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Welfare Reform: Can the States Fly Solo?

Friday, November 1, 1996

Policy Review asked four state welfare officials -- Eloise Anderson of California, Vance McMahan of Texas, Don Taylor of Mississippi, and Jason Turner of Wisconsin -- to comment on the following questions about what the welfare-reform legislation of 1996 will mean for their states:

Q: States have been ahead of the federal government in welfare reform for many years, and 43 states have already received some sort of waiver from federal welfare rules. What will be the most important changes for your state as a result of the federal legislation? How do these compare in magnitude with reforms your state has already embarked on?

          Eloise Anderson, director, California Department of Social Services: Under the new federal welfare legislation, recipients will no longer be able to receive aid indefinitely (until the youngest child at home turns 18) without working. Time limits will force more people into jobs. This will lead to more families entering the mainstream and over time becoming self-sufficient. Government will cease to be the first place families turn to when in trouble. And childbearing and parenting will again be a primary responsibility of parents.

AFDC died on September 30, 1996. California, Mississippi, Texas, and Wisconsin say they're ready to take over

          Families will become more accountable to each other. States will be given the opportunity to treat married and single-parent families more equally so that there is no penalty for marriage. Stricter paternity establishment will lead to greater child support. There will be no aid for teen parents who drop out of school and they will be required to live at home or in an adult-supervised setting as a condition of aid.

          The legislation also will remove costly and restrictive federal mandates and give states a little more flexibility to design programs that work best for their communities.

          Vance McMahan, policy director, Office of the Governor, State of Texas: The biggest impact of the federal welfare legislation may, at first, be more symbolic than substantive. The decision to end the federal entitlement to Aid to Families with Dependent Children (AFDC) marks a reversal of 61 years of social policy, an admission that the current welfare system has become more a cause of poverty than a cure, and a recognition that perhaps someone outside Washington, D.C., may be able to do a better job at helping those in need. By so doing, the federal law gives states and communities more freedom to tailor their policies to reflect the values and specific needs of their people.

          Ending the welfare entitlement has also changed the fundamental question. Instead of asking, "What is this person entitled to?," states can now ask, "What does this person need to become self-sufficient?" By changing the question, the bill gives states the freedom to try different answers.

          As a practical matter, the bill's initial impact will be limited, since it allows states to continue to operate under existing waivers. Texas will be affected by the decision to cut off food stamps and SSI to some legal immigrants. State officials are trying to determine the impact of this provision.

          The new work-participation requirements will also affect Texas. Texas does not have a generous welfare grant ($188 a month for a family of three) and thus tends to have a welfare population that is relatively poorer and less educated than other states. Governor George Bush is, however, committed to marshaling all necessary resources to liberate as many people as possible from dependence on government. Welfare rolls in Texas have shrunk by 15 percent during his term.

          Don Taylor, executive director, Mississippi Department of Human Services: The current legislation provides a long overdue shifting of the balance of power between federal and state levels of government. Congress finally acknowledged that the "one size fits all" federal programs are an abysmal failure, so states will now be allowed to tailor welfare plans to meet specific needs of their states. We may now correctly measure the success of our programs by the number of individuals placed in the work force, not the number enrolled in training programs that often have no connection to the actual job market.

          Jason Turner, director of capacity building, Wisconsin Department of Workforce Development: The new law could not have been passed at a more propitious time for Wisconsin -- just as we were negotiating with the U.S. Department of Health and Human Services over the terms of the waiver, the new law made it possible to implement Governor Tommy Thompson's radical welfare replacement program, "Wisconsin Works," or "W2," without major compromises. This plan eliminates AFDC entirely and replaces it with a system of work opportunities for individuals of all abilities. It differs from other reform initiatives (such as two-years-and-off plans) in that no unrestricted cash assistance is provided, not even temporarily. Instead, individuals who need family income will have four work options available, starting at the top (private employment) and working down to community-service jobs or sheltered workshops, if necessary. Temporary "bridge" loans, subsidized child care, and subsidized medical insurance will be made available -- whatever is absolutely necessary to make work possible. But in the end, all parents will enjoy the dignity of earning their family income through work.

          There were many obstacles for the governor to overcome in order to realize this concept. The ideological left in Wisconsin and in Washington had fully mobilized to oppose W2. But a new Republican legislative majority in Madison and the new federal legislation passed in Washington combined to make their protests moot.

Q: Many liberals predict that children and families will be hurt by the welfare legislation. The Urban Institute has predicted an increase of 1.1 million children in poverty. The National Coalition for the Homeless declares that "without increased resources for child care, affordable housing, health care and education, this reform will prove to be most effective at moving people from welfare . . . into deeper poverty and homelessness." And Hugh Price, the president of the National Urban League, predicts that "desperate mothers" will "turn to hustling, prostitution, drug dealing, or panhandling." He says that "Washington has decided to end the War on Poverty and begin a war on poor children." How do you respond?

