Welfare as We Might Know It

In August 1996, President Clinton signed welfare reform legislation that signaled the end of an era in the country's response to needy families. No longer will cash assistance to dependent children be guaranteed by the federal government. Instead it will be provided, or not, by states using block grants.

*In signing the legislation, the President identified a number of "flaws" that he promised to fix after the election. Other Democrats, some of whom voted for the bill, took up the President's refrain. Their statements implied that there was little to worry about in the legislation, since any problems with it could be solved in the 105th Congress.

This implication is wrong—and not just because Congress remains Republican. The fundamental flaws in the law are not in the food stamp or immigrant provisions that the President has singled out for criticism, but in the abdication of federal responsibility for the poor. Even if cuts in food stamps and immigrant benefits could be restored, which would be difficult in the current budget context, the structural change in welfare is irreversible in the foreseeable future.

The country—or at least the Congress—decided that the old welfare system needed to be scrapped. The public, rightly, wanted welfare reform that expected work and parental responsibility. The political rhetoric supporting the new law, unfortunately, made the concept of a federal entitlement synonymous with irresponsibility and lifelong dependency, and the replacement of the entitlement with block grants synonymous with work requirements. This rhetoric was misleading but powerfully effective. It will be many years before public officials can talk again about a guarantee of assistance, or even a guarantee of work or protection for children.

I believe the new welfare law poses serious dangers to poor children and families. As assistant secretary for children and families in the Department of Health and Human Services, I supported the administration's efforts to refocus the welfare system on work and to increase state flexibility through the waiver process. But in the course of reviewing state welfare reform proposals, I became concerned that politics and financial pressures were pushing states into a "race to the bottom." As long as the old law was in place the federal government could insist on guaranteed assistance and protections for recipients. My fears about what would happen to poor children when states were no longer required to provide the modest assurances and protections we insisted on in waiver demonstrations led me to resign after President Clinton signed the welfare bill.

I believe the dangers in the law will be impossible to alleviate with the incremental changes that are politically feasible. The deed is done. This round of debate about poverty and welfare has ended with the issue being left to the states. But it is hard to imagine that the national interest in the well-being of children can be so easily put aside. So it is now time to look toward the longer term, and to begin laying the groundwork for approaches that could build a new national safety net for poor children above the wreckage of the old one.

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The new welfare law—the Personal Responsibility and Work Opportunity Reconciliation Act of 1996—has nine titles. One of them, Title III on child support enforcement, makes unambiguous improvements in the national child support enforcement system and as a freestanding bill would probably have received near unanimous support. Another, Title VI on child care, authorizes more federal money for child care, and takes some steps toward a more integrated child care system by rationalizing, somewhat, a number of federal child care funding streams. Titles V, VII, and IX make small and relatively harmless changes in child protection, child nutrition, and other programs.

Title II has received little attention but may have significant effects. It redefines benefit eligibility rules for disabled children under the supplemental security income program. The impetus for the changes came from allegations of abuse in the program by families of children with emotional, behavioral, and learning problems. Though these abuses were not found to be widespread in studies by the Health and Human Services inspector general and other watchdog groups, changes in the program to require medical determinations of physical or mental impairments (rather than simply functional assessments) received wide bipartisan support. This will lead to denials of benefits to many families.

Title IV, dealing with immigrants, and Title VIII, dealing with food stamps, were singled out by the President as the most seriously flawed. Title IV bans most legal immigrants from most federal benefit programs. Title VIII makes across-the-board cuts in food stamp benefits. It also includes one of the meanest legislative provisions of recent history, restricting food stamp benefits to unemployed adults without disabilities or dependents to 3 months out of 36. These two titles generate most of the $54 billion savings in the law. They are in theory fixable—the money just needs to be put back in. But in practice this will not be easy, given the general commitment to balancing the budget and the lack of political support for immigrants and nonworking childless adults.

