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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IMMIGRANTS AND FOOD STAMPS

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.


FROM AFDC TO TANF

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.


DISPATCHING DUE PROCESS

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.


WELFARE TO WORK?

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.


WHAT HAPPENS TO THE CHILDREN?

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.


MOVING FORWARD—BECAUSE THERE'S NO MOVING BACK

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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