Nuance can be everything in lawmaking. That’s certainly the case for federal welfare reform, which is still on the negotiating table.
Five years after it redefined public assistance as temporary, rather than an open-ended entitlement, the reform law is set to expire at the end of this month. When lawmakers return to Capitol Hill from their Labor Day break, they must decide what the next five years will hold — for needy families and for the states that administer the welfare program.
Or they could take a pass. They could simply vote to extend the 1996 reforms, which provide $16.5 billion in block grants to the states each year, and tackle eligibility questions next year.
Unless lawmakers on opposite sides of the debate get over their differences in a hurry, this is the likely scenario.
The states, which must operate their welfare programs within parameters set by the feds, would prefer the first option, especially in light of the growing budget shortfalls many state governments face. They want to know how much money will be available to meet the needs of their recipients.
“We are strongly encouraging Congress to pass something this year so that states have some certainty about the money they’re going to get for the next several years,” says Jack Tweedie, director of the Children and Families Program at the National Conference of State Legislatures. “Also, they want some certainty about the rules they’re going to have to operate under.”
At issue for the states is the ability to be creative with their welfare-to-work efforts. Illinois, for instance, has been one of the nation’s most innovative states in designing programs to move welfare recipients into the workforce.
For state Human Services Secretary Linda Reneé Baker, retaining the freedom to operate such programs is one of the state’s two priorities with regard to reauthorization of the federal law. The other is sustained funding. Illinois receives an annual $585 million federal grant and allocates $430 million in state funds.
“When we are able to craft an Illinois-specific program for the people in our mix, we’ve been successful,” she says. “We don’t want them to give us a program, then put a whole host of strings on the money.”
But the U.S. Senate, controlled by Democrats, and the House, controlled by Republicans, haven’t been able to agree on what the rules should be.
The White House wants states to push more welfare recipients into the workforce and require them to work more hours. The House approved a measure that mirrors that proposal.
The Senate proposal isn’t as strict. That measure, which passed the Finance Committee but hasn’t been debated by the full chamber, would not, for instance, require as many hours of work.
“There are huge differences between the administration’s proposal and the Senate Finance proposal,” says Grant Collins II, chief of staff for the Office of Family Assistance at the U.S. Department of Health and Human Services. “And, quite honestly, there’s a question as to whether these things could be worked through in a timely way so that we might have a bill.”
Welfare reform, by most accounts, has been a glorious success. States made huge cuts in the number of people who are dependent on cash assistance. This accomplishment has been attributed to the law’s mandates for work, and to the soaring economy of the 1990s.
At issue for the states is the ability to be creative with their welfare-to-work efforts. Illinois, for instance, has been one of the nation's most innovative states in designing programs to move welfare recipients into the workforce.
The number of families on welfare nationwide dropped from a historical high of 5.1 million in 1994 to 2.2 million last July. While caseloads in some states have increased in the past year, reflecting a sagging economy, those increases have been slight.
Illinois was exceptionally successful in reducing its caseload. The number of families dependent on cash assistance dropped almost 74 percent from 188,069 in 1997 to 49,178 in June, according to the state human services department. Meanwhile, the proportion of recipients who are working increased from 27.1 percent to 36 percent.
The University Consortium on Welfare Reform, a cooperative effort of Northwestern University and other research centers, studied, among other issues, the relationship between Illinois welfare recipients and work. In a May report to the state, investigators concluded there was a “significant increase” between 1998 and 2001 in the proportion of respondents relying solely on income from work, while the proportion of respondents relying solely on welfare went down.
At the same time, though, the proportion of respondents who left the welfare rolls but were not working increased 10 percent. “Overall, large declines in [Temporary Assistance for Needy Families] use were not matched by comparable increases in work [between 1998 and 2001], indicating that some families were left with neither work nor welfare as a source of support, although they may have had other sources of support,” the report concludes. “Efforts to decrease welfare dependence, therefore, appear to have been very successful, while efforts to increase work were moderately successful.”
In fact, a recent report by the Illinois Poverty Summit concludes that poverty rates in Illinois have increased slightly over the period of welfare reform.
State human services officials, however, dismiss any suggestion that government efforts to cut the welfare roles contribute to poverty. They note that people simply have more income when they work. “An individual who is working is far better off than an individual who is receiving that assistance check,” Baker says.
Striking a deal on a new welfare law for another five years by October 1 would be an impressive feat for Congress. Lawmakers are preoccupied with many other pressing issues.
“We have a very brief period of time here and a very heavy schedule with appropriations bills, the new Department of Homeland Security and a variety of issues,” says U.S. Sen. Dick Durbin, a Springfield Democrat and a member of Democratic Senate Majority Leader Tom Daschle’s leadership team. “So whether we’ll be able to reach it this year is uncertain.”
The 1996 law, which gives the states great flexibility in spending their grants, does provide some guidelines. Chief among them: Individuals can take cash assistance for only five years over the course of a lifetime.
This state adopted the federal limit. However, Illinois stops the clock while a recipient is working 30 hours per week (35 hours a week for two-parent families). And, under the state’s Work Pays program, one of the first of its kind in the nation, recipients lose only one dollar of cash aid for every three dollars they make on the job.
According to Baker, this is the sort of flexibility necessary to make welfare-to-work successful. But Congress must decide how much freedom the next federal policy should grant.
And there are substantial differences between the two bills in this regard. The House version would require each state to get 70 percent of its caseload into the workforce over five years. Currently, the requirement is 50 percent. The House measure also would require workers to put in 40 hours a week to continue to receive aid, up from 30 hours under current law.
The Senate measure would increase the work participation rate to 70 percent by 2007, but the work requirement would stay at 30 hours per week.
Moreover, lawmakers don’t agree on what activities should qualify as “work.” Some Democrats want a broad definition under which welfare recipients could count time spent in college, job training and drug rehabilitation. The White House supports a more conservative definition.
“The only way out of poverty is a job,” says Collins, of the federal health and human services department. “So, to the degree that they are engaged in activities that closely reflect the types of things that they’re going to have to do to get out of poverty, we will support that.”
The White House also would phase out the so-called caseload reduction credit, whereby states are rewarded with a reduction in the required percentage of their clients who must find work. States would instead get credit for getting clients into jobs.
There are other distinctions. The Senate measure would increase childcare funding by $5.5 billion over five years; the House version would add only another $1 billion on top of current funding. The aid is key because welfare recipients require extra money for child care if they spend more time on the job.
Meanwhile, the states are clamoring for an immediate five-year reauthor-ization. “I know what the states are saying,” Durbin says. “But let’s make sure we give the states the flexibility to deal with reduced revenues and different demands.”
The details pose the hurdles. And neither side appears ready to jump.
Aaron Chambers can be reached at statehousebureau@aol.com.
Illinois Issues, September 2002