Even if the immigrant and food stamp provisions in the law were softened, however, the bill would still pose serious dangers. The dangers come from Title I, which replaces the Aid to Families with Dependent Children (AFDC) program with block grants to the states for Temporary Assistance to Needy Families (TANF). This is the welfare reform title of the bill, the title that is touted as reforming welfare by replacing it with work.



The new law abolishes the AFDC program, which guaranteed cash assistance at levels set by states to needy children whose parents were unable to provide for them, and guaranteed federal matching money to the states in amounts sufficient to provide the stipulated benefits. The old law was nothing to be proud of; it badly needed reforms to require and provide opportunities for work and parental responsibility and to hasten families off the rolls rather than lock them into dependency. But the new law goes much further than these sensible reforms. It abdicates federal responsibility for needy children by abolishing any entitlement to benefits or services and providing very flexible block grants to the states, while mandating tough work requirements and a five-year lifetime limit on the receipt of assistance.

The real dangers from the TANF part of the law come both from the work and time-limit requirements—which states will have many opportunities either to use constructively or to avoid—and from the enormous flexibility the states have to spend money, set eligibility requirements, and provide assistance, or not, as they wish.

Some states will use their block grants for creative and innovative approaches to providing work opportunities for adults and appropriate services for children, at least in the short run. Some states will respond to the work requirements and five-year time limits in the new law by helping parents move quickly into work or community service, supporting them in their jobs, and making sure their children are safe and adequately supervised.

But the new law provides broad flexibility in the use of funds, including the power to carry over funds from year to year and to transfer funds to other programs, and the power to devolve responsibility to lower levels of government and even to for-profit companies—all of this with almost no federal oversight. Federal matching of state funds is replaced by a relatively loose requirement that the states maintain their spending at 80 percent of their 1994 level; this means that states can and probably will reduce state funds spent on welfare. All the political and financial incentives are for states to cut assistance, to impose time limits shorter than five years, to meet the work requirements without spending any money, to shift responsibilities to local governments and private contractors, and to use the block grant funds for more politically popular programs. All of these tendencies were evident in waiver demonstrations proposed by states before enactment of the new law.

Politics at the state level are not likely to support spending on the very poor, given the freedom and incentives to use the funds more broadly. Competition among the states, I predict, will continue over who can be tougher on welfare. The for-profit firms bidding to run welfare systems will be driven by cost considerations. There will be little incentive for states to put money into job development, job training, or worker support. Freed from the constraints of the federal law and the waiver process, it would be surprising if state legislatures did not enact further restrictions on cash benefits. And Congress is unlikely to overrule state decisions.

Also, disparities among states will be exacerbated by the funding formula, which locks in historical differences in per capita (more precisely, in per poor child) spending. Since some of the more advantaged states are also those with stable or falling populations, and vice versa, these disparities could well increase over time.

The danger, of course, is that the flexibility and incentives at the state level will result in harm to vulnerable families and children, at least in some states. Unemployment rates differ; in many jurisdictions, there will be a lack of employment as well as a lack of training and support for low-wage workers. The absence of cash assistance, whether because of lower benefits, time limits, or sanctions tied to tough work requirements, may be most felt in housing, with increased eviction and moving, more doubling up and crowded conditions, and more violence-prone relationships. Children may also suffer from a lack of supervision and appropriate discipline from parents who are away from home for long hours without the ability to provide good substitute care. For some, abandonment or serious abuse or neglect will result. For more, the effects may show up in poor school performance and antisocial behavior.

What can be done to mitigate these outcomes? It is important to fix the immigrant and food stamp provisions in the bill by restoring the cuts and exempting more classes of immigrants from bans on benefits, as best as can be done within budget constraints. Fixing the TANF block grant will be much harder, given the political enthusiasm for abolishing the entitlement and giving flexibility to the states. Among the most important short-term fixes will be to strengthen requirements that state programs be publicly accountable and treat recipients with some semblance of due process. Over the longer term, we will need to construct a new national safety net, based on jobs for adults and a new approach to protecting children.



