State Legislatures magazine, February 2000: Welfare Transformed to Services for Families

State Legislatures Magazine: February 2000

Editor's Note: This article appeared in the February 2000 issue of NCSL's magazine, State Legislatures. To order copies or to subscribe, contact the marketing department at (303) 364-7700.

More Than Just 'Welfare'

Work and Beyond
Flexibility with TANF
Creating New Welfare Programs

Feds Help, Really

Follow the Money

Using TANF for Children and Families

State Initiatives that Reinforce Work

More Than Just 'Welfare'

States are transforming welfare from cash assistance to a variety of services to strengthen poor families.

By Jack Tweedie
In Colorado Springs, Colo., a group of grandmothers sit around a table helping each other overcome the challenges they face in raising their children's kids. They talk about how the county welfare office helps them care for their grandchildren-security deposits for new apartments, counseling to help them and the children cope with the changes, and additional cash assistance to help cover expenses. The county assigns their best child welfare workers to these cases, because without the grandparents' help these children could easily end up in foster care.

In Los Angeles, fathers participate in classes that teach them how to be parents to their children, even though they live apart. They talk about how to negotiate conflicts with the mother of their kids so the clashes don't interfere with their relationships with their children. Afterwards, the fathers go to job training and vocational classes that will help them get jobs (or better jobs) so they can pay more support.

In Nashville, former welfare recipients who have jobs still qualify for child care, Medicaid and transportation assistance. If their car breaks down or their babysitter is sick, they can call a hotline to get immediate help. They can still make it to work and not risk losing their jobs.

In Columbus, Ohio, the Head Start program now runs all day, so children can receive more services while their parents work. And new funding has expanded the number of children enrolled.

In Santa Fe, N. M., the Legislature's Welfare Reform Oversight Committee listens to teachers and students talk about the GRADS program-where teenagers who have babies can remain in school with ready access to child care, peer support, health care and vocational training. GRADS improves school performance, helps participants get good jobs and reduces the chance they will have more children while still teenagers. When speakers raise questions about continued funding, Representative J. Paul Taylor answers, "TANF. We can use TANF money for this great program."

That's the common thread here. All these programs are funded under the states' Temporary Assistance to Needy Families (TANF) block grant. Across the country, welfare has become more than a cash assistance program. TANF provides the flexibility and the resources states can use to provide all kinds of services and programs to help poor working families.

WORK AND BEYOND
Over the past several years, state legislatures have focused their welfare programs on work. They require most recipients to work while receiving benefits, and have time limits (usually 24 or 60 months) on how long recipients can get cash. They also substantially increased money for child care and transportation to support parents who are working.

Helped by a strong economy, the results of these changes are extraordinary. Welfare caseloads have been cut in half. State studies of families who have left welfare show that most adults are leaving for jobs. States have also seen big increases in the percentage of families who still receive cash assistance even though they work. But it's not all good news. In some welfare families, the parent is not working and the family is struggling to get by.

Although there has been remarkable progress, states still face challenges in moving recipients off welfare and into work. Many long-term recipients face tough challenges such as substance abuse, learning disabilities and depression. Parents who are working still need services so they can keep their jobs, increase their earnings and have a chance to support their families without government assistance.

And so states are looking to do more. The stunning drop in the cash rolls means that states have money available for new programs after paying benefits and enrolling recipients in work programs. They have billions of dollars-even after putting aside a reserve for increased welfare spending in the event of an economic downturn. And they have broad flexibility under the TANF program. Some states are using federal and state welfare funds for a broad range of programs that serve low-income families in new ways-job retention services, domestic violence training for caseworkers, individual development accounts for further education and training, family support services, alcohol and drug treatment, and kinship care programs.

While many states have started to develop new programs, most legislators are still just learning the full extent of their opportunities. States can transform their welfare programs to focus on work and provide services to strengthen low-income families. The strong economy in most states, early progress in reducing welfare rolls and getting recipients into work, and the flexibility and available resources in the TANF program all contribute to a remarkable opportunity for states to develop and implement new programs and services.

FLEXIBILITY WITH TANF
After several years of experimentation under the Aid to Families with Dependent Children Program (AFDC), federal welfare reforms in 1996 gave states primary responsibility for designing new welfare programs that focus on work and improving conditions for children in poor families. The U.S. Department of Health and Human Services issued final TANF regulations in April 1999 that clarified the program's broad flexibility and answered several questions about the effect of expanding services.

