State Legislatures Magazine: April 2000

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

Building New Paths Out of Welfare Reform

Work-focused Welfare
Early Progress and New Questions
State Flexibility
State Programs
States' Welfare Programs Evolving

Building New Paths Out of Welfare Reform

Many state legislatures are realizing that sending some welfare recipients to college may be a better option than just getting them any old job.

By Jack Tweedie
The way Wendy White's story ends isn't completely typical, but it is thought provoking. According to the Seattle-Post Intelligencer, when welfare reform started in Washington state she was attending Walla Walla College-enrolled in a four-year nursing degree program on a full scholarship. She was also receiving cash assistance from Washington's Aid to Families with Dependent Children (AFDC) program to support her two daughters.

When Washington established its WorkFirst program in 1997, it required recipients to get a job or engage in other work activities for at least 20 hours per week. College didn't count, so Wendy had to leave school.

She went back to the town where she grew up and took two part-time jobs. She also started taking classes to qualify for a two-year practical nursing degree. Because the WorkFirst program did not provide child care, Wendy's mother temporarily left her own job to take care of Wendy's daughters. What is noteworthy about Wendy's story is that although she had to lower her goals, she finished the practical nursing certificate program in the fall of 1999 and got a job paying $12.25 an hour.

Stories like Wendy's have sparked a debate about how education can play a part in getting people off welfare and into better jobs. Lawmakers are starting to add options to the reforms that pushed people into the first available job.

Early in the reform process, almost every state adopted policies similar to Washington's. They required participants to work, and most college programs didn't count. They offered little support to people who tried to juggle both work and school. Most students who were depending on AFDC to help them and their children had to leave college and focus on work instead.

Many state legislatures are now reconsidering these strict work requirements. Ironically, it's the success of states' emphasis on work that has prompted the renewed interest in education. So many recipients have gotten jobs that states now have the flexibility to allow some to go to college. But while adults leaving welfare are usually getting jobs that pay more than minimum wage, their wages increase slowly. Few families are able to move out of poverty. So states are looking at post-secondary education as a way to help them qualify for higher paying jobs, increasing their chances for self-sufficiency.

WORK-FOCUSED WELFARE
Initial state reforms focused on work. They required able recipients to work a minimum number of hours, either in jobs or training designed to move them quickly into the workforce, such as job search or job readiness. Although college was an option under many AFDC programs, the new reforms stressed getting people into jobs as fast as possible. This new "work first" philosophy focused on getting participants a job and then building from there-"a job, a good job, a career."

States embraced work first in part because of data that questioned the old "human capital" approach that stressed training before work. Even though the research focused primarily on basic education that was not well adapted to the needs of welfare recipients, the human capital approach was seen by many policymakers as leading to welfare dependency. They rejected extending education and training programs and focused instead on work.

The federal welfare reform law of 1996 reinforced this emphasis on jobs. It imposes ambitious work requirements on states and threatens substantial financial penalties if states don't meet them. The federal law excludes education unless it is "directly related to employment" and restricts how long these educational activities can count toward the state's participation rate.

Most college programs do not fit the federal definition of "work activities." Indeed, officials in many states believed that the federal law prevented them from using federal funds to assist families where an adult was going to college rather than working. That wasn't true. The federal law doesn't prevent states from allowing recipients to go to college, though it has the effect of discouraging them from doing so.

It does provide strong incentives to get recipients into jobs. But even the best AFDC-era programs did not come close to the employment rates (50 percent of all adult-headed families) that states have to reach by 2002.

So initially, state programs focused on getting recipients into jobs or activities that meet the federal definition. Few states directly supported college. Only Maine and Wyoming considered programs that allowed recipients to go to college without any additional work requirements. They proposed to use state funds to pay benefits and support services and remove the families from the federally funded TANF program and the work rate calculation.

In most states, recipients can go to college only if they first complete their required hours of work. And in most of those states, support services such as child care, transportation or tuition assistance are not available.

EARLY PROGRESS AND NEW QUESTIONS
The emphasis on work contributed to a remarkable transformation in welfare. Cash assistance rolls dropped by half. Most adults who left welfare got jobs. Those who stayed employed were able to increase their earnings by as much as 20 percent in the first year off welfare.

But these successes raised new issues. Many new workers leave their jobs, particularly low paying ones. Even for parents who stay employed, their hourly wages go up slowly. Most of their pay increases are due to increased hours, not raises or promotions. And most of these jobs have no benefits such as health insurance, sick leave and paid vacations.

Many state legislators characterize the three goals of their reforms as moving families off welfare, into jobs and toward self-sufficiency. States succeeded remarkably well on the first and show substantial progress on the second. As they begin to confront the third goal of helping families become self-sufficient, lawmakers are looking at the benefits of college and trying to strengthen the connection between education and work.

Several welfare-to-work programs have been successful in getting better jobs for their clients by combining work with education. Studies show that women with two-year degrees earn as much as 23 percent more than those without. A four-year degree increases earnings by as much as 33 percent. These findings confirm the value that Americans traditionally place on education and point legislators toward strengthening the role of college in welfare programs.

