Cash
Assistance
in Transition:
The Story
of 13 States
Sheila R. Zedlewski
Pamela A. Holcomb
Amy-Ellen Duke
The Urban Institute
Occasional Paper Number 16
Assessing
the New
Federalism
An Urban Institute
Program to Assess
Changing Social Policies
Cash
Assistance
in Transition:
The Story
of 13 States
Sheila R. Zedlewski
Pamela A. Holcomb
Amy-Ellen Duke
The Urban Institute
Occasional Paper Number 16
Assessing
the New
Federalism
An Urban Institute
Program to Assess
Changing Social Policies
The Urban
Institute
2100 M Street, N.W.
Washington, D.C. 20037
Phone: 202.833.7200
Fax: 202.429.0687
E-Mail: [email protected]
http://www.urban.org
Copyright 䉷 December 1998. The Urban Institute. All rights reserved. Except for short quotes, no part of this book
may be reproduced in any form or utilized in any form by any means, electronic or mechanical, including photocopying, recording, or by information storage or retrieval system, without written permission from the Urban Institute.
This report is part of the Urban Institute’s Assessing the New Federalism project, a multi-year effort to monitor and
assess the devolution of social programs from the federal to the state and local levels. Alan Weil is the project director. The project analyzes changes in income support, social services, and health programs and their effects. In
collaboration with Child Trends, Inc., the project studies child and family well-being.
The project has received funding from The Annie E. Casey Foundation, the W.K. Kellogg Foundation, The Robert
Wood Johnson Foundation, The Henry J. Kaiser Family Foundation, The Ford Foundation, The John D. and Catherine
T. MacArthur Foundation, the Charles Stewart Mott Foundation, The David and Lucile Packard Foundation, The
Commonwealth Fund, the Stuart Foundation, the Weingart Foundation, The McKnight Foundation, The Fund for
New Jersey, and The Rockefeller Foundation. Additional funding is provided by the Joyce Foundation and The Lynde
and Harry Bradley Foundation through a subcontract with the University of Wisconsin at Madison.
The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or
its funders.
The authors would like to thank Felicity Skidmore for her considerable contributions and Marti Burt, Jerome Gallagher, Rob Geen, Anna Kondratas, Nancy Pindus, and Alan Weil for thoughtful comments on an earlier draft.
Assessing the
New Federalism
A
ssessing the New Federalism is a multi-year Urban Institute project
designed to analyze the devolution of responsibility for social programs from the federal government to the states, focusing primarily
on health care, income security, employment and training programs,
and social services. Researchers monitor program changes and fiscal developments. In collaboration with Child Trends, Inc., the project studies changes in
family well-being. The project aims to provide timely, nonpartisan information to inform public debate and to help state and local decisionmakers carry
out their new responsibilities more effectively.
Key components of the project include a household survey, studies of policies in 13 states, and a database with information on all states and the District
of Columbia, available at the Urban Institute’s Web site. This paper is one in a
series of occasional papers analyzing information from these and other sources.
Contents
Executive Summary 1
Background, Purpose, and Sample 9
Devolution: Continuation of a Trend
The 13-State Sample 10
Overview of the Report 13
9
Pre-TANF Welfare Policies and Caseloads 15
Three Categories of Cash Assistance Experimentation
Administrative Program Characteristics 22
Caseload Characteristics 24
19
Moving to the TANF Era: States’ Early Responses 29
Who Should Receive Cash Assistance? 32
Who Should Work and How Much? 33
How Long Should Families Receive Cash Assistance? 38
What Part Should Cash Benefits Play in the System? 41
Implications of States’ Early TANF Policies 43
The Changing Nature of Cash Assistance in Our Sample States
The Importance of Implementation 47
Notes 49
About the Authors
53
44
Executive Summary
I
n 1996, federal legislation replaced the 60-year-old Aid to Families with
Dependent Children (AFDC) program with a block grant to states to finance a
new program, Temporary Assistance for Needy Families (TANF). The law
greatly extended the devolution of federal authority to the states that had been
occurring. When the law passed, many welfare reform initiatives already were
under way through federal waivers that allowed states to experiment with key features of the federal AFDC program. Because states varied considerably in their
use of waivers, in mid-1996 substantial diversity existed among states’ welfare
programs. This diversity was expected to influence states’ responses to TANF.
On the basis of case studies conducted in 13 states in late 1996 and early
1997, as well as secondary information about the states, we examine how this
diversity influenced initial state actions regarding TANF. The 13-state sample,
chosen to represent all regions of the country and a wide range of income and
employment circumstances, encompassed over 60 percent of the nation’s welfare population in 1996.1
We describe the approaches to cash assistance in place in the sample states
on the eve of TANF’s passage, focusing on how far states already had departed
from federal AFDC rules. We then discuss early state responses to the new legislation, highlighting trends and patterns in policy emphases and choices made
in light of states’ historical approaches to welfare. Our analysis shows that, for
the most part, the diversity among states’ cash assistance programs continues to
increase under TANF.
The Pre-TANF Picture
Three factors that influenced states’ early TANF decisions provide some
insight into the differences among the 13 sample states:
● The extent of pre-TANF waiver experimentation,
● States’ administrative approaches to welfare, and
● Differences in states’ current caseload characteristics.
State experiments undertaken through waivers changed many of the fundamental features of AFDC—features intended to affect important recipient behaviors including marriage, having children, going to work, and the
length of time spent on welfare.
Waiver activity among our sample states focused on four major policy
areas: eligibility, work, time limits, and payment policies (including family
caps). Changes in eligibility rules were designed to be more neutral toward
marriage by making it easier for two-parent families to move on and off AFDC
as they lost and found jobs. Changes in work policies were focused on increasing incentives to work and increasing work participation requirements and
penalties for not complying with the new requirements. A few states were
experimenting with time limits that would terminate benefits after a certain
period of time, although individuals could again receive benefits after a
period of ineligibility.
Based on whether states were experimenting with the four policy categories
before the passage of TANF, we classify the AFDC programs operating in our
sample states into three categories:
Minimal Experimenters: Alabama, Colorado, and New York
These are states that had changes under way in only one of the four policy
areas. The group includes states with very different approaches to welfare.
Alabama operated its AFDC program under federal rules with low benefit levels. Colorado operated a relatively traditional AFDC program with moderate
benefit levels and experimentation in some counties designed to increase work.
New York operated a high-benefit, fairly traditional AFDC program with some
experimentation focused on helping mothers with child support achieve independence from welfare.
Moderate Experimenters: California, Michigan, Minnesota, and Washington
States in this category were experimenting with two out of the four policies highlighted. These states were, coincidentally, distinguished by their relatively high benefit levels and tended to focus on experimentation designed to
expand eligibility for two-parent families and to increase incentives to work.
Michigan included more aggressive work requirement policies in its statewide
experimentation than others in this category.
2
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
Extensive Experimenters: Florida, Massachusetts, Mississippi, New Jersey, Texas,
and Wisconsin
States in this group were experimenting with a wider variety of changes to
the federal AFDC rules. All expanded eligibility to more two-parent families,
were experimenting with a variety of policies to increase recipients’ work activities, and were experimenting with time-limited welfare benefits, family caps,
or both.
State approaches to administration of cash assistance programs differed in
ways that may also affect their responses to the opportunities presented
by TANF.
Our sample includes seven states in which state employees administer welfare through local offices under state control (state-administered systems) and
six states in which county employees are responsible for local administration
(county-administered systems). In county-administered systems, local offices
traditionally have had flexibility in designing employment services for welfare
recipients. As states moved toward more work-focused cash assistance programs during the pre-TANF era, however, even state-administered systems were
allowing local offices to play a larger role in designing procedures to shift
clients into work activities. Most states reported facing the challenge of moving welfare offices away from an eligibility-compliance culture toward forging
a direct link between welfare and work.
Two characteristics of state caseloads—family structure and the percentage
of the caseload in work activities—highlight the substantial differences
across state cash assistance programs in 1996.
“Child-only” AFDC cases—in which the children do not live with a parent
or the parent they are living with is not eligible for benefits—make up vastly different proportions of states’ caseloads. (Parents might not be eligible because
they are not citizens, are receiving federal Supplemental Security Income benefits, or are sanctioned for not participating in required work activities.) Nationwide, one in five AFDC recipient units were child-only units, compared with
more than one-third in states such as Alabama and Mississippi. The percentage of the caseload made up of two-parent families also varied substantially,
with high proportions occurring in states combining high benefits with eligibility expansions for two-parent families.
The Early TANF Era: Trends and Responses
Although TANF generally increases state flexibility, in some ways the new
legislation gives states less freedom in designing cash assistance programs than
they had during the waiver era. The new law mandates important features of
THE URBAN
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CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
3
states’ welfare programs and sets up financial incentives to further direct
reform. To achieve the stated goals of reducing welfare dependency, preventing the incidence of out-of-wedlock pregnancies, and encouraging the formation and maintenance of two-parent families, the federal government mandated
certain rules about eligibility, work, and time on welfare. States are constrained
in using federal block grant monies and subject to financial penalties unless
their programs conform in three areas designed to move states toward requiring work and reducing welfare dependence:
● States must achieve work participation targets of 90 percent for two-parent
families by 1999 and 50 percent for all families by the year 2002. Work participation activities can include only a limited amount of education activities, and required participation for single-parent families must increase from
20 hours per week in 1997 to 30 hours per week by 2000. States must include
all families with adults in their work participation rates unless the family has
a child under age one. And all welfare recipients not exempt from work participation must be in a work activity by the end of two years to continue
receiving assistance.
● States can only use federal monies to provide cash assistance for families that
include an adult for up to five years in a lifetime, although states may exempt
20 percent of their average monthly caseload from the time limit.
● Unwed teen mothers must live with their parents or other responsible adults
and must attend high school or other equivalent training to be eligible for
cash assistance.
States can step beyond the federal program limits only by providing nonTANF state funds to support recipients who become ineligible for federal TANF
support. Since the block grant allocations for states, based on their AFDC
spending, are fixed for five years and requirements for states’ continued financial contributions are set only at 80 percent of pre-TANF spending, states have the
financial flexibility to provide non-TANF funds so long as caseloads remain low.
Balancing increased flexibility with new federal requirements, states made
changes to many aspects of their cash assistance programs, including to the
definition of who should receive cash assistance, who should work and
when, how long cash assistance should be received, and what part benefits
should play in the new system.
Who Should Receive Cash Assistance?
Continuing the pattern begun during the waiver era—a pattern designed to
remove the marriage barriers and work disincentives inherent in the preferential treatment of single-parent families—nine of our sample states now provide
full parity for two-parent families in their TANF programs, determining eligibility in the same ways as for single-parent families. Only Mississippi, a state in
the extensive experimentation category, retained the AFDC eligibility policies;
the remaining three states (California, Washington, and Massachusetts) retained
some aspects of AFDC rules limiting eligibility for two-parent families to those
with some recent work history.
4
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
One important change regarding family eligibility for TANF relates to
“diversion assistance payments.” These payments provide short-term cash
assistance to applicants to prevent their formal entry into the welfare system.
Eight of our sample states now offer short-term cash assistance. Diversion assistance payment policies cut across program models, relative benefit levels, and
administrative models.
Who Should Work and How Much?
With the exception of Massachusetts (which retained its waiver policies
regarding work), all sample states changed at least one important aspect of
their work requirements. These actions indicated that the federal financial
incentives to meet TANF’s participation requirements were having their
intended effect in motivating states to make their programs more employment
focused. In general, states in our sample moved toward more generous earned
income disregards (to encourage work); fewer exemptions (many more mothers with very young children will be required to participate in work activities);
work requirement time triggers (setting a time limit after which a nonexempt
recipient must be either employed, in a subsidized or unsubsidized job, or in
community service); and tougher sanctions for those failing to comply with
new work participation requirements (the toughest sanction states eliminate
the entire family benefit after repeated failures to comply).
How Long Should Families Receive Cash Assistance?
Some states use intermediate or “tiered” time limits (usually in addition to a
lifetime limit), some do not impose a lifetime limit, and some guarantee a limited
amount of assistance beyond the federal limits. States also vary in how they define
exemptions to the time limits, with some states permitting exemptions only for
disability and others adopting more lenient policies that exempt individuals who
cannot find employment or who face general hardship or “personal barriers.”
What Part Should Cash Benefits Play in the System?
States were free to set their own benefit levels before TANF, but the new legislation gave them more flexibility over payment policies. The new law also
offered states an incentive to cut benefits, since the block grant allocations were
fixed over five years and states may use savings over what they spent on welfare
for other purposes. Countering this incentive, however, was the “windfall” that
most states received from the federal block grant. States have made few changes
in their basic benefit structures in response to TANF, and only two states adopted
new family cap policies that will no longer increase benefits if a child is conceived and born while the family is on welfare.
State policy choices since TANF are increasing diversity in cash assistance
policies across the nation.
Some states are moving further toward policies that discourage the use of
welfare, while others are maintaining large parts of the safety net that were
available under AFDC. All are moving toward a stronger focus on work, but
they emphasize different approaches to reach this goal. Even among states that
THE URBAN
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CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
5
already had been experimenting with broad changes to AFDC before TANF,
welfare programs are undergoing a great deal of change. Somewhat fewer
changes occurred in the states with extensive experimentation under way, but
nearly all states in our sample changed two or more major policies.
