Issue

In 1996, our nation's welfare system was overhauled with the passage of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA). A new program based on state block grants, the Temporary Assistance to Needy Families (TANF) program, replaced the benefits entitlement approach of the Aid to Families with Dependent Children (AFDC) with a "welfare to work" approach with time limits and sanctions. PRWORA also made major changes affecting other programs such as child care, food stamps, and the eligibility of immigrants for federal, state and local benefits. These programs and the issues they address – national poverty policy and family policy – will have a major place on the national agenda again in 2002, because Congress must reauthorize the TANF, Child Care and Development Block Grant (CCDBG) and food stamps programs by October 1, 2002.

Background

The impact of welfare reform so far: Whether one judges the impact of welfare reform positively or negatively depends in part on what numbers you consider. For example, on the one hand, welfare caseloads have decreased dramatically – more than 50% nationwide, as of June 2001. Employment rates among single mothers have increased, and child and family poverty rates are down. Many states have expanded the services they provide for low-income working families.

On the other hand: inflation-adjusted disposable incomes of the poorest 20% of single mothers fell 4% between 1995 and 1999. And while both welfare caseloads and child poverty rates decreased, caseloads have dropped faster than child poverty. There is some evidence to indicate this is because (1) while the majority of those who leave welfare go into jobs, those jobs don't pay enough to lift families and children out of poverty and (2) a significant minority of those who leave welfare are not working.

Whether falling caseloads and rising employment rates are attributable to welfare reform or the strong economy of the late 1990's is hotly debated. While most agree the credit goes to a combination of those factors, with the economy still in recession, the ability of states to continue to help TANF recipients make the transition to work will be tested. According to one study, 22 states saw their caseloads increase between September 2000 and September 2001; during the prior year, only 8 states had increases.

Issues for TANF reauthorization: Among the key issues Congress will debate, and we will follow, will be:

TANF funding levels: The 1996 law made a total of $16.5 billion per year available for the block grants to all the states for the years 1997-2002. How much funding to dedicate to TANF in the coming years will be a central issue in reauthorization. Because caseloads are falling, some will argue we can cut back the amount of TANF funding. On the other hand, much of the states' TANF spending goes towards work support activities – such as child care or transportation assistance – not cash assistance. These services are more costly than cash assistance, and may go to families that are not included in the caseload numbers because they are no longer receiving cash assistance. In addition, because TANF funding has not increased with inflation, the real value of the TANF block grant has fallen by at least 9% – $16.5 billion in 1997 was worth only $14.6 billion in 2001. While the Administration's budget plan for 2003 does propose to maintain TANF funding at $16.5 billion a year, this may not be enough to continue paying for the current level of services.

Work participation rates and what counts as "work": States must have specific percentages of TANF recipients engaged in "work activities," or they lose part of their federal TANF grant as a penalty. There could be attempts to adjust those work participation rates up or down during reauthorization. Redefining what activities count as "work," or giving states more flexibility to make that determination on their own, could also be on the table. For example, under current law, individuals may count only vocational education training towards work participation, for a maximum of 12 months, and states may allow no more than 30% of their caseload to do so. Many will urge Congress to allow states to include more categories of education as "work" for longer periods of time.

Family formation issues: The stated goals of the welfare reform law included decreasing caseloads, promoting marriage and decreasing the number of children born outside of marriage. Many believe that not enough – if any – progress was made on the second and third goals, and Congress is likely to seek out policies that support married couples and their children and encourage people to marry, when appropriate. Others are wary of government action in this area, and want to be sure we do not adopt polices that could reduce benefits to single parent families or coerce people to marry. Striking the proper balance between endorsing marriage as the best environment for bearing and raising children, while keeping them out of poverty, and urging compassion in our policies to assist impoverished single mothers and their children, will be very challenging. Congress is also likely to explore eliminating provisions of federal and state welfare law that place greater burdens on married parents. Under federal law, states must require 90% of two-parent families to be engaged in work activities, while the requirement for single-parent families is only 50 percent. Many states still have welfare laws and regulations that discriminate against married parents in determining eligibility for assistance. Another topic to look for is helping non-custodial parents – often the father – stay financially and emotionally involved with their children. For example, under current law, most or all of the child support collected for children on TANF is retained by the state and federal governments. Allowing states to pass more child support through to the child's custodial parent will enhance the child's economic well-being and enable the parent who pays child support to have a clear and direct impact on his child's life.