          Anderson (California): The Urban Institute's and the National Urban League's predictions on poverty and homelessness do not take into account the behavioral changes that will result from time limits and other new rules under this welfare legislation. The panic is unwarranted.

AFDC recipients are capable and smart enough to make it on their own with government's help
-- Eloise Anderson

          Welfare recipients are no different than anybody else. They will do what it takes to survive. Once government gets out of their way, welfare recipients will respond accordingly.

          I take issue with the National Urban League's assumption that "desperate mothers" will "turn to hustling, prostitution, drug dealing, or panhandling." I see this as a put-down of AFDC recipients. These people are not criminals or lowlifes. I have always said that AFDC recipients are capable, rational, and smart enough to make it on their own without government's help. Advocates need to quit demeaning them as if they are helpless, hopeless, and criminal without government intervention.

          McMahan (Texas): The "war on poor children" began, however unintentionally, with the expansion of the welfare state, which trapped families in dependency by discouraging work and marriage. Studies show children raised in a welfare environment suffer from decreased cognitive abilities and increased behavioral and emotional problems. In Texas, we are committed to taking care of those who truly cannot take care of themselves. As for the rest of the welfare population, we will no longer treat them as victims and wards of the state, but instead as responsible individuals capable of self-improvement and self-sufficiency. That's why Texas requires each welfare recipient to sign a personal responsibility contract outlining what the state will do for them (give them a hand up through job placement, child care, transportation, et cetera) and what they will do in return (work, learn, or train for benefits; identify the father of their child; have their children immunized; stay off drugs; et cetera).

          Taylor (Mississippi): The "war on children" began when the federal government rewarded nonwork and nonmarriage. While perhaps well meaning, those who advocate raising family income artificially through welfare have made the state a competitor with the father and mother as the key providers for the family. In Mississippi, the value of welfare benefits to unwed mothers now exceeds the income of 17 to 30 percent of all single men.

          Too many liberals still have a paternalistic plantation mentality. They think welfare recipients are incapable of achieving self-sufficiency, and thus forever dependent on government largesse. I invite those liberals to mull over the words of Franklin D. Roosevelt: "Welfare is a narcotic, a subtle destroyer of the human spirit."

          Turner (Wisconsin): Half the counties in Wisconsin have reduced their AFDC caseloads by more than 70 percent since 1987 without succumbing to the dire predictions of the liberals. Since January of this year, Milwaukee has been reducing its caseload at an annual rate of 24 percent, and general assistance for childless adults was ended entirely last year without Wisconsin's largest city heaving-to.

          What liberals have entirely failed to grasp is that social maladies, including poverty, are the result of learned behavior in which enforced idleness is a contributing factor. Far from sending nonworking adults "over the edge," required work thrusts people into constructive social interactions that can lift this depression born of isolation, and can identify other problems for resolution.

Q: Many conservatives have argued that the principal objective of welfare reform should be to bring down the rate of illegitimacy and divorce. Do you think this will be achieved by the new welfare bill in your state? If so, how? If not, how else can families in your state be put back together?

          Anderson (California): The aim of welfare reform is to make life better for children. Right now, AFDC children are left out of the mainstream because their parents are not required to work. They see their parents being unproductive and getting food, clothing, and shelter without having to work. Children become so unfamiliar with work that they lack the skills and discipline they need to succeed in a job. Nor do children ever see marriage, or understand its value. Having children out of marriage becomes the norm, and men are devalued. They never see a father in the home. Government has become the father, the provider of the family. By emphasizing work, welfare reform will lead to cooperation between a father and a mother, and create an interdependence for the well-being of the children, which will lead to cultural mainstreaming and stronger families.

          McMahan (Texas): No piece of legislation, no matter how bold, can single-handedly reverse the breakdown of the family. At a minimum, we can at least eliminate incentives to destructive behavior. To its credit, the federal welfare bill does that by setting tough work standards, requiring teen parents to live at home or in an adult-supervised setting, and providing incentive bonuses to states that reduce out-of-wedlock births.

Ending the federal entitlement to AFDC acknowledges that someone outside Washington, D.C, may better help those in need
-- Vance McMahan

          Governor Bush has worked to enact similar changes in Texas, but he also recognizes that out-of-wedlock births, hard-core drug use, and violent juvenile crime are fundamentally moral and spiritual problems that can't be solved by government alone. The solution to these problems lies in changing the culture, renewing our commitment to God, and returning to our bedrock values. In Texas, we are working not only to reform welfare, but also to nurture institutions that have traditionally and more effectively communicated our basic values: charities, churches, synagogues, and neighborhoods. These institutions hold the most promise for changing lives through compassion that is, in Marvin Olasky's words, "challenging, personal, and spiritual."