With some policies there is more conformity among the sample states than
with others. Nine out of 13 states now treat two-parent families who need assistance the same as single-parent families, mostly eliminating all special work
rules for two-parent eligibility. While 10 states had been experimenting with
two-parent eligibility before TANF, only three states had eliminated all special
rules applying to two parents. Eight out of 13 states adopted formal diversion
assistance programs (compared with only one state pre-TANF).
Early TANF decisions were clearly affected by the states’ historic approach
to benefit generosity.
With the exception of Michigan, states with relatively high benefits and
minimal to moderate pre-TANF experimentation (New York, California, Minnesota, and Washington) tend to prefer approaches that encourage families to
move off welfare through incentives rather than penalties. These states have
high-intensity earned income disregards (where families can earn more than
$1,000 per month before losing eligibility for cash welfare) and low-intensity
sanction policies (under which families never lose their entire benefit as a result
of a sanction). All four of these states adopted diversion programs, offering families cash incentives for staying off welfare.
As a group, states with the most extensive pre-TANF policy changes altered
policies somewhat less than others. However, even these states tended to move
to stronger work-first models of welfare. For example, Florida and New Jersey
adopted even higher earned income disregards and fewer exemptions from
work activities. New Jersey maintained policies consistent with its relatively
strong safety net by holding to moderately intensive sanctions and allowing two
six-month extensions to its five-year time limit.
The debate in three states in our sample—Colorado, California, and New
York (all operating county-administered models of cash assistance)—was
characterized at least in part by an historic desire to give counties a greater
role in social welfare policy.
Colorado moved furthest in this direction by allowing counties to determine
diversion policies and work requirements. While New York’s counties were
not given control over specific policies, their TANF plan provides performance
awards based on job placements, and local districts can apply for waivers from
state regulations.
6
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
Most states in our sample did not adopt the optional features of family caps
and basic benefit reduction; only two states adopted new family caps under
TANF and only one state reduced its basic benefit.
The family cap generated considerable debate in the U.S. Congress, and several prominent versions of the federal welfare reform bill proposed to mandate
family caps for all states. (But many states did not believe that this policy was
effective or necessary.) The family cap tends to separate the pre-TANF experimenters from the more traditional states (only one state in the pre-TANF minimal
to moderate experimenters has a family cap, compared with five out of six extensive experimenters, including Wisconsin, which has implemented a new flat benefit policy that does not vary by family size).
The ultimate key to success in these efforts will lie in implementation and
organizational reforms in the way services are actually delivered to clients.
In many states, new cash assistance policies represent a major departure
from the past. Since most states already had more employment-focused policies
under way before TANF, diversion assistance and time limits clearly present the
newest implementation challenges. The strongest message we heard in our site
visits to state and local welfare offices was that most states will adopt new procedures or complete transitions begun under waivers to ensure that new workfocused programs will be a success. But many respondents were worried that
the TANF time clocks for work participation and benefit termination were ticking away while these reforms were still getting under way, raising the specter
that—even in a good economy—some state changes focused on service delivery
might come too late for those whose clocks are ticking.
THE URBAN
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CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
7
Background, Purpose,
and Sample
O
n August 22, 1996, the federal government replaced the 60-year-old
Aid to Families with Dependent Children (AFDC) program with a
block grant to states to finance a new program, Temporary Assistance
for Needy Families (TANF). This federal legislation was remarkable
in two respects. It eliminated the federal entitlement to cash assistance for
such families, and it gave states unprecedented flexibility to design and operate
cash assistance programs. Henceforth, states could only use federal TANF funds
to provide assistance on a temporary basis (no more than five years in a recipient family’s lifetime). Receipt of the full block grant allocation depended on
documentation proving that increasing shares of a state’s caseload participated
in allowable work activities.2 Twenty-five percent of states’ TANF families must
participate in work activities for at least 20 hours a week in 1997, with the level
of participation to increase to 50 percent for at least 30 hours a week by 2002.
Participation rates specific to two-parent families—a small share of the total
cash assistance caseload—are 75 percent and 90 percent. Within these broad
requirements, however, states have considerably more authority to design cash
assistance for families with children.
Devolution: Continuation of a Trend
In fact, this devolution of federal authority was, in many ways, an extension
of business as usual. States have always had the authority to determine their cash
assistance benefit and eligibility levels, and, before TANF, benefits were paid for
out of both state and federal revenues according to a federally prescribed, open-
ended matching formula. More important, explicit welfare reform initiatives
were under way in many states long before passage of the federal legislation,
through federal waivers of certain rules that allowed states to experiment with
changes to their AFDC programs.
Some states used these waivers to implement comprehensive statewide
reform. Others used them to experiment with changes to specific AFDC provisions or implement reforms on a pilot basis in selected counties. Thus, there
was considerable diversity in state welfare programs in mid-1996, which influenced states’ TANF actions and the scale of changes they had to make to comply with federal TANF rules.
This report explores how this diversity influenced initial state responses to
TANF, on the basis of case studies and secondary information about 13 states.
Together these states comprise more than 60 percent of the nation’s welfare population. Site visits were conducted in late 1996 and early 1997.3 Our case studies included interviews with state political and policy leaders, heads of state
departments responsible for cash assistance programs, and local offices responsible for delivering cash assistance benefits to welfare clients.4 The intent was to
learn about their social welfare policies just before the new legislation: how they
made decisions about welfare policy, what goals they set for their programs, and
how these goals were translated into policies and procedures. At the time of our
visits, some states were still debating how to respond to the new federal legislation. Other states had already made final decisions about their new policies. The
implementation status of these policies varied across the states—some policies
had already been implemented for quite some time, others were just beginning
to be put into practice, and others had yet to be implemented. Documents from
the 13 states—legislation, new program regulations, and caseworker handbooks—supplemented information obtained through our extensive interviews.5
These states’ social welfare policies encompass a wide range of social supports for low-income families, including child care, transportation, and health
coverage. These supports clearly play a large role in helping low-income families achieve independence from cash assistance, and ultimately in the success
of welfare reform. However, given its importance to the safety net and the
potential for major changes resulting from federal welfare reform, this report
focuses on the more narrow topic of cash assistance for low-income families as
a first step in understanding the changing social safety net in the states.6
The 13-State Sample
The 13-state sample represents all regions of the country and a wide range of
income levels (figure 1). Washington and California in the West, Wisconsin and
Michigan in the Midwest, and Florida in the South were within 5 percent of the
national average in per capita income in 1996. Colorado in the central part of the
country, Minnesota in the Midwest, and New York, New Jersey, and Massachusetts
10
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
Figure 1 Case Study States, 1996
Per Capita Incomes Compared with the National Average
WA
MN
WI
MA
NY
MI
NJ
CO
CA
MS
AL
TX
FL
105 percent or more of
national average
Range: $25,663–$31,334
Within 5 percent of
national average
Range: $23,320–$25,346
95 percent or less of
national average
Range: $17,575–$22,282
Source: State Personal Income, 1958–1996. CD-ROM. Washington, DC: Regional Economic Measurement Division (BE-55), Bureau
of Economic Analysis, Economics and Statistics Administration, U.S. Department of Commerce, September 1997.
in the Northeast were 5 percent or more above the national average. Texas, Mississippi, and Alabama, all in the South, were 5 percent or more below the national
average. Their unemployment rates were similarly varied (figure 2). Colorado,
Massachusetts, Minnesota, and Wisconsin enjoyed unemployment rates at least a
full point below the national average (5.4 percent in 1996). Rates in California
and Washington, in contrast, were at least a full point above that average.
AFDC program size also varied across our sample states (table 1). Obviously,
the more populous states had the bigger programs, but even when expressed
in per capita terms, the variation was considerable. Compared with a national
average of about 6 percent of nonelderly families receiving AFDC in 1996, for
example, the share was only about 3 percent for Alabama and Colorado versus almost 10 percent for California. The proportion of all poor families with
children receiving AFDC in 1996 varied from about a quarter or lower in
Alabama, Mississippi, and Texas to about a half or higher in California, Massachusetts, Michigan, New Jersey, New York, and Washington.
Program size is clearly related to program generosity. Other things being
equal, the higher the benefit level, the larger the caseload, because more famiTHE URBAN
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CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
11
Figure 2 Unemployment Rates in Sample States, 1996
8.00
7.20%
7.00
6.50%
6.10% 6.20% 6.20%
Unemployment Rate (%)
6.00
5.60%
U.S. Average = 5.41%
5.10%
4.90%
5.10%
5.00
4.30%
4.20%
4.00%
4.00
3.50%
3.00
2.00
1.00
0.00
AL
CA
CO
FL
MA
MI
MN
MS
NJ
NY
TX
WA
WI
States
Source: Bureau of Labor Statistics, March 27, 1998.
lies qualify for assistance. Among our sample states, Alabama, Mississippi,
and Texas had the lowest AFDC benefit levels in 1996; California and New York
had the highest.
Total AFDC expenditures varied by program size and generosity. The proportion paid for by nonfederal sources, however, also varied because the federal
matching formula used to finance the AFDC program provided more generous
matching funds for poorer states. For the country as a whole, the federal government paid 46 percent of the $23.5 billion spent on AFDC in 1996. Mississippi,
with the least expensive AFDC program at $68 million in 1996, paid only 22
percent of the total. Alabama, near the low end with a $94 million program, paid
34 percent of the total. California and New York, at the high end with program
costs totaling $6.2 billion and $3.9 billion respectively, each paid half of the total.
In no state did AFDC absorb a large share of the state general fund.7 In
Alabama, Mississippi, and Texas—all states with low benefit levels and the lowest percentages of poor families with children receiving cash assistance—AFDC
program costs accounted for only about 1 percent of the state general fund. At
the other extreme, California, with the highest benefit level and the second
highest share of poor families with children receiving cash assistance, spent
more than 6 percent of its general fund on AFDC.
12
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
Table 1 Characteristics of States’ AFDC Programs—Fiscal Year 1996
State
AFDC
Families as
AFDC
Maximum
Families
Percent of
Families as
Benefit
in
Poor Families Percent of
per
Total
Average
with
Nonelderly
Family
Expendituresc
Montha
Childrenb
Householdsb
of 3
($ millions)
Alabama
41,300
California
883,900
Colorado
34,500
Florida
205,100
Massachusetts
85,900
Michigan
172,500
Minnesota
57,500
Mississippi
46,400
New Jersey
109,400
New York
422,600
Texas
246,500
Washington
98,200
Wisconsin
55,500
United States 4,442,600
18.6
57.0
41.9
33.1
53.3
50.1
49.1
25.9
55.2
51.6
25.0
63.1
38.0
43.6
3.3
9.9
2.8
5.1
4.8
6.1
4.1
6.1
4.9
8.1
4.4
5.7
3.7
5.7
$164
596
356
303
565
459
532
120
424
577
188
546
517
$393
94
6,178
230
781
606
801
368
68
522
3,938
590
655
300
23,503
Percent
State/Local
Share of
Expenditures
Percent
of State
General
Fundc
34
50
49
45
50
43
46
22
50
50
40
50
41
46
0.8
6.2
1.4
1.9
3.5
3.8
1.4
0.9
1.4
2.3
0.8
3.0
1.5
—
a. From Administration for Children and Families—231 AFDC line-by-line report.
b. Percents are calculated as number of families receiving AFDC in an average month of the calendar year relative to total number of poor families with children and of all nonelderly households. The number of families in each state were averages calculated
from the March 1994, 1995, and 1996 Current Population Surveys.
c. National Conference of State Legislatures, State Budget Actions, Denver, CO, 1996.
Overview of the Report
The following section of this report describes the major characteristics of
cash assistance programs in place in the sample states on the eve of TANF’s passage, focusing on how far states already had departed from traditional federal
AFDC rules. On the basis of these descriptions, we group states into three categories: minimal experimentation, moderate experimentation, and extensive
experimentation. We also describe other program and caseload characteristics
likely to affect states’ TANF choices. The next section discusses early state
responses to the new federal welfare reform legislation, highlighting policy
emphases and choices made in light of the state’s historical approach to welfare.
The final section summarizes the variations in policy emphases across these
states and discusses the implications in the context of their pre-TANF program
structures.
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13
Pre-TANF Welfare
Policies and Caseloads
P
resident Clinton’s famous 1992 campaign promise to “end welfare as
we know it” resonated with states already frustrated by caseload
increases during the early 1990s. The increases roughly paralleled the
recession-induced rise in unemployment (figure 3) but lasted longer
and were more sustained than caseload increases during previous recessions.8
State frustration was somewhat alleviated by a federal provision (Section 1115
under the Social Security Act) that allowed states to apply for waivers of federal
AFDC policies to pursue alternative strategies. The federal government
responded to the states’ growing interest in reforming their welfare programs by
increasing waiver approvals between 1993 and 1996. By the time federal welfare reform was passed by Congress and signed by the president, waivers had
been approved for 43 states.9 During the period of waiver expansion, both
unemployment and caseloads were declining.
State experiments undertaken through these waivers changed many of the
fundamental features of AFDC—features intended to affect important recipient
behaviors, including marriage, childbirth, work, and time spent on welfare.
Waiver activity among our sample states in 1996 was considerable in four major
areas (table 2):
Eligibility. AFDC limited two-parent eligibility to families whose principal wage earner worked fewer than 100 hours per month, was unemployed
for at least 30 days, and could demonstrate substantial previous work
experience. It was widely believed that these rules created disincentives
for two-parent welfare recipients to move back into the workforce
quickly and contributed to the formation of single-parent families.
