Well-Being Visits to Families on Iowa’s Limited Benefit Plan,
               Mathematica Policy Research, Inc., June 1998.

               From Welfare to Work: Welfare Reform in Kentucky, Welfare Reform
Kentucky       Evaluation No. 1, Center for Policy Research and Evaluation, Urban
               Studies Institute, University of Louisville, Jan. 1998.

               Exiting Welfare: The Experiences of Families in Metro New Orleans,
Louisiana      School of Social Work, Southern University at New Orleans, June 1998.

               Life After Welfare: An Interim Report, University of Maryland School of
Maryland       Social Work, Sept. 1997.

               Life After Welfare: Second Interim Report, University of Maryland School
               of Social Work, Mar. 1998.

               Page 18                                                   GAO/T-HEHS-99-116
                 Appendix I
                 Reports From States’ Studies of Families
                 Who Left Welfare

                 A Study of AFDC Case Closures Due to JOBS Sanctions April 1996,
Michigan         Michigan Family Independence Agency, May 1997.

                 Montana’s Welfare Reform Project: Families Achieving Independence in
Montana          Montana FAIM, February 1998 Update, Montana Department of Public
                 Health & Human Services, Feb. 12, 1998.

                 WFNJ (TANF) Sanction Survey, New Jersey Department of Human Services,
New Jersey       July 2, 1998.

                 Survey of the New Mexico Closed-Case AFDC Recipients July 1996 to
New Mexico       June 1997, Final Report, University of New Mexico, Sept. 1997.

                 Family Health & Well-Being in Oklahoma: An Exploratory Analysis of TANF
Oklahoma         Cases Closed and Denied October 1996 to November 1997, Oklahoma
                 Department of Human Services, Sept. 1998.

                 TANF Closed-Case Telephone Survey, Pennsylvania Department of Public
Pennsylvania     Welfare, Mar. 1998.

                 Survey of Former Family Independence Program Clients: Cases Closed
South Carolina   During January Through March 1997, South Carolina Department of Social
                 Services, Division of Program Quality Assurance, Mar. 3, 1998.

                 Survey of Former Family Independence Program Clients: Cases Closed
                 During July Through September 1997, South Carolina Department of
                 Social Services, Division of Program Quality Assurance, Oct. 9, 1998.

                 Summary of Surveys of Welfare Recipients Employed or Sanctioned for
Tennessee        Non-Compliance, University of Memphis, Mar. 1998.

                 Washington’s TANF Single Parent Families Shortly After Welfare: Survey of
Washington       Families Which Exited TANF Between December 7 and March 1998,
                 Washington DSHS Economic Services Administration, July 1998.

                 Page 19                                                  GAO/T-HEHS-99-116
            Appendix I
            Reports From States’ Studies of Families
            Who Left Welfare

            Washington’s TANF Single Parent Families After Welfare, Washington DSHS
            Economic Services Administration, Jan. 1999.

            Post-Exit Earnings and Benefit Receipt Among Those Who Left AFDC in
Wisconsin   Wisconsin, Institute for Research on Poverty, University of
            Wisconsin-Madison, Aug. 17, 1998.

            Post-Exit Earnings and Benefit Receipt Among Those Who Left AFDC in
            Wisconsin, Institute for Research on Poverty, University of
            Wisconsin-Madison, Oct. 30, 1998.

            Survey of Those Leaving AFDC or W-2 January to March 1998, Preliminary
            Report, State of Wisconsin, Department of Workforce Development,
            Jan. 13, 1999.

            A Survey of Former POWER Recipients (Personal Opportunities With
Wyoming     Employment Responsibilities), Western Management Services, LLC, for
            Wyoming Department of Family Services, May 1998.

            Page 20                                                 GAO/T-HEHS-99-116
Appendix II

Information on Seven States’ Studies of
Families Who Have Left Welfare

                                                                                       Follow-up                         Data collection
Categories of families and time periods involved                   Frequency                  Timing                     method(s)
Families receiving AFDC May 1995 to May 1996 who                   Once                       12 to 18 months after      Telephone survey
subsequently left AFDC                                                                        enrollment
Families who left TANF Oct. 1996 to Sept. 1997                     Quarterly                  Up to 12 months after Review of
                                                                                              exit                  administrative data
Families who left or were denied TANF Oct. 1996 to Nov. 1997       Once                       2 to 18 months after       Telephone survey
                                                                                              exit or denial
South Carolinaa
Families with a household member required to seek                  Once                       9 to 14 months after       Telephone survey and
employment who left welfare July to Sept. 1997 and had not                                    exit                       some in-person
returned at time of follow-up                                                                                            interviews
Families who lost TANF benefits Jan. to Oct. 1997 because they Once                           Approximately 3            Telephone survey
did not comply with program rules and TANF families whose                                     months after exit
head was employed full- or part-time Feb. to Oct. 1997
Single-parent families who left TANF Apr. to July 1998             Once                       2 to 4 months after exit Telephone survey and
                                                                                                                       review of
                                                                                                                       administrative data
Single, female-headed families who left AFDC July 1995 to July     Five times                 Quarterly for 5            Review of
1996                                                                                          quarters after family      administrative data
                                                                                              left welfare
Families who left TANF Jan. to Mar. 1998 and did not return        Once                       5 to 10 months after       Telephone survey and
prior to survey                                                                               exit                       in-person interviews
                                               Both South Carolina and Washington reported on groups of families who had left welfare earlier.
                                              We included the most recent sample in our summary.

                                              Source: GAO analysis of state studies.

(116032)                                      Page 21                                                                      GAO/T-HEHS-99-116
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