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Human Services Committee Alert

Key Bills to Reauthorize Welfare Reform and TANF

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Updated 7/10/02

Legislation to reauthorize the 1996 welfare law (PRWORA, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996) and the Temporary Assistance to Needy Families (TANF) program has moved forward in both the House and the Senate. Major bills are summarized below. The process of reauthorization began in February when President introduced his TANF reauthorization proposal. This was a proposal, not actual legislative language. Some of the key issues for states in welfare reform are funds for TANF and supplemental grants and child care, retaining the flexibility of the current TANF block grant and proposed new requirements, notably increased work participation rates that states must meet or risk significant financial penalties. The penalties include loss of 5% of the block grant, a requirement to "backfill" that reduction with state dollars, and a 5% increase in the state Maintenance of Effort (MOE) dollars.

The House-passed bill, H.R. 4737, incorporates many aspects of the President's plan, including increasing the work participation rate to 70% and the number of hours of participation required of recipients to 40 hours a week, although there are some significant changes including a restored but limited caseload reduction credit. H.R. 4737 combined elements of H.R. 4090, introduced by Representative Wally Herger (R-California), chair of the Human Resources Subcommittee of the House Ways and Means Committee, and H.R. 4092, introduced by Representative Howard McKeon (R-California), chair of the 21^st Century Competitiveness Subcommittee of the House Education Workforce Committee. H.R. 4737 passed the House by a mostly party-line vote of 229-197 on May 16.

On June 26, the Senate Finance Committee passed the "Work, Opportunity, and Responsibility for Kids (WORK) Act of 2002," a welfare reform reauthorization bill that is more state-friendly than House-passed legislation, by a vote of 13-8. Three Republicans joined all Democrats but one in voting for passage. The bill proposed by the Chairman, Senator Baucus (D-Montana) resembles the "tripartisan" proposal put forward by Senators Breaux (D-Louisiana), Hatch (R-Utah), Lincoln (D-Arkansas), Jeffords (I-Vermont), Snowe (R-Maine) and Rockefeller (D-West Virginia), who all voted for final passage. A third Republican Senator, Senator Murkowski of Alaska, also voted for the measure. Senator Daschle (D-South Dakota), the Senator Majority Leader, defected from his fellow Democrats and voted against final passage. The Senate Finance bill could go to the floor later in July or in early August, or perhaps after the August recess.

The process is still far from complete. After Senate floor action, House and Senate conferees face a conference process that is likely to be very contentious. The TAN F program must be reauthorized by October 1, 2002. Some have suggested that it may necessary to extend the TANF program and delay reauthorization. NCSL has urged action on reauthorization this year.

H.R. 4737
The Personal Responsibility, Work and Family Promotion Act of 2002
Sponsor: Representative Deborah Pryce (R-Ohio)
Status: passed the House 229-197 on May 16

The bill increases the work participation rate (percentage of recipients who must be working) by 5% a year, from 50% to 70% . It also increases the number of hours per week recipients must be engaged in work and other activities. Recipients must spend 24 hours a week in work activities, and participate in other activities for an additional 16 hours a week. The activities defined as work are reduced from the number in current law. Activities that count toward the 24 hours are: unsubsidized employment; subsidized private sector employment; subsidized public sector employment; on-the-job training; supervised work experience; or supervised community experience. If states do not meet these dramatically increased work requirements, they risk significant financial penalties. Current funding for the block grant remains at $16.5 billion, and the supplemental grants and contingency fund are continued.

The bill establishes a new bonus fund taking funds from the existing high performance bonus fund averaging $100,000,000 a year over the five years of the reauthorized program. These funds would reward states for state performance in achieving the goals of employment entry, job retention, and increased earnings for families under TANF

There is no option for states to serve legal immigrants who arrived after 1996 with federal TANF funds. This would include services, such as English as a Second Language classes (ESL) as well as cash assistance.

Two new funds to promote marriage and family formation are included in the bill. The Secretary of HHS will award competitive grants to states, territories and tribal organizations to develop and implement innovative programs to promote and support healthy, married 2-parent families. This grant program would receive $100,000,000 a year. It would be funded by repealing the bonus to reduce out-of-wedlock births. This is a matching grant program that would require a 50% match. There is also a separate $100,000,000 annual fund to conduct research and demonstration projects and provide technical assistance focused on family formation and maintenance activities. The money would be awarded by the Secretary of Health and Human Services to support projects conducted by public and private entities

The bill establishes a program of demonstration projects in a state or portion of a state to coordinate multiple public assistance, workforce development, and other programs. The programs that can be part of a waiver to conduct these coordination demonstration projects are:

• TANF
• The Social Services Block Grant (SSBG, or Title XX)
• Workforce Investment Act Title 1 (Adult and Dislocated Worker and Youth) programs, except Job

Corps, with some limitations

• Projects authorized under Section 505 of the Family Support Act of 1988 (JOBS programs)
• Wagner-Peyser Act (general employment) activities
• Adult Education and Family Literacy Act activities
• Child Care and Development Block Grant (CCDBG) activities
• Housing programs (not Section 8 rental assistance programs or section 7 programs)
• McKinney-Vento Homeless Assistance Act activities
• The Food Stamp program

H.R. 4737 also sets up a State Food Assistance Block Grant Demonstration Project. This block grant program would fund food assistance, an employment and job training program for needy individuals, and administrative costs. Five states could receive a waiver to operate such a program for five years.