Figure 3 National Caseload Growth Compared with the Unemployment Rate
5,500,000
8.0
6.0
4,500,000
Caseload
5.0
4,000,000
4.0
3,500,000
3.0
3,000,000
Number of AFDC Cases
2.0
Unemployment Rate
2,500,000
1.0
2,000,000
Jan 88
0.0
Jan 89
Jan 90
Jan 91
Jan 92
Jan 93
Jan 94
Jan 95
Jan 96
Jan 97
Date
Source: Bureau of Labor Statistics, 1988 through 1997 administrative data.
AFDC also allowed teen mothers to apply for assistance as a separate
unit but permitted states to require them to live with their parents to
gain eligibility. Many believed that allowing unmarried teen mothers to
form assistance units encouraged out-of-wedlock pregnancy.
Prior to TANF, 10 states in our sample had waived one or more rules to
make it easier for two-parent families to move on and off AFDC as they
lost and found jobs. In most states the new eligibility rules applied
statewide. One state, Texas, had begun implementing a diversion program
that would provide short-term cash assistance to help families avoid entry
into welfare. Only five states in our sample—Massachusetts, Minnesota,
Mississippi, New York, and Wisconsin—had adopted the optional federal rules requiring unmarried teen mothers to live with their parents or
other responsible adults to be eligible for cash assistance.10
Work. The AFDC program specified rules for the treatment of earnings
while on welfare, and states were required to operate Job Opportunities
and Basic Skills (JOBS) programs offering a range of education, training, and work activities to recipients. However, a large share of the adult
caseload was exempt from participation; participants were required to
work only 20 hours a week; and states only had to reach a 20 percent
participation rate for their nonexempt caseload.11 The general consensus
16
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
Unemployment Rate (percent)
7.0
5,000,000
Table 2 AFDC Provisions Most Commonly Waived by the Sample States before TANF (as
of July 1996)
Policy
Number of States in Sample with
Waivers from AFDC Policies
(Statewide Policies in Bold)a
Features
AFDC/JOBS Provisions
Two Parents
Restricted to unemployed or disabled
two-parent families meeting work
history requirements for eligibility and
restrictions on number of hours of
work allowed per month for applicants
and recipients.
10 states: CA, FL, MA, MI, MN, MS,
NJ, TX, WA, WI
Diversion
Assistance
None
1 state: TX
Earnings
Incentives
$90/month disregarded for work
expenses plus $30 and 1/3 of remaining
monthly earnings disregarded for four
months; for the next eight months
$120/month disregarded; subsequently
disregard dropped to $90/month.
9 states: CA, CO, FL, MA, MI, MN,
MS, NY, WI
Requirements
Minimum JOBS program participation
rate of 20% for nonexempt caseload;
participation measured by 20 hours
per week standard. Person disabled,
caring for disabled, or with child under
3 exempt.
11 states: CA, CO, FL, MA, MI, MN,
MS, NJ, NY, TX, WI
Sanctions
Adult benefit removed for
noncompliance in JOBS.
6 states: CO, MA, MI, MS, NJ, WI
Dependency
Time Limit
None
4 states: FL, TX, WA, WI
Payments
Family Cap
No
4 states: MA, MS, NJ, WI
Eligibility
Work
Sources: Setting the Baseline: A Report on State Welfare Waivers, June 1997 (Office of the Assistant Secretary for Planning and
Evaluation, Department of Health and Human Services); state AFDC plans; and terms and conditions of waivers.
a. Indicates intent of state policy approved by federal government and some policy implementation under way at the time that
TANF passed. (In some cases, especially the more recent waivers, policies were being implemented gradually across the state.)
among many observers of the federal JOBS program was that it was not
as effective as hoped in moving recipients into work.12
In the pre-TANF period, nearly all states in our sample adopted some
policy to increase work among welfare recipients. Most states expanded
earned income disregards to encourage employment. Only 4 out of 13
sample states—Alabama, New Jersey, Texas, and Washington—still
retained the AFDC earned income disregard rules statewide in 1996.
Most states in our sample obtained waivers or made major changes in
their JOBS programs to implement tougher requirements designed to
increase participation in activities leading to employment. Eleven states
had increased the percentage of the caseload that was required to participate in work and work preparation activities. Many of these states
also increased the sanctions imposed on people who failed to comply
with new requirements.
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17
Dependency. Under AFDC, families could receive assistance as long as
they had a dependent child under age 18 and met their state’s income
eligibility criteria. Many critics of the welfare system argued that the entitlement nature of AFDC led to long-term dependency.13 However, lifetime time limits were largely absent from states’ waiver policies in part
because the federal government would approve time limits only if certain safeguards were included. Some states, including Massachusetts and
Wisconsin, were prepared to go forward with lifetime limits under certain
circumstances before TANF but were prevented from doing so by the federal government. Some states secured approval to experiment with temporary benefit termination. At the time TANF passed, most states still
retained AFDC’s guaranteed assistance to families with children.
Prior to TANF, only one state in our sample—Texas—had adopted a
statewide “benefit termination” time limit before the 1996 legislation,
which was being implemented gradually across the state beginning in
April 1996. The Texas time limit was “tiered” so that recipients could
receive benefits for 12, 24, or 36 months depending on their readiness for
work, and the time limit resulted only in a loss of eligibility for the adult
for five years (children continued to receive benefits). Washington
adopted a unique time limit that would reduce a family’s monthly benefit by 10 percent a year after adults had received welfare for four out of five
years. Florida and Wisconsin had time limits that were not statewide,
and both of these policies allowed the clock to be “reset” after a period of
ineligibility. Waiver approval for time limits, in all cases, required states
to continue aid or allow participation in a work program in cases where
the adult complied with program rules but was unable to find employment despite “best efforts.”14
Payments. States have always set basic benefit levels for families, and
benefit levels have traditionally increased with family size. Some
argued that this benefit policy encouraged welfare recipients to have
additional children.15
Prior to the passage of TANF, four states in our sample—Massachusetts,
Mississippi, New Jersey, and Wisconsin—adopted “family caps” that
either reduced or eliminated any increase in assistance for families when
another child was conceived and born while the family was receiving
welfare.16 New Jersey adopted a family cap first, with a waiver going
statewide in 1994, that eliminated any increase for children so born.
Thus, the most common waivers for states in our sample focused on increasing equity for two-parent families and increasing earned income disregards to
encourage work. While these were expansionist policies (both increased the
number of families eligible for welfare), they were designed to be more neutral
toward marriage and to encourage work. States with more generous earnings
disregards also increased the proportion of the caseload that was required to
participate in work-related activities relative to the federal JOBS requirement and
placed more emphasis on activities designed to lead immediately to employment
18
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
(such as job search activities rather than education or training). Some states also
increased the penalties for nonexempt recipients who failed to participate in
work activities. Other states chose to impose time limits during the waiver era,
although these time limits did not result in a lifetime limit on benefits.
Three Categories of Cash Assistance Experimentation
Based on whether states were experimenting with the four policy categories
shown in table 2 (eligibility, work, time limits, and payments) before the passage
of TANF, we classify the AFDC programs operating in our sample states into three
categories. Minimal experimentation refers to states that were operating with or
without waivers in one of our four selected policy areas. Moderate experimentation refers to programs that had changed two policy areas for at least some portion
of the states’ welfare population. Extensive experimentation refers to programs
experimenting with changes in three or more policy areas. Table 3 shows the
states in our sample grouped into these three categories, with policy changes
and dates approved (to show how long the waiver policy had been in effect), maximum benefit levels, and relative caseload size. Table 3 also shows whether the
state received waiver approval to implement the new policy statewide or limited experimentation to some counties.17
Table 3 States’ Pre-TANF Policies and Relative Caseload Sizes, 1996
State’s Pre-TANF
Departure from
Federal AFDC Rules
(waiver approval date)
Policy Departure
Eligibility
Work
a
Time Limitc
Payments
Relative
Benefit
Levelb
Caseload
as
Percent of
Nonelderly
Households
Low
Medium
High
3
3
8
d
Minimal Experimentation
Alabama
(e)
Colorado
(1994)
New York
(1989)
嘷
嘷
Moderate Experimentationd
California
(1994)
Michigan
(1994)
Minnesota
(1994)
Washington (1996)
䢇
䢇
䢇
䢇
䢇
䢇
嘷
Extensive Experimentationd
Florida
(1994)
Massachusetts (1995)
Mississippi
(1995)
New Jersey
(1992)
Texas
(1996)
Wisconsin
(1995)
嘷
䢇
嘷
䢇
䢇
䢇
嘷
䢇
嘷
䢇
䢇
䢇
High
High
High
High
䢇
嘷
䢇
嘷
䢇
䢇
䢇
䢇
Low
High
Low
Medium
Low
High
10
6
4
6
5
5
6
5
4
4
a. Open circles indicate waivers that changed the AFDC rules in some counties; closed circles indicate statewide waiver policies. See table 2 for characterization of policy changes.
b. States’ maximum benefits for family of three with no other income across the nation were divided into three equal groups based
on relative position to the U.S. median ($377). Benefit levels for sample states are shown in table 1.
c. Benefit reduction or termination time limit.
d. Minimal Experimentation indicates states with waivers in one or no policy categories; Moderate Experimentation indicates
states with waivers in two policy categories; Extensive Experimentation indicates states with waivers in three or more policy categories.
e. Alabama did not have an active waiver at the time that TANF passed.
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
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19
Minimal Experimenters: Alabama, Colorado, and New York
This group includes states with very different approaches to welfare.
Alabama’s AFDC program operated under federal rules with such low benefit levels in 1996 that the federal Food Stamp program was the main income support
program for its low-income families with children. Alabama did strictly enforce
sanctions for noncompliance in JOBS, but the sanctions were thought not to stimulate compliance for those required to participate because they eliminated only
the adult portion of the benefit, which was partially offset by increased food
stamp benefits. (Families lost $30 per month in AFDC benefits when they were
sanctioned, and food stamps made up one-third of this loss.)
Colorado, a fairly rich state, also had a small, relatively traditional AFDC
program with a medium benefit level. Only 3 percent of nonelderly families
received assistance in Colorado, which matched Alabama as the smallest caseload in our state sample. Like Alabama, welfare historically has not been a
prominent policy issue in Colorado, although the state maintains a strong interest in educating and training its low-skilled population—welfare recipients and
working poor alike. Colorado did have a waiver to increase work among its
caseload, and the state experimented with a combination of earnings incentives, tougher work requirements, and sanctions in five counties. However,
these counties still emphasized skill development work activities over immediate employment. These policies reflected Colorado’s goal of creating incentives for recipients to leave and stay off of welfare, rather than move recipients
off quickly into low-paying jobs with the high probability that they would
return. Colorado also reported that it fostered an environment in which counties were encouraged to tailor programs to fit their communities while remaining within the federal AFDC and JOBS rules.
New York contrasts sharply with the other two states in the minimal
experimentation category with its relatively high benefit level and large caseload. New York had minimal reform under way before TANF. The state had
implemented administrative changes to strengthen requirements for work and
work-related activities, but it had no active waivers from federal AFDC policy with the exception of the Child Assistance Program (CAP), a voluntary
program for AFDC mothers with child support orders. CAP, implemented in
14 counties, was designed to help families with child support court orders
achieve independence. The program encouraged work through higher earned
income disregards and increased support services in exchange for lower
AFDC benefits.
Moderate Experimenters: California, Michigan, Minnesota, and Washington
States in this category were experimenting with two out of the four policies
highlighted. As shown in table 3, all states in this category paid relatively high
benefits, and, with the exception of Minnesota (the one state in this group with
higher-than-average median income in 1996), all had relatively high proportions
of nonelderly families receiving cash assistance. All had waivers to experiment
with more generous eligibility for two-parent families, and, with the exception
20
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
of Washington, these states had more generous earned income disregard policies
than required under AFDC. None had waivers introducing family caps. Only
Washington had introduced a time limit policy, and it was relatively lenient.18
While Michigan’s approach to welfare has many features in common with
the other states in this category, it also stands out as the state with the most
aggressive approach to moving recipients into work. As shown in table 2,
Michigan is the only state in this category that adopted stricter sanctions along
with greater incentives to increase work activities among its caseload. Michigan’s policy that mandates work activities for all but the disabled and mothers
caring for a child who is disabled or under three months of age is unique among
this group of moderate experimenters.
Extensive Experimenters: Florida, Massachusetts, Mississippi, New Jersey,
Texas, and Wisconsin
States in this category were experimenting with a wider variety of changes to
the federal AFDC rules. All states in this group expanded eligibility to more twoparent families, were experimenting with a variety of policies to increase recipients’ work activities, and were experimenting either with time-limited welfare
benefits, imposing family caps, or both. States in this category are mixed in terms of
their relative benefit levels, and they all had a relatively moderate caseload size in
1996 (from 4 to 6 percent of nonelderly families). Some limited their extensive
experimentation to select sites while others experimented on a statewide basis.
Mississippi and Florida moved toward reform by experimenting with new
policies in three out of the four categories shown, but most of the new policies
were adopted only in some parts of the states. Mississippi shifted from its traditional AFDC program by experimenting with a work-first demonstration in six
counties in 1995 that emphasized employment and immediate placement in
jobs over education and training. This demonstration also incorporated subsidized job placements and stricter work participation requirements with tougher
sanctions for noncompliance, which included reducing or eliminating food
stamp benefits. At the same time, Mississippi adopted a statewide family cap.