The welfare law's explicit elimination of an entitlement to benefits or services presumably has two purposes: to send a message that assistance is temporary and conditional on meeting work and other requirements; and to eliminate or sharply limit the ability of recipients to claim due process protections and to litigate denials or terminations of assistance. By repealing federal AFDC, Congress undermined 60 years of case law establishing due process protections for recipients. The new law leaves open the very real possibility that states will condition assistance not just on meeting requirements but on the availability of funds. Like housing assistance currently, cash and employment assistance could become subject to waiting lists or other forms of rationing. It also leaves open the possibility that recipients will have little recourse if they are denied assistance, even for arbitrary or discriminatory reasons.

The law does say that the state plan "shall set forth objective criteria for the delivery of benefits and the determination of eligibility and for fair and equitable treatment, including an explanation of how the State will provide opportunities for recipients who have been adversely affected to be heard in a State administrative or appeal process." This would seem to require that states lay out rules for getting assistance, that they apply them fairly, and that they provide some rights of review. It will no doubt provide the basis for legal appeals. However, because the new law is so explicit about the elimination of the entitlement, and so cryptic about requirements on the states, the set of protections and due process rights developed through litigation under the old law will almost certainly not be applied. Different judges in different districts and circuits will interpret equal protection and due process requirements differently, and a piecemeal system of rights and protections, or lack thereof, will gradually develop.

Efforts by Democrats to clarify and strengthen the equitable treatment language were unsuccessful during the congressional debate and were attacked as attempts to reinstitute an entitlement. But it does seem reasonable to require states to make clear to potential recipients what benefits and services will be provided, under what precise conditions, and to whom. It also seems reasonable to require states to serve everyone they say they will serve, so that families and children in need are not disadvantaged by the vagaries of the appropriations or economic cycles of a state. Legislating these requirements would be an important short-run improvement, and would be both fairer and faster than relying on a litigation strategy. Even though no particular benefits or services would be guaranteed, at least potential recipients would know the rules and could count on receiving whatever assistance was authorized.

Another important short-term fix is to strengthen the reporting requirements in the law. State plans are currently required to contain only an "outline" of how the state "intends to . . . conduct a program that provides assistance to needy families with (or expecting) children and provides parents with job preparation, work and support services to enable them to leave the program and become self-sufficient." Federal block grant funds may be used "in any manner that is reasonably calculated to accomplish the purpose of this part," with the calculation made almost entirely by the state. States are not required to explain in any detail how they are using the federal block grant or required state maintenance-of-effort funds: what benefits or services they're using the money for, under what conditions, for how many people, and at what levels of benefits or services; what money is being used for if it is carried over or transferred to other programs; and how much is being spent on things other than ongoing cash assistance or employment. Since federal oversight is almost eliminated by the law, state-level monitoring and advocacy will be the primary mechanisms for achieving and enforcing state commitments to needy families. The ability of the public to scrutinize the program could be greatly enhanced by strong state planning and reporting requirements.

It might be useful to go beyond reporting requirements and specify more clearly the uses to which block grant funds may be put, and the uses of funds that count toward the state's required maintenance of effort. The enormous flexibility in the use of funds and the entry of profit-making consultants and contractors into the business of developing and running welfare systems will almost certainly lead to exploitation of the loopholes in the law. There is certain to be shifting of costs from state to federal funds, and attempts to use block grant funds (or to free up other money) for state programs that are mandated—like Medicaid—or that are more politically popular than welfare.

Though some in Congress may try to close loopholes and direct the funds more tightly to certain forms of assistance, the attempt is unlikely to be successful. Governors—and their allies in Congress—will defend their ability to use funds as they see fit. An example of the difficulty of closing loopholes comes from the old law. States started to use open-ended federal emergency assistance funds, provided through the AFDC program, to finance their juvenile justice systems. HHS disallowed this use through administrative action. Under the new law, after agitation by a number of states with powerful representatives, states are explicitly permitted to use funds for any purpose that they were using them for before HHS action, such as juvenile justice.