          Taylor (Mississippi): More than 44 percent of births in Mississippi in 1993 were to unmarried mothers, and for teenagers, more than three-fourths of all births were illegitimate. Welfare has eroded the social foundation of marriage and made it financially irrelevant.

          The welfare bill now allows our state to craft eligibility and benefits regulations to encourage marriage rather than reward irresponsible behavior. We hope this will begin to overcome the corrosive effect of welfare on the family structure.

          Turner (Wisconsin): Under W2, income is only received through work, so there is no economic incentive for illegitimacy. Nor can teens set up independent households with cash benefits under W2 -- they must live with their parents or in a supervised home for unwed mothers.

          The authors of the welfare-reform bill should be commended for offering financial rewards to states that reduce illegitimacy. Although state policymakers have only an indirect influence on illegitimacy, this provision puts the subject on the table for ongoing discussion and debate. Let us look forward to the day when illegitimacy replaces poverty as our most-discussed social indicator.

Q: The Congressional Budget Office (CBO) estimates that most states will accept a financial penalty rather than try to comply with the work requirements of the welfare legislation. Do you believe your state will be able to move the required proportion of recipients from welfare to work? And if so, how will you do this?

          Anderson (California): Meeting the tough work requirements will be a challenge, but we have every intention of succeeding. Our current welfare-to-work program has achieved tremendous results in California counties even where unemployment rates are high. Last year, when Los Angeles County shifted from a classroom-training emphasis to a "work first" approach, the number of job placements for welfare recipients skyrocketed by 400 percent to 25,000. In rural Calaveras County, job placements from 1992-93 to 1994-95 increased by 90 percent.

          Our Employment Development Department is identifying entry-level jobs that are available in different communities, and the skills needed for those jobs. Relocation is one avenue to those jobs that we are looking into. But government can only help bridge the gap. The private sector is the job provider. Neighborhoods, communities, and churches also play a role in helping recipients become successful. And the real work in moving out of dependency must be done by the recipients. We must shift from the notion that government has the answers and will rescue people from themselves. We can provide people with information, but it is up to them to use it.

          McMahan (Texas): The bar is high. The federal welfare bill sets a work participation rate of 25 percent for Fiscal Year 1997, rising to 50 percent for FY 2002. Yet the highly acclaimed work program in Riverside, California, managed to place only 30 percent of welfare recipients in long-term jobs. Given the flexibility to tailor work programs to the needs of our welfare population, Texas is committed to doing its best to meet the standard. We will have to restore the virtue and value of fatherhood. We will have to contract with private companies to place welfare recipients in real jobs, paying only for results. We will have to challenge and create incentives for Texas's private sector to provide more slots for on-the-job training for welfare recipients.

          Taylor (Mississippi): Mississippi is already meeting the mandate with our WorkFirst pilot program. Under WorkFirst, implemented in 1995, the emphasis is on work, not on open-ended entitlements. The clients' first contact after being approved for benefits is with a job-placement specialist, not a social worker, as in the past.

          The ability of states to meet the mandated work requirements is grossly underestimated by the Congressional Budget Office. Federal bureaucrats are undoubtedly fearful that states will, in fact, be successful in this endeavor and therefore set the stage for future transfer of additional programs to state control.

          Turner (Wisconsin): Work participation standards are an important tool for states. And universal recipient participation in some work activity is the only proven way for most programs to achieve dramatic results.

          The CBO and many states are unnecessarily concerned about the cost of providing work requirement slots. These slots are by and large cheap to run -- the major expense is that of subsidizing associated child care in order to permit the covered individuals to work.

          This concern also ignores a central dynamic of welfare reform. When individuals are faced with a choice of receiving welfare benefits in exchange for working in a work-requirement slot, or else going to work for wages in the private sector economy, most will choose the latter. Under these circumstances, the caseload quickly shrinks.

Q: Now that states have full responsibility for welfare, what elements of this responsibility would you like to turn over to churches, businesses, and other private organizations?

          Anderson (California): States now have the primary responsibility for welfare, but they cannot do it alone. Faith-based groups can provide counseling, temporary food and shelter, and clothing for those in need. Businesses need to be receptive to hiring. Goodwill Industries has worked with us closely to help those who face barriers to employment. It has a long history of helping the disabled find mainstream employment. Using nonprofits such as Goodwill is vital to the success of the new programs. We need to stop thinking that government owes us something and start thinking about duty, personal responsibility, and communities coming together to help those in crisis.