The most notable component of Florida’s waiver was one of the nation’s first benefit time limits, also implemented only in parts of the state. Florida was poised for
broader, statewide reform just before the federal legislation passed. Florida had
passed its Work and Gain Economic Self-Sufficiency (WAGES) Act, legislation
that shared many features found in Florida’s waiver, in June 1996.19
Wisconsin’s reforms designed to move welfare recipients into the workforce
were widely known and influenced the federal welfare reform debate. Wisconsin’s
policy was strongly focused on work, including a new sanctions policy, implemented statewide in March 1996, that included part of the food stamp benefit in
the penalty. New Jersey was also an early experimenter, with reforms in three out
of four of the policy categories that were implemented statewide between 1992
and 1994. New Jersey was the first state to experiment with a family cap, and it
drew considerable national attention as a result. New Jersey’s waiver policies
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21
regarding work, however, contrasted sharply with those in Wisconsin. New Jersey required more families to participate in work activities than the federal JOBS
program did (and those who did not participate faced tougher sanctions), but those
work activities focused on education and job training aimed at helping welfare
recipients achieve independence rather than immediate employment.
Massachusetts and Texas adopted extensive new policies before federal
reform had passed, but they only began implementing these reforms in 1996,
just before TANF. When Texas made its change, it was a dramatic one—going
directly from a very traditional AFDC program to a strong work-first policy with
a time limit, a move that was accompanied by a new statewide focus on workforce development. Massachusetts moved toward a strong work policy but
applied it to a small percentage of its caseload (because of a broad exemptions
policy), and it adopted a family cap.20
Administrative Program Characteristics
States vary in their approaches to administering cash assistance programs in
ways that may also affect their response to the opportunities presented by
TANF. Some states take full responsibility for administering programs, while
others supervise county administration of welfare programs. Most states with
county-administered programs require counties to share the cost of assistance
programs. States that have historically given counties more flexibility in the
delivery of welfare services may be better poised to devolve more responsibility to counties under TANF.
Our sample includes state-administered models and county-administered
models of welfare service delivery (table 4). In state-administered models
(seven states), state employees administer welfare through local offices. In
county models (six states), county employees under state supervision are
responsible for local administration. 21 Both types of models extended little
flexibility in determining welfare eligibility and imposing participation
requirements, in large part because of the strong role of federal regulations in
the pre-TANF period. In county-administered models, states have traditionally given local offices greater flexibility in designing employment services. In
contrast, in nearly all of the state-administered models, local offices reported
that they had little or no flexibility in designing employment services for
welfare recipients.
The majority of states in the minimal and moderate experimentation categories have county-administered welfare systems. In contrast, states in the
extensive experimentation category tend to have state-administered systems.
This difference may indicate somewhat more difficulty in reaching a consensus
on bold statewide reforms when counties play a strong role in the state’s welfare
system. Of course, other factors (such as the governor’s strength and will to
achieve reform) also play an important role in consensus building.
22
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
Table 4 Administrative Characteristics of Sample States’ Cash
Assistance Programs, 1996
States Grouped by
Pre-TANF Departure
from Federal AFDC Rules
(waiver approval date)
Administrative Model
County Share of State
Spending: Percent
of Benefits/Percent
of Administrationa
Reported
Degree of
County
Flexibilityb
Minimal Experimentation
Alabama
(c)
Colorado
(1994)
New York
(1989)
State
County
County
—
43/40
50/50
None
Broad
Broad
Moderate Experimentation
California
(1994)
Michigan
(1994)
Minnesota
(1994)
Washington
(1996)
County
State
County
State
5/30
—
15/100
—
Broadd
Limited
Broad
Limited
Extensive Experimentation
Florida
(1994)
Massachusetts
(1995)
Mississippi
(1995)
New Jersey
(1992)
Texas
(1996)
Wisconsin
(1995)
State
State
State
County
State
County
—
—
—
25/100
—
0/0
Limited
Limited
None
Limited
Limited
Broad
a. “Background Material and Data in Programs within the Jurisdiction of the Committee on Ways and Means,” Committee on Ways and Means, U.S. House of Representatives, May 19, 1998, tables 7-18 and 7-17.
b. County flexibility: Limited = county flexibility primarily in organization of employment services; Broad = wide
discretion to counties, including deciding exemptions and work participation referrals.
c. Alabama did not have an active waiver at the time that TANF passed.
d. Counties varied in terms of how they described the degree of flexibility they had in administering AFDC.
With the exception of Wisconsin, all of the states with county-administered
systems require their counties to pay a share of the benefit costs and local administrative costs (table 4). The required share of nonfederal benefit costs varies
from a high of 50 percent in New York to a low of 5 percent in California. The
required share of local administrative costs ranges from a high of 100 percent in
New Jersey and Minnesota to a low of 30 percent in California. County funding
responsibilities do not necessarily imply county flexibility, however. Local offices
in California and New Jersey reported limited flexibility in designing their
welfare programs, while others reported great freedom to do so. Counties in
Colorado, for example, were permitted to experiment with welfare reforms before
TANF (Denver, for example, experimented with JOBS-like case management
techniques in its AFDC program).
At the time of our case study visits, most states, regardless of whether they
employed a state- or county-administered model for their cash assistance program,
reported that efforts were under way to strengthen the link between welfare and
employment. And most states reported that forging a direct link between welfare and work within an eligibility-compliance culture was a challenge. The traditional AFDC culture, in most of our sample states, as well as elsewhere, has
focused on determining client eligibility for cash assistance, ascertaining whether
the client was required to participate in work activities, informing the client
about other services available in the county, and making sure that payments were
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23
correctly calculated and delivered on time. Communication between the welfare
eligibility system and employment services typically was conducted in writing,
and there was no perceived obligation on the part of the eligibility caseworker to
encourage or link a client with work.
States that had well-developed work-first programs before TANF had further
strengthened the link between cash assistance and work. In this process some
states with state-administered welfare systems (including Florida, Washington, and Texas) gave local areas a larger role in designing and developing service delivery systems. Florida, for example, was establishing community-based
private/public boards to oversee work and support services. Overall, these
changes have introduced more flexibility at the local level, although welfare is
still operated under a state-administered system.
Washington and Texas provide two more examples of state-administered
welfare systems that were moving toward more local flexibility before TANF.
Washington state retained control over policy development, technical assistance, program monitoring, and evaluation. However, it divided its program
operations and administration into six regions in 1996 to ensure that community needs were identified and community resources were used in operating the
AFDC and JOBS programs. In 1995 Texas shifted responsibility for job training
and employment for welfare clients from the state welfare offices to 28 regional
workforce development boards.
Caseload Characteristics
Other things being equal, a state’s program model will influence the characteristics of its caseload. Although it is not possible to sort out program influences on caseload from those of other important factors (such as employment
conditions and education levels), the basic characteristics of a state’s caseload in
1996 can still help us understand state responses to TANF. Two characteristics—
family structure and percentage of the caseload in work activities—are particularly important because they indicate how states’ caseloads compare with the
new federal requirements that states meet work participation targets for families. These work participation targets are higher for two-parent families than for
single-parent families, and units without adults are not included in the targets.
Family Structure
For the country as a whole, only 8 percent of the AFDC caseload consisted
of two-parent families (table 5). As is to be expected, California, Michigan, and
Washington—all states that extended eligibility to two-parent families
statewide—had higher-than-average proportions of two-parent families in the
AFDC caseload. Although Massachusetts and Texas had also implemented
waivers extending eligibility to two-parent families statewide, both had lowerthan-average shares of two-parent families in their caseloads. It is unclear
24
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
Table 5 Characteristics of State Caseloads, 1996
States Grouped by
Pre-TANF
Departure from
Federal AFDC Rules
(waiver approval date)
Family Structure
(percent)
Composition of Child-Only Cases
(percent)a
Single
Parent
Two
Parents
Child
Only
No
Parent
Parent Not
a Citizen
Parent
on SSI
Parent
Sanctioned Other
Minimal Experimentation
Alabama
(b)
Colorado
(1994)
New York
(1989)
59
80
73
1
2
9
40
18
18
33
46
22
0
8
30
29
22
8
26
4
5
13
19
35
Moderate Experimentation
California
(1994)
Michigan
(1994)
Minnesota
(1994)
Washington
(1996)
60
76
80
69
18
11
7
15
22
13
13
16
26
35
39
54
44
1
7
14
17
44
33
20
9
5
5
1
5
15
10
11
Extensive Experimentation
Florida
(1994)
Massachusetts (1995)
Mississippi
(1995)
New Jersey
(1992)
Texas
(1996)
Wisconsin
(1995)
78
77
66
76
73
69
1
5
0
4
2
5
21
18
34
20
25
26
50
32
38
44
33
31
8
11
0
9
27
2
16
31
42
13
13
30
3
6
7
22
20
19
23
27
13
12
7
18
U.S. Average
71
8
21
38
16
21
10
15
Source: Urban Institute tabulations of 1996 AFDC Quality Control Data, from the Administration for Children and Families, U.S.
Department of Health and Human Services.
a. Numbers may not add exactly to 100 percent because of rounding.
b. Alabama did not have an active waiver at the time that TANF passed.
whether these states had low two-parent participation despite their waivers
because the rule was relatively new (and possibly not well known), because
the benefit was too low to attract eligible two-parent families (in Texas), or
because the AFDC work history rule applying to two-parent families remained
in effect (in Massachusetts).
Child-only cases consist of cash assistance units in which children either are
not living with a parent or are living with a parent who was ineligible for benefits.
Child-only cases without parents do not count as part of the caseload for the
purpose of calculating states’ TANF work participation targets. Thus, states with
a large percentage of child-only cases without parents have fewer adults to move
into work activities. On the other hand, these states’ caseloads may not decline
much because child-only cases will not be subject to new policies designed to
move parents into work. Nationwide, 21 percent of AFDC recipient cases in 1996
were child-only cases. Among our sample states, more than a third of the caseloads in Alabama and Mississippi consisted of child-only cases. Texas and Wisconsin also had higher-than-average shares of child-only cases.
The composition of child-only cases also varied widely by state. Nationally,
nearly 40 percent were eligible children who did not live with their parents; among
our sample states, this percentage was higher in Colorado, Florida, Minnesota, New
Jersey, and Washington. Nationally, 47 percent of child-only cases involved children living with parents who were not AFDC-eligible—21 percent involved parents
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25
on Supplemental Security Income (SSI), 16 percent involved parents who were not
citizens, and 10 percent involved parents who had been sanctioned. Among our
sample states, Alabama, Colorado, Massachusetts, Michigan, Minnesota, Mississippi, and Wisconsin had a higher-than-average percentage of parents on SSI. California, New York, and Texas, consistent with their relatively large immigrant populations, had a much higher than average percentage of parents who were not
citizens. Alabama, New Jersey, Texas, and Wisconsin had a higher-than-average
percentage of parents sanctioned. Alabama, the only state in our sample without an
active waiver from federal AFDC rules, had strong JOBS sanction enforcement policies during the pre-TANF era, as noted earlier. The other three states, all in the
extensive experimentation category, had implemented tough sanctions to enforce
participation in their new work-first programs.
Work Activities
The new federal rules require states to show that 25 percent of TANF families
engaged in work activities in 1997, to increase to 50 percent in 2002, and increasing participation in job search and employment was a major focus of state waiver
activity. About one-third of all adult single females receiving AFDC already participated in work-related activities in an average month during 1996 (table 6).22
Among our sample states, Michigan, Minnesota, and Wisconsin—all pursuing
a variety of policies to increase work among their caseloads—had more than 40
percent of their caseloads participating in some work activity. As noted earlier,
Table 6 Female Adult Recipients in Work-Related Activities, 1996
Percent of
Adult Female
Recipients in
Work Activities
Employed
Looking
for Work
In Training/
Education
Minimal Experimentation
Alabama
(b)
Colorado
(1994)
New York
(1989)
31
24
23
3
9
4
11
1
4
18
13
14
Moderate Experimentation
California
(1994)
Michigan
(1994)
Minnesota
(1994)
Washington
(1996)
33
54
46
35
16
26
11
7
6
13
17
11
12
12
17
16
Extensive Experimentation
Florida
(1994)
Massachusetts
(1995)
Mississippi
(1995)
New Jersey
(1992)
Texas
(1996)
Wisconsin
(1995)
U.S. Average
29
37
36
12
23
49
34
7
9
8
3
3
21
10
12
10
8
6
12
9
10
11
17
21
4
8
19
13
States Grouped by Pre-TANF
Departure from Federal AFDC
Rules (waiver approval date)
Percent in Different Work Activitiesa
Source: Urban Institute tabulations of 1996 AFDC Quality Control Data, from the Administration for Children and
Families, U.S. Department of Health and Human Services.
a. Totals may not add exactly to total Percent of Adult Female Recipients in Work Activities (column 2) because of
rounding.
b. Alabama did not have an active waiver at the time that TANF passed.
26
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
Michigan had implemented multiple policies to increase work activities among
its caseload, which applied to a large share of the caseload. In 1994, Minnesota
implemented an incentive-focused waiver in eight counties that allowed participation in welfare until a household’s earnings reached 140 percent of the federal
poverty level. The waiver also required all recipients to complete an employability plan after two years on welfare.