STATE FLEXIBILITY
The TANF program and the rapid caseload decline give states flexibility to help people on cash assistance as well as other low-income parents who want to enroll in college.

Federal rules contain no direct restrictions on using either state or federal TANF funds to provide cash assistance and support services to parents enrolled in college or other educational programs. States can provide child care and transportation assistance. They can pay tuition and book expenses. And the federal rules do not require students to work. The state may count courses and homework as the full participation requirement. Alternatively, states can require some work in addition to school for those recipients.

Work participation has increased. Caseloads dropped so much that most states no longer risk being unable to meet their work participation rates, which was the reason states focused on work in the early years of reform. But work must still be a high priority. As of October 1999, states must have 40 percent of their welfare families working. But states can reduce that requirement by the amount their caseload has dropped since FY 1995 (minus any reductions due to changes in eligibility requirements).

For example, 38 states reduced their caseloads by more than 30 percent since FY 1995. And most states had actual work participation rates of more than 30 percent in FY 1998. Combine those two accomplishments and it is clear that most states can allow a significant number of qualified recipients to go to college and still be confident they will meet the federal work participation rate requirement with room to spare.

Some state officials still worry about what will happen if caseloads start to go up. Even though the increase would have to be substantial (at least 50 percent in most states), it makes sense to build in a safety valve to help avoid possible future financial penalties.

Credit for state reductions is based on the previous year's caseload, so officials would have six to nine months' notice of a caseload increase before it would affect their credit. Arkansas' education program allows the agency to require participants to return to the federally required number of work hours if caseloads increase. Because the state would have several months' notice, it could allow students to finish their terms before imposing the work requirements.

Third, the caseload reduction also gives states the financial flexibility to invest in programs to help qualified recipients obtain two- and four-year degrees. Even though states have progressed in spending down their TANF reserves, most still have substantial funds available. And college programs do not require large investments-just tuition, books and fees, child care and transportation along with a recognition that recipients are likely to need cash assistance longer than if they were immediately looking for a job.

Finally, states also have flexibility to extend this opportunity to working poor families. One reason that some lawmakers are reluctant to establish post-secondary programs involves fairness. Should the state support welfare recipients while they attend college, when poor parents who work may want to go to school, but can't afford it?

States may use TANF funds to support education and training, including college, for working poor parents, whether or not they receive or have ever received cash assistance. For all services and benefits under TANF, states determine income standards for eligibility, including income up to at least 200 percent of the poverty level. If the program involves a stipend for living expenses, it might be preferable to set up a separate state program using state maintenance of effort (MOE) funds so participants aren't counted in the work participation rates and don't use up their time limit.

STATE PROGRAMS
Almost all states allow some education toward recipients' work participation, but it seldom includes enough college to earn a degree. Many states do not go beyond the federal allowance-up to 12 months if "directly related to employment." About half the states allow more than 12 months, some with a separate work requirement in addition to school attendance. Some states now allow a wide variety of two- and four-year degree programs, and several more are considering such policies.

Maine established the first program under TANF, the Parents-as-Scholars program that uses state MOE funds so that participants are not included in Maine's work participation rate. It includes cash benefits and support services such as child care and transportation. The program pays tuition only in special circumstances. Participants enroll in two- or four-year degree programs intended to help them qualify for a better job.

For the first two years they must meet a 20-hour participation requirement, including class and preparation time. After two years, participants also have to work 15 hours per week or do 40 hours per week of school and work.

Wyoming also set up a state-funded program that would allow TANF participants to enroll in college, but it hasn't been put to use. Instead, it is including students in its federally funded program. Officials there now believe a separate state program is unnecessary because Wyoming's caseloads have dropped significantly and it will have no trouble meeting its work participation rate.

People in Wyoming's program must have been employ-ed for at least part of the four months before enrolling in school. If approved by the agency, they can enroll in a program that leads to a specific job. They must take at least 12 credits per semester and 32 per year. If they are not in school, they have to work 32 hours a week during the summer. And they must maintain at least a "C" average.

Illinois' program allows recipients to meet their work requirement through full-time enrollment in a degree program. They must maintain a 2.5 grade point average. Illinois uses MOE funds for benefits, and the months enrolled in school (up to a maximum of 36) do not count against the family's time limit.

Arkansas legislators were concerned that if agency workers were too focused on work, they would not approve many participants for education. So lawmakers passed a bill in 1999 that specifies that the agency was to enroll at least 400 people in college and 700 in vocational education programs. The agency met the targets within five months. Participants can be required to work up to 15 hours per week. And, again, because of worry that caseloads may go up and make it hard to meet the federal work requirements, the agency can stop the program if that becomes a risk.

STATES' WELFARE PROGRAMS EVOLVING
State legislatures are building on the initial successes of their welfare reforms. The narrow emphasis on work moved many recipients off welfare and into jobs. Now, reduced caseloads give states the flexibility to provide more intensive services aimed at helping recipients move toward self-sufficiency. Allowing qualified participants to enroll in two- and four-year college degree programs is one promising strategy that many legislatures are adopting to give an added boost to families leaving welfare.

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