Family Cap: Twenty-three states have exercised the option given them by the 1996 welfare reform law to deny benefits to children born while their family is receiving assistance. The family cap was opposed by USCCB, Catholic Charities USA and many members of Congress. A Rutgers University study of the New Jersey family cap found that this policy increased abortion rates among welfare recipients by 14% and forced into deeper poverty 28,000 children denied benefits because of the family cap. We will continue to work to end the family cap option, either in TANF reauthorization or in separate legislation.

Medicaid and Food Stamps Enrollment: The 1996 welfare law also changed the relationship between welfare benefits and the Medicaid and food stamps programs. A significant number of families who are eligible for Medicaid and food stamps are not receiving these benefits, including families leaving welfare for work. State determination errors, state sanction policies, and unnecessarily burdensome and confusing application processes all contribute to eligible TANF and former TANF families going without health care coverage and food stamp assistance. Strengthening the current transitional Medicaid program and adding transitional food stamps to the law so that TANF-leavers automatically qualify for Medicaid and food stamps for a year will be considered as part of reauthorization.

Time limits and sanctions: A five-year time limit on TANF assistance to adults and mandatory financial sanctions for non-compliance with program requirements, such as the work activity requirement, were key, and controversial, aspects of the 1996 law. Participants are starting to hit their five-year time limits, forcing states to decide whether and how to continue helping these families with state funds. Sanctions can be severe – 35 states have "full family" sanctions punishing whole families for infractions – and there are indications that they are not equitably enforced. Some sanctioned participants don't understand what they did – or didn't do – to cause the sanction. Congress will almost certainly revisit these issues in the upcoming debate. For example, should states be allowed to "stop the clock" on time limits when participants are fulfilling their work requirement, or are in necessary pre-work programs, such as substance abuse treatment?

Helping those with barriers to employment: It is estimated that approximately 60% of those who leave welfare have found jobs. What happened to the others? According to some studies, 20% of mothers leaving welfare go through long periods without work, and more are without jobs from time to time. The jobs that welfare-leavers find generally offer wages below the poverty line, and no health benefits or paid leave time. Many families face serious barriers to employment: mental health and substance abuse problems, lack of skills or education, illiteracy, domestic violence, seriously ill or disabled family members. Congress must grapple with whether and how to help families that simply aren't able to meet the work requirements.

Supports for Working Families: Like other low-income working families, families leaving welfare for work need assistance to help keep them in jobs and off welfare. In addition to Medicaid, food stamps and good child support laws, working families need the Earned Income Tax Credit, child care programs, and housing and transportation assistance. These supports are crucial to the success and well-being of low-wage workers and their children. Any debate on welfare and poverty will reexamine such programs.

Our Position:

In 1996, the Catholic Bishops' Conference stated that welfare reform policies should: Protect human life and dignity; strengthen family life; encourage and reward work; preserve a safety net for the vulnerable; build public/private partnerships to overcome poverty; and invest in human dignity.

Based on these principles, we believe a central goal for TANF reauthorization should be to address the moral scandal of so much poverty in the richest nation on earth. We believe we can achieve the goal of poverty reduction through a three-pronged strategy of:

• Supporting meaningful work,
  
• Strengthening marriage and family life, and
  
• Sustaining the needy and vulnerable among us, especially our children,

Action Requested

Let your Senators and Representatives know that you want them to make our welfare system more effective at reducing poverty. Specific policies we believe are important for achieving our goal, and for which we will advocate during TANF reauthorization, include:

• ending the family cap;
  
• removing the barriers to two parent families receiving assistance;
  
• restoring benefits to legal immigrants;
  
• giving states greater flexibility to count job training, vocational and post-secondary education as work; and
  
• ensuring that those leaving welfare have access to transitional Medicaid and food stamps benefits.

Resources

Putting Children and Families First
Moral Principles and Policy Priorities for Welfare Reform
Comments on TANF Reauthorization Submitted to HHS by SDWP, November 30, 2001
Comments on TANF Reauthorization Submitted to HHS by CCUSA, November 30, 2001

Websites: USCCB: usccb.org CCUSA: catholiccharitiesusa.org

For More Information
Kathy Curran, 202-541-3188, kcurran@usccb.org;
Mark Gallagher (ph) 202.541.3142, mgallagher@usccb.org,
Pam Smith, 703-549-1390, psmith@catholiccharitiesusa.org

Email us at sdwpmail@usccb.org
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