Nationally, 10 percent of recipients were combining welfare with employment. Among our sample states, Michigan and Wisconsin—states with bold,
employment-focused waivers under way for at least two years—had more than
20 percent of their caseloads doing so. California—a moderate experimentation state that had significantly increased earned income disregards and
reduced the proportion of the caseload exempt from work—was not far behind,
with about 16 percent of its caseload working in unsubsidized jobs.
Only New Jersey fell considerably behind other sample states in achieving
work activities for its adult female caseload. New Jersey’s waiver policy
focused on education and training and addressing the needs of the entire family to help families achieve independence; respondents in our case studies,
however, reported that caseworkers lacked the time required to implement
the ambitious policy.
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27
Moving to the TANF Era:
States’ Early Responses
T
he period of waiver experimentation ended with the passage of the
Personal Responsibility and Work Opportunity Reconciliation Act
(PRWORA). PRWORA created the TANF program, stating the following purposes:
[To] increase the flexibility of States in operating a program designed
to: 1) provide assistance to needy families so that children may be
cared for in their own homes or in the homes of relatives; 2) end the
dependence of needy parents on government benefits by promoting job
preparation, work, and marriage; 3) prevent and reduce the incidence of
out-of-wedlock pregnancies . . . ; and 4) encourage the formation and
maintenance of two-parent families.
Along with increased state flexibility, the statute was equally clear in its intent
to remove cash assistance to low-income families with children as a federal
entitlement:
No Individual Entitlement—this part shall not be interpreted to entitle
any individual or family to assistance under any State program funded
under this part.23
To achieve these goals, the new legislation also mandated certain rules about
eligibility, work, and time on welfare. In particular, states are constrained in
how they use federal block grant monies and are subject to financial penalties
unless their programs conform in three key areas designed to move states
toward requiring work and reducing dependence:
● States must achieve work participation targets of 90 percent for two-parent
families by 1999 and 50 percent for all families by the year 2002. Work participation can include only a limited amount of educational activity, and
required participation for a single-parent family must increase from 20 hours
per week in 1997 to 30 hours per week by 2000. (Two-parent families must
participate in work activities for at least 35 hours per week beginning in
1997.) States must include all families with adults in their work participation
rates unless the family has a child under age one. All welfare recipients not
exempt from work participation must be in a work activity by the end of two
years to continue receiving assistance.
● States can only use federal monies to provide cash assistance for families that
include an adult for up to five years in a lifetime, although states may exempt
20 percent of their average monthly caseload from the time limit.
● Unwed teen mothers must live with their parents or other responsible adults and
attend high school or other equivalent training to be eligible for cash assistance.
If states wish to assist individuals not eligible for federal TANF assistance,
they are permitted to do so, as long as they use their own monies.
States were required to bring all aspects of their cash assistance programs
into compliance with the new federal law. The one exception was that a state
could retain its waiver policy until the scheduled expiration date and would
not be required to comply with the aspects of the federal law that are inconsistent with the waiver.
The federal financing of the new system played an integral role in states’
responses. The federal legislation established a block grant, fixed over five
years, to finance TANF benefits and employment services for welfare recipients.
The allocations to states were based on AFDC spending (including JOBS and
Emergency Assistance) over the 1994–96 period. These allocations were
expected to exceed costs in most states, at least in 1997 if not beyond, because
caseloads and spending were declining. States that wished to be generous could
use the extra federal money to provide relatively expensive services required
to move more recipients into jobs. The federal law also included a state
maintenance-of-effort (MOE) requirement. States must spend at least 80 percent
compared with what they spent in the baseline year (or 75 percent if they met
the federal work participation requirements).
The 1997 federal block grant allocations for all the sample states except Colorado exceeded federal 1996 spending for AFDC (table 7). What is interesting
is that many states did not receive their entire block grant allocation during
1997. This is because states were not required to submit a TANF plan until
July 1, 1997, and could operate temporarily under AFDC federal financing
rules. The states that received their entire block grant allocation—Florida,
Massachusetts, Michigan, Mississippi, and Wisconsin—submitted TANF plans
early and, with the exception of Florida, received the largest windfalls (more
than 123 percent of 1996 funding). These states were experimenting with welfare reform before TANF (all but Michigan fall in the extensive experimentation
30
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
Table 7 Federal TANF Funds Available for FY 1997
TANF Implementationa, b
Block Grant
States Grouped by
Pre-TANF Departure
from Federal AFDC Rules
(waiver approval date)
FY 1997
Allocationc
($ millions)
Percent of
1996 Spendingd
Minimal Experimentation
Alabama
(e)
Colorado
(1994)
New York
(1989)
93
136
2,360
Moderate Experimentation
California
(1994)
Michigan
(1994)
Minnesota
(1994)
Washington
(1996)
Extensive Experimentation
Florida
(1994)
Massachusetts
(1995)
Mississippi
(1995)
New Jersey
(1992)
Texas
(1996)
Wisconsin
(1995)
Date
Award
($ millions)
As Percentage
of Available
Funds
118
98
102
11/15/96
07/01/97
12/02/96
81
46
1,982
87
34
84
3,734
775
266
400
109
133
111
103
11/26/96
09/30/96
07/01/97
10/01/96
3,148
775
112
289
84
100
42
72
562
459
87
404
486
318
107
123
126
114
112
132
10/01/96
09/30/96
10/01/96
02/01/97
11/05/96
09/30/96
562
459
87
293
431
318
100
100
100
73
89
100
a. Administration for Children and Families, “State Spending under the New Welfare Reform Law,” February 6, 1998.
b. Note that states were required to submit TANF plans by 7/1/97.
c. Gordon Mermin and C. Eugene Steuerle, “The Impact of TANF on State Budgets,” table 1, Washington, DC, The
Urban Institute, November 1997.
d. Ibid, spending adjusted to 1996 actual dollars.
e. Alabama did not have an active waiver at the time that TANF passed.
category) and were ready to respond quickly to the new legislation. Some states
submitted TANF plans conforming to new federal guidelines even before they
made final decisions about how to structure their programs in order to begin
block grant funding. For example, California submitted its initial plan November 26, 1996, but only completed its legislative debate concerning TANF in
late summer of the following year. In contrast, Colorado and Minnesota submitted their TANF plans at the latest possible date. While Colorado expected a
slight cut in federal monies (unless its caseload dropped during 1997), Minnesota was poised for a significant bonus (111 percent).
How much change TANF required at the state level, of course, depended
on how much each state had already changed its traditional AFDC practices.
The states that were experimenting with policies similar to the new federal
law needed fewer policy changes to come into compliance with TANF. Most
states in the extensive experimentation category either did not reopen the
welfare debate at all (e.g., Massachusetts and Texas, states with very recent,
extensive waivers) or simply waited until the federal legislation passed before
adopting new policies already debated and approved by the state legislature
(e.g., Florida and Wisconsin). Most states that were minimal or moderate experimenters, in sharp contrast, entered long debates over what new reform policies
they should adopt.
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31
State responses were also influenced by their underlying philosophies about
cash assistance, which were themselves related to the types of program models in place in 1996. For example, states with high benefit levels that limited
waiver experimentation to broadening eligibility for two-parent families and
increasing incentives to combine work and welfare stressed public responsibility for a strong financial safety net for families. Other states, mostly in the
extensive experimentation category, stressed changes that increased personal
responsibility, increased employment, and reduced welfare dependency. For
example, four out of the six states in this category already had adopted tough
sanctions to enforce participation in work activities and had adopted family
caps hoping to reduce out-of-wedlock births. Historical attitudes to state-local
sharing of policy authority (reflected in their administrative models) were
another type of influence, which cut across categories.
In the remainder of this section, we discuss states’ initial responses to TANF
along four major dimensions:
●
●
●
●
Who should receive cash assistance?
Who should work and how much?
How long should families receive cash assistance?
What part should cash benefits play in the system?
Who Should Receive Cash Assistance?
TANF removed any federal presumption about which types of families with
children should be eligible for cash assistance. Continuing the pattern begun during the waiver era—a pattern designed to remove the marriage barriers and work
disincentives inherent in the preferential treatment of single-parent families—
nine of our sample states now provide full parity for two-parent families in their
TANF programs, determining eligibility in the same way as for single-parent families (table 8). Only Mississippi, a state in the extensive experimentation category,
retained the AFDC eligibility policies. California, Washington, and Massachusetts
retained some aspects of AFDC rules that limit eligibility for cash assistance to
those two-parent families with some recent work history. With the exception of
Mississippi, all states eliminated the AFDC rule that limited the number of hours
an adult recipient in a two-parent family could work to 100 per month, presumably because this rule acted as a work disincentive for two-parent families, a
group requiring a high work participation rate. California and Washington, however, still apply the 100-hour rule to applicants.
One important change regarding family eligibility for TANF relates to
“diversion assistance payments.” These payments are designed to provide
short-term cash assistance to applicants to prevent their formal entry into the
welfare system.24 Some states added diversion assistance payments to their
policy arsenal before TANF (among our sample states, only Texas had waiver
authority to implement this policy before TANF, starting in 1997). Many states
are now using these payments in an effort to divert families away from wel-
32
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
Table 8 States’ 1997 TANF Policies Regarding Eligibility for Cash Assistance a
States Grouped by
Pre-TANF Departure
from Federal AFDC Rules
(waiver approval date)
Minimal Experimentation
Alabama
(b)
Colorado
(1994)
New York
(1989)
Moderate Experimentation
California
(1994)
Michigan
Minnesota
Washington
(1994)
(1994)
(1996)
Extensive Experimentation
Florida
(1994)
Massachusetts (1995)
Mississippi
(1995)
New Jersey
(1992)
Texas
(1996)
Wisconsin
(1995)
Two-Parent Eligibility Policies Relative to AFDC
Full parity
Full parity
Full parity extended statewide (from pilot)
Four-week waiting period; 100-hour rule (limiting
amount of work allowed for two-parent families)
applies to applicants
Full parity
Full parity extended statewide (from pilot)
30-day waiting period; work history rule; 100-hour rule
(limiting amount of work allowed for two-parent families)
applies to applicants
Full parity extended statewide (from pilot)
Work history rule
AFDC policies in effect
Full parity
Full parity
Full parity
Diversion
Assistance Payments
—
County option
(up to 6 months
benefits)
4 months benefits
County option
—
4 months benefits
$1,500
2 months benefits
—
—
—
$1,000
$1,600c
Note: Information in boldface indicates TANF change.
a. States’ 1997 TANF policies from One Year after Federal Welfare Reform: A Description of State Temporary Assistance for Needy
Families (TANF) Decisions as of October 1997, Washington, DC, The Urban Institute, June 1998.
b. Alabama did not have an active waiver at the time that TANF passed.
c. Diversion in Wisconsin differs from other states in that the lump-sum payment is a loan to assist with employment-related
expenses and must be repaid to the state within 12 months.
fare while still qualifying them for employment services, food stamps, child
care, and Medicaid. 25 Eight states in our sample now offer short-term cash
assistance payments. While states that adopted diversion assistance payments
fell into all experimentation categories, three out of four moderate experimenters adopted this policy. Diversion assistance policies in Colorado and
California give counties more flexibility in setting welfare policy. But other
states have adopted diversion as a statewide policy goal. Florida’s WAGES
program, for example, made reducing welfare rolls an explicit policy goal,
and diversion assistance an explicit means to achieve it. 26 Wisconsin’s diversion assistance policy differs from the others; the lump-sum payment is a loan
to assist with employment-related expenses and must be repaid to the state
within 12 months.
Who Should Work and How Much?
Although states now have complete freedom in setting work requirements
for their welfare caseload, the federal legislation gives them strong financial
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
THE URBAN
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33
incentives to aggressively pursue strategies that move recipients into employment. At the time of our site visits, most states were either beginning to move
toward work-first policies or, as in Michigan and Wisconsin, already had welldeveloped work-first policies. As mentioned earlier, work-first policies, under
the philosophy that any job is a good job, emphasize work over education and
training as a strategy for moving welfare recipients toward independence.27
These policies contrast sharply with the federal JOBS program, which required
states to offer education and job training activities. States could move toward a
work-first policy without waivers under AFDC by emphasizing employment
activities over education. However, states that moved furthest in this direction
sought and received approval for waivers so they could combine an emphasis
on employment with the stronger sanctions and more limited work exemption
policies and earnings disregards described earlier.
Table 9 shows four indicators of the intensity of state work policies: the generosity of the earned income disregard; the age of youngest child that exempts
mothers from participating in work activities; formal, time-triggered work requirements; and the level of benefit sanction for failure to comply with participation
requirements. Table 9 also indicates in bold type which policies represent TANF
changes. A quick glance shows that, with the exception of Massachusetts, all
sample states reported changing at least one aspect of their work requirements,
clearly indicating that the federal financial incentives to meet TANF’s participation requirements were having their intended effect in motivating states to make
their welfare-to-work programs more employment focused.
Earnings Disregards
Nine states adopted new earned income disregards, with eight of them moving toward more generous disregards, continuing the trend started under
waiver policies. Only two states retained the AFDC rules (Colorado and Texas).