States' welfare money includes federal TANF block grants and state funds (called state maintenance of effort or MOE) that must be spent to draw down the block grants. Under the Brown Amendment in the federal law, state legislatures decide how to appropriate this money. States can use state and federal funds in a wide range of programs as long as they address at least one of the four TANF purposes:

1. Provide assistance to needy families so 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. Reduce the incidence of out-of-wedlock pregnancies.

4. Encourage two-parent families.

These purposes are the foundation of TANF and of the flexibility of the program. Federal officials are encouraging states to interpret these requirements broadly-allowing spending for any services "reasonably calculated to accomplish [a] purpose." There are a few restrictions that limit the programs states can develop, but the basic principle is that states can use these resources to fund services that strengthen low-income families and help their children.

Spending on the first two goals must be targeted on "needy" families or parents, but states define eligibility. They determine the income level that qualifies as "needy," and they can define different income levels for different services if they choose-one level for cash assistance, another for child care, a third for home visits and Head Start participation. Federal officials have already agreed to eligibility levels of at least 200 percent of the poverty level, more than $27,000 for a family of three. And states do not need extensive eligibility verification procedures for these programs. All they need to do to determine eligibility is to ask participants about their income.

Spending federal money for the third and fourth purposes is not restricted by income eligibility. So states are using federal TANF money for school or community programs to prevent pregnancy without having to worry about which teens qualify. They are also establishing after-school programs that offer academic enrichment, mentoring, abstinence education and recreational activities. These programs have been shown to reduce teen pregnancy, so they can be funded through TANF. The programs can be directed to both girls and boys, and they do not have to be limited to discussions of pregnancy and parenthood.

The new TANF regulations also answer many legislators' concerns about the federal time limit. The federal law restricts states from using federal money to provide certain benefits to families for more than 60 months. The regulations limit what counts against families' time limits. Families use up a month of their TANF clock only when they receive benefits such as cash assistance and housing subsidies that go on for more than four months. States can provide a wide range of services to families not receiving cash assistance without affecting these time clocks. Direct services to families and their children do not count. The federal regulations also do not count many of the other programs that states can offer-child care, transportation and work support for working families, payments to help recipients get cars fixed or enroll in training programs, earned income tax credits, individual development accounts, and employment and parenting training for noncustodial fathers.

States are also using more flexibility in structuring programs and services using TANF funds. They include a variety of state and local agencies-departments of children and families, schools, public health programs, domestic violence agencies and homeless programs, as well as the TANF agency. And states are increasingly contracting with community and faith-based organizations to provide services to low-income families and communities. Local United Way chapters, Goodwill Industries and churches and neighborhood associations know the needs of the local area and are committed to helping the families in that community. In many cases, they are better suited to provide the new kinds of services being developed to help poor families.

There are some limits on TANF. States cannot use the funds for general K-12 education or to substitute for Medicaid. Federal TANF block grant money and state funds used for the maintenance of effort have slightly different restrictions. For instance, states cannot use federal money for medical services, such as substance abuse treatment by a doctor or health insurance premiums, but they can use state money for that. And they can use the federal money in their substance abuse treatment programs for screening and support services such as child care and transportation. Finally, uses of state maintenance of effort funds on existing programs must meet a new spending test that focuses on increases since 1995, but there is no similar restriction on federal TANF money. Legislative and executive fiscal analysts need to know these rules and be able to help structure programs so they comply. But the flexibility is still there.

CREATING NEW WELFARE PROGRAMS
State legislatures continue to transform their welfare programs. This year's sessions are critical in many states as legislators recognize the available resources and adjust to the federal regulations that spell out their flexibility. More than at any other time in welfare history, states have the opportunity to create programs responsive to their needs and economic situations. Under AFDC, states' new ideas were usually met with the double negative: "The federal rules won't let us do it, and we don't have money anyway."

Now state legislatures can. They can strengthen their emphasis on work. They can provide job training, child care and transportation assistance to working poor families, even those who have never received cash assistance. They can subsidize jobs for recipients or fund economic development in poor regions. They can start after-school programs to help teens stay in school and avoid pregnancy. They can help grandmothers raise their children's children and keep them out of the child welfare system. They can help fathers get better jobs and become better parents.

They can provide state earned income tax credits or help welfare recipients establish individual development accounts they can use for education or starting a business. They can improve early education opportunities for children up to age 3. They can send welfare recipients to college.