Moreover, limiting the use of funds at this point would circumscribe what may be the best opportunity provided by the new legislation—for states to genuinely experiment with new approaches to serving families and children. Investing heavily in diversion, day care, subsidized employment, or other approaches that are only now being thought about may, in fact, be successful. A period of genuine experimentation, as long as there is full and complete reporting (and adequate funding), may well be the best foundation for building a new national commitment to needy families and children.



A new national commitment is likely to be necessary. President Clinton and others have already recognized that genuinely reforming welfare requires jobs for those who must leave welfare. The President has proposed a combination of moral suasion of private employers, tax incentives, and modest grants to cities to fill this need.

Urban areas where "work has disappeared" will be hardest hit by the change in welfare. Not only do these areas often lack vital businesses that could provide jobs, they are also home to many people who lack the basic capacities, skills, and attitudes necessary to obtain and hold employment. What is known about the characteristics of current long-term welfare recipients, through work by Donna Pavetti of the Urban Institute and others, does not suggest an easy transition to self-sufficiency. Most are poorly educated with little or sporadic work experience. Many have cognitive and skills deficits. Many have histories of substance abuse or domestic violence. Many have great difficulties holding jobs, because of poor work habits, difficulties in dealing with authority, and problems in managing the routines of child care, transportation, and work life.

For these workers to become fully self-sufficient will take investment in a network of training and support services that help them not only get but also keep jobs through the inevitable difficulties at work and at home—and to get new jobs when they lose the first one. The problem is made more complicated and more crucial by the fact that focusing job development and support resources entirely on current or past welfare recipients—almost all of whom are women—is likely to be self-defeating. Strong family and community life requires the participation of men as husbands, fathers, and workers.

Too small, too tightly targeted programs are likely to be ineffective in changing the environment of depressed urban areas to one in which work is available, desired, and kept. The modest program that the Clinton administration has proposed may provide opportunities to experiment with what does and does not succeed in these areas. It will be important to see it not as a solution in itself but as a program that might provide a basis for a fuller national commitment later.



Protecting children who are hurt by the welfare bill is equally important—and even more complicated. Analyses produced by the Department of Health and Human Services and by the Urban Institute before the bill was enacted predicted that upward of a million children would be pushed into poverty as a result of the bill, and that some eight million families with children would lose income. The poverty effects result mostly from the cuts in food stamps, supplemental security income, and immigrant benefits, since many families potentially affected by the cuts have incomes right on the edge of poverty.

More difficult to predict are the effects of work requirements, time limits, state flexibility, and the dramatic change in the nature of welfare itself produced by the elimination of the entitlement. No doubt some current long-term welfare recipients—and it is really impossible to predict how many—will respond to the combination of tough requirements, short time limits, and modest services by getting jobs and getting their lives together. But many will not. States that have gotten serious about work or more general participation requirements are cutting the benefits of many, many families who are sanctioned for noncooperation. States have also seen dramatic decreases in caseloads, not entirely driven by good economies, from people deterred by the new requirements and the new climate.

Sadly, there are almost no data to indicate what happens to these families and their children when they are no longer receiving welfare. It is possible to offer some guesses, however. Some of the families are no doubt fine, having found jobs, decent living situations, and adequate child care, so that their children are well cared for and safe. Others are likely to be in situations of great instability, both in their work and in their housing; some are likely to be in danger.

The debates around welfare reform recognized the potential harm to children. The shape and resolution of the debates illustrate the difficulty of resolving the dilemma. The earliest versions of the Republican welfare bill would have allowed states to use block grant money for orphanages, in stark recognition of the facts that some families would be denied assistance entirely and that not all parents would successfully meet the challenges of the new requirements. Democrats attacked this provision relentlessly. They observed that good group homes are very expensive and could never provide care for more than a small fraction of children affected by time limits or denials of benefits for other reasons. They also reminded the country that for many decades child protection laws have recognized that poverty and unemployment are not crimes for which the removal of children is appropriate punishment. In response to the fierce attacks, the word "orphanage" was quickly removed from later versions of the bill. The underlying problem, however, was never addressed.