Colorado, a state in the minimal experimentation category, operated a fairly
traditional AFDC program before TANF, and its JOBS program (called New
Directions) focused on long-term self-sufficiency through extensive education
and training. Colorado’s waiver in five counties, Colorado Personal Responsibility and Employment Program (CPREP), emphasized skill development over
immediate employment, but it also sought to increase employment through
more generous earned income disregards, stricter sanctions for noncompliance,
and a two-year limit on education and training activities. In contrast, Colorado’s
TANF approach moves to a work-first philosophy using tougher work requirements and sanctions rather than incentives. Texas, on the other hand, a state in
the extensive experimentation category, had already adopted strong initiatives to
move a greater share of its caseload into employment in 1996, and its relatively
low benefit level limited the number of families eligible for assistance.
Wisconsin eliminated the earned income disregards, intending to move
families away from welfare dependency when it implemented its W2 program
in September 1997. A family with earnings from an unsubsidized job receives
34
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
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CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
35
100% for 3 mos.; then 20%
AFDCf
$90 plus 42% of remainder
$225 plus 50% of remainder
$200 plus 20% of remainder
36%
50%
$200 plus 50% of remainderi
$120 plus 50% of remainder
100% of first 6 months’ employment
100% first month; then 50%
AFDCf
n/a
Minimal Experimentation
Alabama
(e)
Colorado
(1994)
New York
(1989)
Moderate Experimentation
California
(1994)
Michigan
(1994)
Minnesota
(1994)
Washington
(1996)
Extensive Experimentation
Florida
(1994)
Massachusetts
(1995)
Mississippi
(1995)
New Jersey
(1992)
Texas
(1996)
Wisconsin
(1995)
$806
$1,250
$458
$886
$402
n/a
$1,355
$774
$1,311
$1,082
$205
$752
$1,085
Maximumb
3 months
6 years
1 year
3 months
4 years
3 months
6 monthsg
3 months
1 year
1 year
1 year
County optional
1 year
Exemptions Based on Age
of Youngest Child
—
60 days
—
—
—
Immediate
18 monthsh
—
—
—
—
—
—
Time-Triggered
Work
Requirementc
High
Medium
High
Medium
Low
High
Low
Medium
Low
Low
Medium
Medium
Low
Sanction Intensityd
Note: Information in boldface indicates TANF change.
a. States’ 1997 TANF policies from One Year after Federal Welfare Reform: A Description of State Temporary Assistance for Needy Families (TANF) Decisions as of October 1997, Washington, DC, The Urban Institute, June 1998.
b. This is the maximum amount of earnings a recipient can have before the TANF benefit drops to zero (after three months of work).
c. Indicates states with policies requiring employment or community service after the time trigger shown to ensure continued eligibility.
d. Sanction intensity is classified as “low” for states that do not impose full benefit sanctions even for repeated failures to comply with requirements, “high” for states that impose a full family sanction for first lapse in fulfilling requirements, and “medium” for states falling between these extremes.
e. Alabama did not have an active waiver at the time that TANF passed.
f. AFDC earnings disregard is $120 plus one-third of remainder.
g. Counties can reduce the exemption to 12 weeks or expand it to 12 months on a case-by-case basis in California.
h. Applies to new recipients only in California; others have two years.
i. Policy was in effect in eight Florida counties before TANF.
Disregard
Earnings Allowance
States Grouped
by Pre-TANF Departure
from Federal AFDC Rules
(waiver approval date)
Table 9 States’ 1997 TANF Policies Regarding Work a
only those earnings plus any other non-TANF federal and state income supports
for which it qualifies.
Table 9 also shows the maximum amount recipients can earn before losing
eligibility for cash assistance, which depends on the amount a recipient can
earn before the benefit is reduced (the disregard), the benefit reduction rate
that applies to earnings above the disregard, and the maximum benefit level.
Most states in the moderate experimentation category stand out in their generous earnings limits (and maximum benefit levels), which allow recipients in
three-person families to earn more than $1,000 a month before losing eligibility for cash assistance. The exception is Michigan (the state in this category
with the most advanced work-first policy before TANF), which retained its
pre-TANF earned income disregard policy. Earnings limits are considerably
lower in all other sample states except Massachusetts and New York, which
are high-benefit states.
Exemptions for Age of Youngest Child
Under waivers, most states exempted mothers of very young children from
work activities, but the federal TANF work participation requirements forced
states to review these policies. Under the pre-TANF federal policy rules, states
could require mothers to participate unless they had a child under age one (the
federal work participation requirement exempted mothers with a child under age
three), and some states had waivers allowing them to require mothers with
younger children to participate (10 states had these waivers, including two of our
sample states, Florida and Michigan28).
Some states spent a considerable amount of time debating work exemption
policies, addressing such issues as treating welfare mothers and other working
mothers equitably and the effects of lowering the exemption age on the state’s
child care policy. The age of youngest child exemption stimulated heated debate
in many states. To be effective, a policy that requires mothers of infants to work
also requires a commitment to financing infant care. Infant care is more expensive
than care for older children and in short supply regardless of price in many states.
All but one of the sample states (Massachusetts) lowered their age-ofyoungest-child exemption policy. California, Florida, Michigan, New Jersey, and
Wisconsin adopted exemptions more restrictive than the federal minimum
(12 months).29 Before TANF, two sample states had such stringent limits: Michigan (a statewide policy) and Florida (a pilot). The youngest child exemption was
such a contentious issue in California that it delayed passage of its welfare reform
legislation into the final hours of a legislative session that had already been
extended. The governor proposed a three-month exemption. Perhaps not surprisingly, given the state’s fairly traditional approach to cash assistance and its
high benefits, the legislature and many of the county governments forced the governor to accept a compromise of six months (allowing counties some flexibility to
reduce the exemption for care of a child to 12 weeks or increase it to 12 months
on a case-by-case basis).
36
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
All the other sample states except two instituted an exemption until the
child’s first birthday. Massachusetts and Texas—both extensive experimentation states—extended the exemption to six and four years, respectively. The
Massachusetts decision was driven both by a desire to allow mothers to stay
home until their children were ready for elementary school and a concern over
the availability and cost of child care for young children. The Texas decision
was driven by concern about the child care costs that a more stringent exemption would entail.
Time-Triggered Work Requirements
TANF requires that nonexempt recipients of federally funded cash assistance engage in activities that focus on work or work preparation after two years
on welfare (or sooner at state option). While most states have indicated that they
will conform their programs to the federal requirement, some have adopted
policies that require participation only in employment or unpaid work after a
set period of time. Massachusetts had a formal pre-TANF time trigger, requiring employment (subsidized or unsubsidized) or community service after
60 days, and California required 100 hours of community service per month
for recipients participating in Greater Avenues for Independence (GAIN, California’s JOBS program) for 22 out of 24 months.30 Two states in our sample
implemented new formal work triggers as part of their TANF programs, and
Massachusetts retained its pre-TANF trigger. California now requires unsubsidized employment or community service after 18 months on welfare (two years
for those on welfare when the new policy was implemented). Wisconsin’s
TANF approach moves clients into unsubsidized employment, trial jobs, or
community service as soon as they begin receiving welfare as bridges to regular paid employment. The other sample states have not adopted explicit time
triggers requiring employment or community service, relying instead on work
activity participation requirements to move clients into jobs.
Sanctions
Under AFDC/JOBS policy, individuals failing to comply with work participation requirements lost benefits for the adult in the unit until compliance;
the second failure drew a sanction that lasted for at least three months or until
compliance (whichever was longer); and the third and subsequent failures drew
at least a six-month sanction. Federal food stamp benefits increased as sanctioned families’ AFDC cash benefits decreased, thereby weakening the financial
effect of the sanction. State and local offices in our sample states, particularly
those with relatively low benefits, often reported that these sanctions were ineffective because the sanction amount was so low that it did not motivate recipients to comply with new work requirements. Many respondents reported that
retaining cash assistance for the children and food stamps outweighed the loss
of the adult AFDC allotment.
Federal TANF rules eliminated the food stamp adjustment for sanctioned
families and placed no restrictions on states’ ability to design their sanction
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CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
37
policies, including the length and amount of the sanctions. Table 9 characterizes TANF sanction intensity as low for states that never impose a full family
sanction (that is, loss of the entire TANF benefit), medium for states that impose
a full sanction only after repeated warnings, and high for states that impose
the full sanction after the first compliance failure. While the sanction intensity
increases in all states as the number of compliance failures increases—either
by increasing the length of time the sanction lasts before benefits are restored or
increasing the amount of benefit reduction31—the use of full family sanctions
seems to serve as the best indicator of the intensity of the sanction. Families
who can lose all cash assistance because of sanctions face the stiffest penalties
and thus the strongest motivation to comply.
Three states in our sample—Florida, Mississippi, and Wisconsin (all extensive experimenters before TANF)—are at the high end. In contrast, three out of
four of the states in the moderate experimentation category and New York in the
minimal experimentation category—all states with relatively high benefits—use
low-intensity sanctions, indicating their more traditional philosophy of maintaining a relatively strong cash assistance safety net for families with children.
The exception is Michigan, which had moved toward a strong employmentfocused program before TANF. Michigan used its flexibility under TANF to
increase the intensity of its sanctions and now imposes a full family sanction
after repeated failures to comply with work participation requirements. Michigan is also one of two states in the country that includes the food stamp benefit in its sanction (the other is Florida), making its sanction policy stronger
than other states in the medium-intensity category.32
Sanction intensity, of course, does not indicate the level of enforcement,
which is critical to its effectiveness. Respondents in our site visits reported
wide differences in the rigor of sanction implementation across states (even
among states whose formal sanction policies were identical) and across counties within states. The full effects of TANF sanction policies on the caseload
will not be fully understood without new data from the states on how often
sanctions are imposed.
How Long Should Families Receive Cash Assistance?
States’ responses to the new federal time limit requirements take many
forms that can only be fully understood in the context of a range of time-limit
exemption policies. Table 10 shows three important aspects of time limits—
intermediate or “tiered” time limits, lifetime limits, and exemptions to lifetime
limits—and a summary intensity measure. Intermediate limits, which are
allowed under TANF because states can use lifetime limits shorter than five
years, place a maximum on any continuous period of assistance to force recipients into employment or other private support systems quickly but to
provide for support if there should be a future need. Lifetime limits are selfexplanatory. Exemptions are listed as narrow for states that only permit
38
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
Table 10 States’ 1997 TANF Policies Regarding Time Limits a
States Grouped by
Pre-TANF Departure
from Federal AFDC Rules
(waiver approval date)
Time Limit Characteristics
Intermediate
Limit
Lifetime Limitb
Exemptionsc
Time-Limit
Intensityd
Minimal Experimentation
Alabama
(e)
Colorado
(1994)
New York
(1989)
None
None
None
5 years
5 years
Guarantees voucher
after 5 years
Medium
Medium
Medium
Medium
Medium
Low
Moderate Experimentation
California
(1994)
None
Guarantee for children
after 5 yearsf
None
5 years
5 years
Broad
Low
n/a
Medium
Not specified
Low
Medium
Medium
None specified
for lifetime limitg
Broad
High
Medium
Medium
Broad
Medium
Low
None specified for
lifetime limitg
Narrow
High
Michigan
Minnesota
Washington
(1994)
(1994)
(1996)
Extensive Experimentation
Florida
(1994)
Massachusetts
(1995)
Mississippi
New Jersey
(1995)
(1992)
Texas
(1996)
Wisconsin
(1995)
None
None
None
2 out of
5 years
2 out of
5 years
None
None
1, 2, or
3 yearsh
2 years
4 years
None
5 years
5 years, extended up
to 1 year in special
circumstances
5 years
5 years
High
Note: Information in boldface indicates TANF change.
a. States’ 1997 TANF policies from One Year after Federal Welfare Reform: A Description of State Temporary Assistance for Needy
Families (TANF) Decisions as of October 1997, Washington, DC, The Urban Institute, June 1998.
b. Limit refers to cumulative number of months of benefit receipt; months not on welfare do not count toward time limit.
c. Exemptions are listed as Narrow in states with exemptions only for disability; Medium for disability plus up to three other
extenuating circumstances; and Broad for disability, other extenuating circumstances, and exemptions for bad labor market, general
hardship, or other personal barriers.
d. Time-limit intensity is listed as Low in states with time limits more generous than the federal limit; Medium in states with the
federal maximum; and High in states with time limits shorter than the federal government’s, including states with intermediate time limits, unless the state has a broad exemption policy (Massachusetts).
e. Alabama did not have an active waiver at the time that TANF passed.
f. Counties decide whether to issue vouchers or cash benefits after the five-year time limit.
g. State specifies broad extensions for intermediate time limit.
h. The intermediate time limit, adopted under a waiver, began June 1996 in one county and was scheduled to expand to the
entire state by September 1997. The intermediate time limit in Texas applies to the adult but not the children in the unit.
exemptions for reasons of disability; 33 broad for states that exempt individuals who cannot find employment because of a weak labor market,
general hardship, or “personal barriers”; and medium for states with policies falling between these two extremes.
Time limits were clearly an area of major debate and change across the
states. As table 10 shows, nearly all the time-limit policies in our sample states
were adopted in response to the new federal legislation. Texas and Washington are the only states that implemented new, statewide time-limit policies in
1996 through federal waiver approval.34 Texas had adopted a tiered time limit
that was being implemented gradually beginning in June 1996, and Washington
had a 10 percent benefit reduction each year until benefit exhaustion (beginning
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39
after an adult was on welfare for four years). But even these states had to make
changes to conform to the new federal TANF rules. Texas retained its tiered policy but also will be bound by the five-year lifetime limit in federal law, and
Washington changed its policy to conform to the federal maximum. As described
below, Florida and Wisconsin, states with time-limit pilots before TANF, were
able to move toward the time-limit policies previously prohibited under waivers.