          McMahan (Texas): Media reports on the welfare bill have overlooked a significant provision -- the "charitable choice" clause. Under "charitable choice," private, charitable, and faith-based groups can compete for contracts or participate in voucher programs whenever a state uses nongovernment providers to deliver welfare services. If we are to replace welfare with a more compassionate and effective system, faith-based institutions will have to be part of the answer -- whether it's a church providing day care or Victory Fellowship helping people kick drug addiction. As Governor Bush has said: "Government can hand out money, but it cannot put hope in our hearts or a sense of purpose in our lives."

          Governor Bush rejects the statist view that government has exclusive jurisdiction for the poor; rather, government shares responsibility with society's "little platoons" that do the heavy lifting of changing lives from the inside out. Texas's mission is to facilitate and cultivate these untapped resources, not to displace them, and certainly not to secularize their religious character. The governor has appointed a 16-member advisory task force on faith-based community-service programs to determine how best to free faith-based programs and organizations from unreasonable government regulations and allow them to go about the business of changing lives.

The "war on children" really began when the federal government started rewarding nonwork and nonmarriage.
-- Don Taylor

          Taylor (Mississippi): Mississippi's "Faith and Families" program matches volunteer AFDC recipients to local churches and synagogues, thus restoring the historical role of religious institutions to help unfortunate members of their communities. To date, almost 300 churches and synagogues have been enlisted to "adopt" welfare recipients in their communities to help them transition into the work force.

          The business community will now be able to determine and provide the type of training necessary to move welfare recipients into the work force. In lieu of the ineffective training provided by a variety of government programs for jobs that often do not exist, local businesses can provide real skills for real jobs.

          Turner (Wisconsin): Wisconsin now requires an AFDC applicant to enter into an interactive problem-solving session with a caseworker, who helps the applicant look for alternatives to welfare, including immediate employment. It has been shockingly effective -- in Milwaukee 28 percent of those exiting the problem-solving session decide they can do without AFDC after all, and elsewhere the proportion is as high as 50 percent. Interviews indicate that many AFDC applicants like the idea that someone is helping them decide to do what they knew was right all along.

          The point here is that many trapped inside the system are looking for some kind of moral guidance. But by and large government is not equipped to provide this guidance -- nor should it be. Under W2, churches are being asked to help develop homes for teen mothers and private charities are offering work opportunities for those needing to practice work before entering competitive private employment. Finally, the entire system, which was formerly run exclusively by state and county government, will be open under W2 to any private providers of services on a competitive bid basis.

Q: What do you most dislike about the legislation, and why?

          Anderson (California): There are still strings attached that work against California. The "maintenance of effort" requirement was not removed from the SSI/SSP program for the aged, blind, and disabled, giving us no flexibility to make the program more effective and cost-efficient. This will mean a loss in savings of $277 million for California.

Half the counties in Wisconsin have reduced their caseloads by more than 70 percent since 1987 without succumbing to the liberals' dire predictions.
-- Jason Turner

          The federal legislation is geared more toward state-run welfare systems and not county-run systems such as California's. We have far different issues than state-run programs and we need to be treated differently.

          We are also a border state with nearly 40 percent of the legal immigrant population of this country. I believe that sponsors of immigrants should be held accountable for taking care of their own. If legal immigrants want to enjoy the benefits of their adopted homeland, they should take the next step and become U.S. citizens. However, I also believe immigration is a federal responsibility. The responsibility of caring for legal immigrants who have been allowed to enter federal programs should be a federal responsibility, not a state or local responsibility.

          This welfare reform bill came to us in a 400-page document. If this is a first step, then I can accept it. If this is the end result, however, then the feds really haven't changed the rules.

          California needs relief from federal mandates, not more or different mandates.

          McMahan (Texas): The federal welfare bill does not allow states to receive credit for persons diverted from welfare or those who find a job after being on welfare for less than six months. States should be rewarded for such efforts. It is more expensive and more difficult to get someone off welfare than to take steps to keep them from ever going on. The bill also ties the hands of states by requiring a "maintenance of effort." This limits states' flexibility to design and implement their own programs and set their own spending priorities. The bill contains a number of other strings that ensure continued federal involvement.

          States were not given any new flexibility on Medicaid. Federal mandates have made Medicaid the 800-pound gorilla of most state budgets -- at the expense of education and other programs. Medicaid now costs more than AFDC, food stamps, and SSI combined, and it keeps growing. In Texas, Medicaid spending as a percent of the state budget increased from 13 percent to 21 percent from 1990 to 1995. Fundamental welfare reform should include giving states freedom from oppressive Medicaid mandates so they can maximize the use of limited health-care dollars.

          Taylor (Mississippi): The reporting and data requirements of the 1996 legislation are burdensome, expensive, and time-consuming. The data required by the law exceed the needs of the state to effectively administer and efficiently monitor the program. These make-work requirements are a monumental waste of tax dollars designed to ensure that returning funds to the states will not adversely affect the number of federal bureaucrats in Washington.

          Some habits die hard.

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