The Democratic answer to the problem of protecting children was vouchers. In substitute bills and in amendments offered in committees and on the floor, Democrats proposed that states be required, or at least permitted, to provide vouchers to cover certain needs of children whose families lost benefits because of the inability to find work or the imposition of time limits. The proposal did not extend to the children of parents who refused to cooperate, turned down jobs, were fired for cause, or quit for cause—all likely to occur. Nonetheless, Republicans fought the voucher proposals vigorously and successfully, arguing that vouchers simply reinstituted the old entitlement to indefinite assistance under another name.

We need an amendment permitting states to use block grant funds for vouchers, and perhaps even requiring them to provide vouchers if they institute time limits on cash assistance shorter than five years. To really make mandatory vouchers work, however, would require specification of the circumstances in which they would be offered, and by extension of the circumstances under which cash assistance itself is offered. Given the enthusiasm with which the last Congress abolished the entitlement and celebrated state flexibility, it seems unlikely that the present Congress will go this far toward a federally defined right to assistance. Moreover, even this proposal does not deal very adequately with the dangers to children whose parents cannot or will not make it in the new world of temporary assistance and requirements.

The old welfare system all too often gave up on long-term recipients but provided for their children with minimal but continuous cash assistance. The new welfare system will no longer do this. But the current child protection system, which investigates reported child abuse and neglect and supervises out-of-home placement for children who are found to be in danger, is not equipped to deal with the situations of children whose families lose benefits. The system is already overwhelmed by escalating numbers of abuse and neglect reports. And it has a limited set of tools for responding to the needs of children. Most states provide very few services to families and rely on foster care for protecting children in danger. Child protection systems are explicitly not authorized to provide ongoing housing or cash assistance, even if economic deprivation appears to be the cause of child neglect.

If neither the welfare system, now focused on employment, nor the child protection system can step in to help children hurt by welfare reform, then who will protect kids? States, communities, and private agencies will need to develop new approaches to child welfare, which may eventually need to be mandated and funded at the national level. The new approaches will have to combine services, required parental activities, and cash or in-kind assistance, and perhaps even structured living situations, as well as provide counseling and support. They will recognize that full-time unsubsidized employment is too ambitious a goal for some parents and will have to provide ongoing assistance, in many cases on a long-term basis. To avoid being perceived as an easy way out of the welfare system's work requirements, the new approaches will also have to provide supervision, require participation in activities, and perhaps limit the flexibility of assistance through vouchers or in-kind services. They will be more intensive and almost certainly more expensive than current cash assistance, but will—one hopes—be required for many fewer families.

A research and experiential base sufficient to design such a system on a national basis does not currently exist. But I predict we will need such a system. We should be ready in a few years to propose a system that provides more or less uniform protections across the nation. The first steps should be careful observation of state efforts and some demonstrations. I hope that states will start now, so that in a few years we have a firm basis for serious national legislation.



The 1996 welfare law does indeed "end welfare as we knew it." There is no politically feasible way of going back to the old structure, with its guarantees of assistance and federal regulation of state programs. A new national commitment to the poor will have to come through approaches that are very different from the old discredited system; this cannot be achieved by incrementally fixing the law.

For now, we should soften the immigrant and food stamp provisions of the law as much as possible. It is also crucial to fix the TANF part of the law. For one thing, we need a better understanding of what is happening so that information is available to local and national groups demonstrating the need for change. It would be desirable, if possible, to tighten and clarify the requirements for equitable treatment, and to provide for at least optional vouchers for needy children whose parents have been denied aid.

For the longer term, I believe we should be looking toward the time when the nation has gotten over its disgust with the old welfare system and is ready to consider once again its national responsibilities for children. For this new debate, which I believe is inevitable in a few years, we should focus on developing new approaches to job development and worker support, and to protecting children.

I would like nothing better than to be wrong about the dangers of the new era that the new welfare law has begun. But if I am right, there is an enormous amount of work to be done, and the time to start is now.

Vermont has instituted reforms that both parallel and run against Clinton's plan. See "Welfare as Vermont Knows It," by Jason Gray Zengerle.

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