States in our sample are distributed fairly evenly among low-, medium-, and
high-intensity time limits. While all three states with high-intensity time limits
(Florida, Texas, and Wisconsin) fall into the extensive experimentation category,
two other states in this category adopted medium- (Mississippi) or low- (New Jersey) intensity time limits.35 The two states in this category that had time-limit
pilot programs in place before TANF—Florida and Wisconsin—moved toward
high-intensity time limits with intermediate limits, narrow exemptions, and,
in the case of Florida, a four-year lifetime limit. Florida’s high-intensity timelimit policy, which is consistent with the strong dependency-reduction theme
of its WAGES program, is the only state in our sample that adopted a time limit
shorter than the federal maximum.36 The new Wisconsin policy still retains a
five-year lifetime limit, but it also includes two-year time limits for three components of its W-2 program (trial jobs, community service jobs, and transitions).
Wisconsin has no formal exemptions to its time limit, based on a belief that it
will be able to move nearly all welfare recipients into self-sufficiency within
five years.
In contrast, most of the states with low-intensity time limits, consistent with
maintaining more of the entitlement nature of cash assistance, were the highbenefit states falling into the minimal and moderate experimentation categories.
California, New York, and Michigan adopted the most generous time limit policies in our sample. California guarantees cash assistance to children (given
county verification that employment is not an option). New York offers assistance in the form of vouchers for the entire family.37 California also adopted
broad time-limit exemption policies. Michigan rejected time limits as a means
of enforcing its intensive work-first policy. It had been gradually reforming welfare since 1992, and its policies reflected a strong conviction that requiring
work for nearly all the caseload, along with rigorous enforcement of its strong
sanctions, would be enough to move able-bodied recipients into the labor market. Respondents in Michigan reported that the state intended to move families who exhaust the federal time limit into a state-funded program, although no
plans were yet under way to design such a program.
New Jersey, a state with extensive experimentation under way before TANF,
debated its time-limit policy at length, with some arguing that time limits would
penalize families complying with work requirements who were not yet earning
enough to leave welfare. Ultimately, an extension policy was added to its five-year
lifetime time limit that will allow some recipients up to 12 months in additional
benefits, a compromise that allows flexibility for those who have a difficult time
moving to self-sufficiency. New Jersey also adopted a broad exemptions policy,
providing exemptions for those who face personal barriers to employment or
40
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
poor labor market conditions, in addition to the more common exemptions for
disabled persons or for victims of domestic violence.
What Part Should Cash Benefits Play in the System?
While states were free to set their own benefit levels before TANF, the new
legislation gave states more flexibility over payment policies.38 For example,
states are free to adopt a family cap, a policy some states with waivers used
before TANF to eliminate or reduce any increase in benefits when a child was
born to a family on welfare. The new legislation also offered states an incentive to cut benefits, since the block grant allocations were fixed over five years,
and states may use savings from what they spent on welfare for other purposes.
Countering this incentive, however, was the “windfall” that most states
received from the federal block grant.
Only two states in our sample changed basic benefit levels as part of their
new TANF policies (table 11). California decreased benefits, but this was a con-
Table 11 States’ 1997 TANF Policies Regarding Payments a
States Grouped by Pre-TANF
Departure from Federal AFDC
Rules (waiver approval date)
Minimal Experimentation
Alabama
(d)
Colorado
(1994)
New York
(1989)
Moderate Experimentation
California
(1994)
Michigan
(1994)
Minnesota
(1994)
Washington
(1996)
Extensive Experimentation
Florida
(1994)
Massachusetts
(1995)
Mississippi
(1995)
New Jersey
(1992)
Texas
(1996)
Wisconsin
(1995)
Benefits
Family Capb
Payment Policy
Emphasisc
$164
$356
$577
No
No
No
Low
Low
Low
$565 (–)
$459
$763 (w/
food stamps)
$546
Fulle
No
No
High
Low
Low
No
Low
$303
$565
$120
$424
$188
$628 (+)
for some
Partiale
Full
Full
Fullf
No
Flat Benefit
Medium
Medium
Medium
Medium
Low
High
Note: Information in boldface indicates TANF change.
a. States’ 1997 TANF policies from One Year after Federal Welfare Reform: A Description of State Temporary Assistance for Needy Families (TANF) Decisions as of October 1997, Washington, DC, The Urban Institute, June 1998.
b. A “full” family cap eliminates any increase in benefits for a child conceived and born while on welfare and a
“partial” cap reduces the amount of increase at least for the first instance.
c. States’ emphasis on payment policies listed as Low indicates no change in benefit and no family cap, High indicates a change in both policies, and Medium indicates changes in policy focus in one of two categories.
d. Alabama did not have an active waiver at the time that TANF passed.
e. As noted in the text, California and Florida had federal approval for family cap waivers, but chose not to implement them before TANF.
f. Allows capped families to retain more earnings before reducing benefits.
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41
tinuation of a trend toward reducing welfare costs established long before
TANF. Wisconsin adopted a unique payment policy in which all families qualify for a flat benefit, resulting in slightly increased benefits for smaller families
and decreased benefits for larger families.
California and Florida adopted new family caps under TANF, bringing the
total number of sample states with caps to six.39 (Wisconsin had a pre-TANF
family cap policy, and its new flat-benefit policy has the same effect as a family cap.) All but one of the states with family caps fell into the extensive experimentation category. California, a state with a more traditional program before
TANF, adopted a family cap policy after the contentious debate that characterized
other facets of its welfare reform legislation. The legislature fought the governor
on the family cap, but unlike its record on time limits and child exemption policy, it failed to achieve a compromise.
42
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
Implications of States’
Early TANF Policies
O
ne intent of the federal welfare reform legislation was to allow states
more freedom to run programs that provide assistance to families
with children. In some ways, however, the new legislation gives
states less freedom to design cash assistance programs than they had
during the waiver era, because the legislation mandates important features of
states’ welfare programs and sets up financial incentives to direct reform in
other ways. The federal government, for example, mandated a maximum fiveyear termination time limit (allowing an exemption for 20 percent of states’ current caseloads), forced states to move recipients into work activities at the end
of two years, and established financial penalties for states not meeting federally
defined work participation rates for adults receiving assistance that were significantly higher than those imposed under JOBS.
The new federal legislation constrains states in another way as well. States
can sidestep the federal program time limits only by providing non-TANF state
funds to support recipients who become ineligible for federal TANF support.
Because the block grant allocations for states, based on their AFDC spending,
are fixed for five years, and because states’ MOE requirements are set at only
80 percent of pre-TANF spending, states can support recipients who become
ineligible for federal TANF support only as long as caseloads remain low. Even
so, the contrast between TANF and the most recent waiver era—when states
could experiment with most aspects of their AFDC programs—is not as stark
as the rhetoric surrounding the new legislation seems to imply.
While states’ new TANF policies were clearly designed to conform to federal parameters, their responses also reflected their previous approach to cash
assistance. State choices since TANF definitely are increasing diversity in cash
assistance policies across the nation. Some states are moving further toward
policies that discourage the use of welfare. Others are maintaining large parts of
the safety net available under AFDC. All states are moving toward a stronger
focus on work, but they emphasize different approaches to accomplish this
goal. It is clear that, even among states that had been experimenting with broad
changes to AFDC before TANF, welfare programs are undergoing a great deal
of change.
Below we assess the nature of this diversity in cash assistance policies
across the states. We also discuss the importance of state and local policy implementation to the ultimate success of welfare reform and to defining the diversity
in states’ programs.
The Changing Nature of Cash Assistance in
Our Sample States
Table 12 summarizes policy emphases in the sample states since TANF,
with TANF policy changes in bold type. While somewhat fewer changes
occurred in the states with extensive experimentation under way, nearly all
states in our sample changed more than one major policy. Massachusetts provides the exception. The medium-intensity benefit time limit was its only new
formal policy, and, in fact, the state had sought, but was denied, approval for
this time limit as part of its 1995 waiver.
There is more conformity among the states for some policies than for others. Nine out of 13 states now treat two-parent families who need assistance the
same as single-parent families, mostly eliminating all special work rules for twoparent eligibility. While 10 states had been experimenting with two-parent eligibility before TANF, only 3 states had eliminated all special rules applying to
two parents. Eight out of 13 states have formal diversion assistance programs
(compared with only one state before TANF). While we showed earlier that the
amount of states’ diversion assistance payments varies, the adoption of this
policy indicates that most states in our sample value the ability to offer applicants short-term assistance to resolve need and prevent entry into welfare.
Our categories indicating the degree of pre-TANF departure from federal
AFDC rules provide some insight into states’ early TANF decisions, but these
decisions also were clearly affected by the states’ historic generosity and, in some
cases, a desire to give local governments more control over cash assistance. With
the exception of Michigan, states with relatively high benefits and minimal or
moderate experimentation before TANF (New York, California, Minnesota, and
Washington) tend to prefer approaches that encourage families to move off welfare through incentives rather than through penalties. These states have highintensity earnings incentives and low-intensity sanction policies (under which
44
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
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45
High
High
High
Medium
High
High
Medium
High
Medium
Low
High
High
High
Minimal Experimentation
Alabama
(h)
Colorado
(1994)
New York
(1989)
Moderate Experimentation
California
(1994)
Michigan
(1994)
Minnesota
(1994)
Washington
(1996)
Extensive Experimentation
Florida
(1994)
Massachusetts
(1995)
Mississippi
(1995)
New Jersey
(1992)
Texas
(1996)
Wisconsin
(1995)
Yes
—
—
—
Yes
Yes
Counties
—
Yes
Yes
—
Counties
Yes
Diversion
Programb
Eligibility
Medium
High
Medium
High
Low
n/a
High
Medium
High
High
Medium
Low
High
Earnings
Incentivesc
High
Low
Medium
High
Low
High
High
High
Medium
Medium
Medium
Countiesi
Medium
Work
Requirementsd
Work Policies
High
Medium
High
Medium
Low
High
Low
Medium
Low
Low
Medium
Medium
Low
Sanction
Intensitye
High
Medium
Medium
Low
High
High
Low
Low
Medium
Medium
Medium
Medium
Low
Time-Limit
Intensityf
Medium
Medium
Medium
Medium
Low
High
High
Low
Low
Low
Low
Low
Low
Payment Policy
Emphasisg
Note: Information in boldface indicates TANF change.
a. Two-parent eligibility emphasis coded as Low for states retaining AFDC policies, Medium for states that have removed at least one of the restrictions on two-parent eligibility, and High
for states providing full parity for two-parent families (see table 8).
b. Refers to a one-time cash assistance payment for short-term difficulties in lieu of enrolling in TANF.
c. Earnings incentives coded as Low for states retaining AFDC policy, Medium for states with moderately high allowances for earnings of recipients, and High for states with high allowances
for recipient earnings (see table 9).
d. Work requirements coded as Low for states that exempt from employment mothers with children older than age one, Medium for states adopting the federal exemption for one-yearolds, and High for states with exemptions for age of youngest child under age one (see table 9).
e. Sanction intensity coded as Low for states that never impose a full family sanction, Medium for states that impose a full family sanction after repeated failures, and High for states that
impose a full family sanction after the first failure to comply with rules (see table 9).
f. Time-limit intensity coded as Low for states that guarantee benefits beyond the federal maximum, Medium for states generally following the federal maximum, and High for states with
time limits shorter than the federal maximum (unless, as in Massachusetts, the state uses a broad time-limit exemption policy) (see table 10).
g. Payment policy emphasis coded as Low for states with no payment changes from their AFDC rules, Medium for states with a change in benefits or a family cap, and High for states
making changes in payment and family caps.
h. Alabama did not have an active waiver at the time that TANF passed.
i. State gives counties flexibility to determine these policies.
TwoParenta
States Grouped
by Pre-TANF Departure
from Federal AFDC Rules
(waiver approval date)
Table 12 Changing Emphases of States’ Early TANF Policies, 1997
families never lose their entire benefit as a result of a sanction), combined with
low- to moderate-intensity time-limit policies. All four of these states adopted
diversion programs, offering families cash incentives for staying off welfare.
Michigan, a high-benefit state in the moderate experimentation category because
it primarily focused its pre-TANF changes on work, did intensify its sanction policy, but it did not adopt a time-limit policy, trusting that its welfare-to-work policies would move most recipients into jobs.
States with the most extensive pre-TANF experimentation changed their
policies less than other states. However, Florida, New Jersey, and Wisconsin
shifted policies considerably. Florida and New Jersey moved to a stronger workfirst model of welfare with even higher earned income disregards and fewer
exemptions from work activities. However, New Jersey also maintained policies
consistent with its relatively strong safety net by holding to moderately intensive sanctions and allowing two six-month extensions to its five-year time limit.
In contrast, Florida adopted high-intensity sanctions and time limits to reduce
families’ dependence on welfare.