They can support community organizations providing services to families at risk of abuse or neglect. They can provide family support services to help parents cope with the challenges of raising children in poor neighborhoods. States can transform what was a cash assistance program into a broad set of family assistance services.

The range of choices is astounding for human service policymakers used to coping with inflexibility and limited resources. State legislatures can decide now what programs they want to strengthen low-income families and reduce out-of-wedlock pregnancies. They have the money, and they have the flexibility. The choices are theirs.

Jack Tweedie is NCSL's expert on state welfare policies.

©2000, National Conference of State Legislatures. All rights reserved.

Feds Help, Really

There's a new twist on the old joke about federal officials appearing in a state and saying "We're here to help." The U.S. Department of Health and Human Services is actively helping legislatures exercise their flexibility under TANF. They have co-sponsored several regional meetings with NCSL to help state legislators and staff understand the flexibility and financing of the new welfare program. They have also published a guide that provides a good explanation of state program choices. And it is written in plain language-Helping Families Achieve Self-Sufficiency: A Guide on Funding Services for Children and Families through the TANF Program. The guide is available on the Administration for Children and Families Web site-www.acf.dhhs.gov/programs/ofa/funds2.htm.

Follow the Money

States have substantial money available in their TANF programs-$8 billion to $10 billion nationwide. Individually, most states have tens of millions of dollars or more. But legislators often have difficulty determining how much is available and how much the state is spending. They need to have a better picture of their state's TANF finances as they make decisions about welfare policy, but the information is not always forthcoming from their agencies.

Four basic TANF money principles are:

1. By law, federal TANF funds are subject to appropriation by the state legislature (the Brown Amendment).

2. In almost every state, spending has lagged considerably behind appropriations. The average state is spending only 75 percent to 80 percent of the state and federal money available every year. That means most states have significant money in reserve.

3. In analyzing TANF resources available, legislators should think in terms of two different types of money:

Federal funds that have accumulated from past years.
The amount by which current "welfare income" (the federal block grant and required state spending) exceeds current spending.

For states concerned with what happens if their economy declines and caseloads and spending increase, the difference between welfare "income" and spending provides continuing funds states can use to cover increased spending.

4. Legislators need to know current spending data. Agency officials must report how much federal money they have spent and how much is left to the federal government every three months. State legislators should obtain those reports from their agencies as they are completed. They can use them to see how much money is available or to identify big changes in spending that legislators may not have known about.

NCSL staff track state TANF spending and can help you obtain and analyze the most recent information. Call Jack Tweedie at (303) 364-7700

Using TANF for Children and Families

Florida established college accounts for the children of welfare recipients.
Ohio and South Carolina are funding home visits to help new parents.
Connecticut established a safety net program to help families who leave welfare.
Iowa and Tennessee are conducting home visits to families that have left the welfare rolls to check on the well being of the children and to determine whether additional services are needed.
Kentucky expanded its family preservation services and family assessment program.
Missouri has a "Grandparents as Foster Parents" program funded with TANF. Participating grandparents are eligible for the standard foster care payment and support services including respite and child care.
Washington uses TANF funds to increase wages for early childhood education teachers who achieve a two-year degree. Money is also used for a child care micro-loan initiative, which provides loans to providers to improve the quality and supply of child care.
Iowa established a community-based initiative that improves services for children from birth to age 5, including prenatal programs, parent education classes and full-day preschool and Head Start programs.

State Initiatives That Reinforce Work

Washington provides former recipients with services that help them keep their new jobs including problem resolution with employers, workplace adjustment skills, job coaching and mentoring.
Arizona offers vocational and occupational training for ex-recipients who have jobs to help them acquire more valuable skills and allow them to keep their jobs or get better ones.
Florida created Retention Incentive Training Accounts to help pay for education, mentoring, performance incentives, transportation, child care costs and other costs needed for successful job retention and advancement.
Michigan appropriated $4 million to pay for enhanced vocational skills training for former and working recipients.
Oregon places substance abuse professionals in local offices to help identify clients who need treatment and provides a range of treatment options for those who need help.
Indiana matches recipients' contributions to individual development accounts that can be used for further education or training.
Kansas and Washington have initiatives for clients with learning disabilities that provide a screening tool for welfare staff, help welfare recipients move toward self-sufficiency and identify jobs that are suitable for learning-disabled clients.
California, Iowa and North Carolina are using TANF for programs to help low-income fathers pay child support and reconnect with their children through job training, employment counseling, life skills management and peer support.

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