Texas’s cash assistance policies stand out among those of the extensive
experimenters because they combine a broad exemption for mothers of young
children, low-intensity sanctions, and no family cap. On the other hand, Texas
discourages dependence on cash assistance by combining a relatively low
monthly benefit ($188 per month for a family of three with no other income,
compared with the national average of $393 per month) with a high-intensity
time limit (continuous benefit receipt limited to one, two, or three years
depending on work readiness and a five-year lifetime limit). Once again, Wisconsin stood out as the leader in experimentation. As noted earlier, Wisconsin
had applied for a waiver for its W-2 program during the federal debate over welfare reform. Once PRWORA passed, Wisconsin could implement these policies without federal waiver approval.
The debate in three states in our sample—Colorado, California, and New York
(all operating county-administered models of cash assistance)—was characterized at least in part by an historic desire to give counties a greater role in setting
social welfare policy. Colorado moved furthest in this direction by allowing counties to determine diversion policies and work requirements. While New York’s
counties were not given control over any of the specific policies shown in table
12, their TANF plan provides performance awards based on job placements, and
local districts can apply for waivers from state regulations.
It is important to note some optional features that most states in our sample did not adopt. Only two states adopted new family caps under TANF (and
the three states that had adopted family caps under waivers retained them);
only one state reduced its basic benefit. While the family cap generated considerable debate in the U.S. Congress, and several versions of the federal welfare reform bill proposed to mandate family caps for all states, many states did
not believe that this policy was effective or necessary. The family cap separates the pre-TANF experimenters from the more traditional states (only one
46
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
state in the pre-TANF minimal and moderate experimentation categories
adopted a family cap, compared with five out of six extensive experimenters,
including Wisconsin’s new flat-benefit policy). This may be an example of the
federal government taking its cues from the policies of the early experimenters
with state welfare reform that were not reflecting widespread desires of states.
The Importance of Implementation
While assessing states’ policy choices illustrates the variety of approaches to
cash assistance, the ultimate key to success in these efforts will lie in reforming how services are actually delivered to clients. Failures of earlier welfare
reform efforts have been attributed in no small part to overlooking the need for
organizational reforms that articulate new goals clearly to caseworkers and
clients, provide adequate resources to welfare bureaucracies, and build the
organizational capacity to effect policy change efficiently.40 In addition, county
welfare offices across different states and even within a single state may interpret and administer policies differently even when they appear identical.
In many states, new cash assistance policies represent a major departure
from the past. Diversion assistance and lifetime time limits clearly present
new implementation challenges. However, most states reported that forging a
direct link between welfare and work within a traditional welfare office was
still a significant challenge. The major product delivered by local welfare organizations for decades has been cash assistance, but now state and local welfare
programs are expected to deliver economic self-sufficiency.
The clearest message we heard in our site visits to state and local welfare
offices is that most will adopt new procedures or complete transitions begun
under waivers to ensure that new work-focused programs will be successful.
Most offices in our sample were still operating an “eligibility-compliance”
model of welfare and recognized the need to reorganize, retrain eligibility workers, and establish new collaborations among welfare eligibility offices and
providers of employment services to focus on employment. As we have seen,
most states furthest along the road to welfare reform before 1996 were also making major changes in their service delivery systems to accommodate a more
work-focused system. Typically these changes involved giving local offices more
flexibility in designing policies to move clients into work activities, even in
states with state-administered models of cash assistance. But many respondents
were worried that the TANF time clocks for work participation and benefit termination were ticking away while these reforms were still getting under way,
raising the specter that—even in a good economy—some state changes focused
on service delivery might come too late for those whose clocks are ticking.
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47
Notes
1. The sample includes California, Colorado, and Washington in the West; Michigan, Minnesota, and Wisconsin in the Midwest; Alabama, Mississippi, Texas, and Florida in the
South; and Massachusetts, New Jersey, and New York in the East. Relative AFDC program
sizes varied across the sample, ranging from a low of about 3 percent of the nonelderly population for Alabama and Colorado to almost 10 percent for California.
2. While the new federal law places more restrictions on what states can count as work activities for the caseload than were allowed under the former federal Job Opportunities and Basic
Skills (JOBS) program, work activities can extend to job search, education, and training activities for short periods of time. TANF work activities can include unsubsidized employment,
subsidized private or public employment, work experience, on-the-job training, job search
and job readiness for up to six weeks, community service, vocational education for up to
12 months, provision of child care to TANF recipients, job skills training, education directly
related to employment, and high school education or its equivalent. However, only the first
nine activities count toward the first 20 hours of work activity participation per week.
3. The social welfare system of each of the sample states is summarized in more detail in a
series of papers entitled Income Support and Social Services for Low-Income People.
4. We were not able to visit state offices in Mississippi.
5. This material is summarized from L. Jerome Gallagher, Megan Gallagher, Kevin Perese, Susan
Schreiber, and Keith Watson, One Year after Federal Welfare Reform: A Description of State
Temporary Assistance for Needy Families (TANF) Decisions as of October 1997 (Washington,
DC: The Urban Institute, June 1998).
6. Other papers in this series include Sharon Long, Gretchen Kirby, Robin Kurka, and Shelley
Waters Boots, Child Care Assistance under Welfare Reform: Early Responses by the States
(Washington, DC: The Urban Institute, 1998), and forthcoming assessments of states’ education and training services and child welfare services, and the organization of the social safety
net in the states. All of these papers provide an early view of states’ new policies by drawing upon the case studies conducted during 1997.
7. Of course, states spent monies on other social welfare programs for low-income families
besides AFDC, such as subsidized child care.
8. Explaining the Decline in Welfare Receipt, 1993–1996. A Report by the Council of Economic
Advisers, May 9, 1997.
9. See Setting the Baseline: A Report on State Welfare Waivers (Washington, DC: Office of the
Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human
Services, June 1997) for a description of state waivers.
10. This change from the standard AFDC eligibility rules is not included in table 2 because states
did not need a waiver to implement it.
11. The JOBS program had a number of categorical exemptions, the most significant of which was
to exempt mothers with children under age three (or age one, at state option) from mandatory
participation, so that only about half of the adult caseload was required to participate.
12. JOBS programs differed across the states. Some states had stronger labor force attachment
models than others. However, a survey of 453 county JOBS administrators by the General
Accounting Office in 1995 concluded that JOBS programs nationwide lacked a strong
employment focus. See Welfare to Work: Most AFDC Training Programs Not Emphasizing Job
Placement, General Accounting Office, HE15-95-113 (Washington, DC: U.S. Government
Printing Office, May 1995).
13. See, for example, Mary Jo Bane and David T. Ellwood, Welfare Realities: From Rhetoric to
Reform (Cambridge, MA: Harvard University Press, 1994) for a discussion of these arguments.
14. Mark Greenberg and Steve Savner, Limits on Limits, State and Federal Policies on Welfare
Term Limits (Washington, DC: Center for Law and Social Policy, 1996).
15. In a review of recent studies of welfare and out-of-wedlock childbearing, Acs concludes
that no studies found a direct effect of AFDC benefit levels on subsequent births to women on
welfare. See Gregory Acs, “Does Welfare Promote Out-of-Wedlock Childbearing?” in Welfare Reform: An Analysis of the Issues, Isabel V. Sawhill, editor (Washington, DC: The Urban
Institute, 1995).
16. Note that both California and Florida had approval for family caps but later decided that they
would not implement these waivers.
17. We focus on states’ policy intent as an indication of their desire to experiment, even though
the state may have been implementing the new policies gradually.
18. Washington began a time-limit waiver policy in 1996 that reduced the benefit by 10 percent
for recipients who received assistance for 48 out of 60 months and imposed a 10 percent grant
reduction for every 12 months thereafter. No grant reductions were imposed before the
demonstration was repealed in 1997.
19. Florida’s WAGES program, implemented in October 1996, serves as its TANF plan and is discussed later.
20. Massachusetts requires nonexempt recipients to begin working within 60 days of applying
for benefits. But the state estimates that only 20 percent of its caseload would be subject to the
work requirements. Massachusetts will continue operating this policy under a federal waiver
that will remain in effect through September 2005.
21. Richard Nathan, in The Newest New Federalism for Welfare, Rockefeller Institute Bulletin,
1998, reports that 35 of the 50 states have a state-administered system, many more than
40 years ago, indicating greater centralization of the system over the 1957–1997 period. However, this review also points out that there are early indications that states are devolving more
decisionmaking back to local governments and groups in their TANF programs.
22. Under the AFDC/JOBS rules, “work activities” included all types of educational activities, as
well as job search activities, on-the-job training, and community work experience.
23. Public Law 104-193, August 22, 1996, H.R. 3734, Personal Responsibility and Work Opportunity Reconciliation Act of 1996. 42 U.S.C. 1305.
24. Policies requiring documentation of a job search before approving enrollment can also divert
applicants from enrolling.
25. Many are concerned that some applicants who are diverted under the new TANF rules may
not receive other services even though they are eligible because they fail to follow through on
program application procedures. In addition, families may be ineligible for Medicaid and
food stamp benefits in the month that they receive the lump sum payments because their
incomes are too high. See Kathleen Maloy, LaDonna Pavetti, Peter Shin, Julie Darnell, and
Lea Scarpulla-Nolan, A Description and Assessment of State Approaches to Diversion Programs and Activities (Washington, DC: George Washington University, June 1998).
26. Florida’s WAGES legislation, passed in June 1996 with implementation beginning in October
1996, states that “reform must reduce the number of economically dependent families.”
27. See Pamela Holcomb, LaDonna Pavetti, Caroline Ratcliffe, and Susan Riedinger, Building an
Employment-Focused Welfare System: Work First and Other Work-Oriented Strategies in Five
States (Washington, DC: U.S. Department of Health and Human Services, June 1998) for an
in-depth discussion of these policies.
28. U.S. Department of Health and Human Services, June 1997.
29. The federal government requires states to include all families with a child 12 months of age
or older in their work participation requirements, thereby setting an effective minimum or
at least a strong incentive for a 12 month age of youngest child exemption policy.
30. As explained earlier, a large percentage of the caseload in Massachusetts is exempt from work
participation. California adopted this work trigger late in 1995 as part of its move toward a
work-first policy.
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CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
31. In most of our sample states the first sanction lasts for one month, increasing to six months
for the third penalty. See Gallagher et al., 1998, especially the appendix, for a detailed
description of sanction policies.
32. Interestingly, two states that were experimenting with reducing food stamp benefits along
with cash assistance for work-related sanctions before TANF—Mississippi and Wisconsin—
did not continue these policies under TANF.
33. Federal law allows states to exempt up to 20 percent of their caseloads from time limits. There
are no precise data that show whether the 20 percent exemption will be sufficient to exclude
all TANF recipients who are disabled or who care for a disabled child. To a large extent it
will depend on how broadly states define disability. However, national studies showed that
approximately 20 percent of the AFDC caseload fell into this category (see “Profile of Disability among Families on AFDC,” Pamela Loprest and Gregory Acs, August 1996, Washington,
DC: The Urban Institute). It is expected, however, that this exemption rate will not be sufficient to exclude all of the disabled since they are likely to become an increasingly larger
share of the caseload over time as more able-bodied recipients move into the workforce.
34. As shown in table 2, Florida and Wisconsin had implemented time limits before TANF as
experiments with limited geographic coverage.
35. While Massachusetts has an intermediate time limit, its policy is classified as medium-intensity
because of its broad exemptions to the lifetime limit.
36. In addition to Florida, 10 other states (Arkansas, Connecticut, Delaware, Georgia, Idaho,
Nebraska, New Mexico, Ohio, Oregon, and Utah) adopted time limits shorter than the federal
maximum, and Iowa adopted an “individualized” time limit. See Gallagher et al., 1998.
37. The voucher guarantees will be subject to a state appropriation process; the state points out
that continuation is not an entitlement. Only four states have policies that generally provide
assistance beyond a five-year lifetime time limit—Maryland, Rhode Island, California, and
New York. Michigan and Vermont have no time limits.
38. TANF also changed the treatment of child support collected on behalf of welfare recipients
by eliminating the federal rule that states must pass through $50 a month to recipients. Five
sample states—Colorado, Minnesota, Washington, Florida, and Mississippi—eliminated the
pass-through, and two—California and Michigan—retained it only on a temporary basis. It
is unclear whether these changes reflect states’ desires to save money by retaining all the
child support collected, to reduce administrative hassles, or to change recipient behavior
(by encouraging recipients to substitute private child support for welfare).
39. As noted earlier, these states had established federal approval for family caps earlier but
chose never to implement them.
40. Marcia Meyers, B. Glaser, and K. MacDonald, “On the Front Lines of Welfare Delivery: Are
Workers Implementing Policy Reforms?” Journal of Policy Analysis and Management,
vol. 17, no. 1 (Winter 1998).
THE URBAN
INSTITUTE
CASH ASSISTANCE IN TRANSITION: THE STORY OF 13 STATES
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About the Authors
Sheila R. Zedlewski is the director of the Urban Institute’s Income and Benefits Policy Center. Her areas of special interest include income security, health
benefits, retirement, aging, and taxes.
Pamela A. Holcomb is a senior research associate at the Urban Institute. Her
work focuses on program operations and service delivery, particularly as they
relate to welfare reform, employment and training, and social services. For the
Assessing the New Federalism project, she was the leader of the Wisconsin
and Florida case study teams.
Amy-Ellen Duke is a research associate in the Urban Institute’s Human
Resources Policy Center. Her career has concentrated on income support programs
and related employment and training issues. She has been involved in a number
of the Institute’s assessments and evaluations of state welfare reform efforts.
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