HR 4737 would increase child care funds by $2 billion over five years. However, only $1 billion of the $2 billion is mandatory or guaranteed funds, the rest is subject to the appropriations process. The $1 billion in mandatory funds, due to a current law requirement, would require a state match. Under current federal law, all federal funding increases to the CCDBG (Child Care and Development Block Grant) mandatory funding stream must be matching grants. State match is set as the federal Medicaid assistance percentage (FMAP). The quality set aside in the Child Care and Development Block Grant is increased to 6%.

The ability of states to provide transitional Medicaid assistance to those who leave welfare for work is extended for one year in H.R. 4737. This is paid for by cutting state Medicaid administrative funds.

The Work Opportunity and Responsibility for Kids (WORK) Act/Senate substitute for H.R. 4737
Status: Passed Committee on June 26 by a 13-6 vote

The WORK bill, a substitute for H.R. 4737, has many state-friendly provisions. While the bill increases work participation rates to 70% over 5 years, the hours of work a recipient must work are retained at 30, a broad definition of work activities apply and it retains the current 20 hour work requirement for a parent with a child under 6. The bill features an employment credit replacing the caseload reduction credit that provides states with credit for a percentage of those who leave TANF for full and part time employment or those who work and receive child care or transportation assistance. Two years of vocational education including community college may count toward the work requirement. "Rehabilitative services" including substance abuse and mental illness treatment, may count for three months which can be extended for an additional three months. It sets a new standard for universal engagement of all TANF recipients with flexibility for states to determine which activities are appropriate. Other good news for states: The Child Care and Development Block Grant would receive an additional $5.5 billion in mandatory funding, with no state match required for the first three years.

The Committee amended the Chairman's mark to increase the Social Services Block Grant (SSBG) to $1.952 for FY 2005. Notably, the bill gives states long-sought options to use TANF funds to serve legal immigrants and to provide Medicaid and SCHIP to pregnant legal immigrant woman and children. Supplemental TANF grants are increased, included in the TANF block grant and expanded to include 24 states. Current states waivers are retained and extended.

The bill also features a five year extension of Transitional Medicaid and permits states to provide continuous Medicaid eligibility for 12 months and, for families with average gross monthly earnings below 185% of federal poverty guidelines (less work needed child care costs) as of the first year of transitional benefits, to extend benefits for another year for a total of 24 months. There is no Medicaid administrative cut. Also, it adopts a new marriage promotion fund, extension of child welfare waiver authority, simplification of child support distribution and child support pass through at state option.

Other amendments to the mark were adopted in committee give states:

• a new option to provide Medicaid and SCHIP to cover legal immigrant pregnant women and children;
• the option to count up to 10% of their TANF caseload as working while engaged in postsecondary
• education;
• the ability to exempt from work requirements up to 10% of their caseload from work requirements if \

they are caring for a disabled family member, by voice vote; and

• allows all states to apply for waivers identical to current state waivers. Waivers are time-limited for 4

years.

Overall child care policy issues are in the jurisdiction of the HELP Committee, not the Finance Committee. The HELP Committee has jurisdiction over the part of the CCDBG that is discretionary; the Finance Committee has jurisdiction has authority over the mandatory funding. This bill changes the authorized amount of discretionary funding in the Child Care and Development Block Grant to $3.1 billion for FY 2003, and "such sums as necessary" for FYs 2004-2007. (The amount currently appropriated for FY 2002 is $2.1 billion.) State plans would have to include information about how states would provide parents with consumer information about quality child care and describe how states will inform parents receiving child care assistance and low-income parents about their eligibility for child care assistance. In their plans, states would have to certify that procedures for monitoring providers are in place that include unannounced visits (states may choose to exempt relatives providing child care). States would have to show that they have training requirements in effect for all providers except relatives. The set-aside of these funds for quality activities is increased from 4% to 10%. There is also an additional 5% set aside for activities relating to increasing provider reimbursements. States must increase reimbursement rates to 85% of the markets survey rate, and may use the set-aside for providing tiered reimbursements above that rate if they do so. States could not increase co-pays. The bill allows states to operate an at home infant care program to promote the quality of care for infants. The bill also includes separate authorizations include the following measures: the Child Care Centers in Federal Facilities Act, the Technical and Financial Assistance Grants Act, the Book Stamps Act, and the Early Care & Education Act.

The bill includes level funding for TANF and child care, continuation of the TANF supplemental grants and the TANF contingency fund, and reallocated funds for marriage promotion. Like the President's proposal, the bill would increase the work participation rate to 70%. Recipients would be required to participate for 40 hours a week, 24 hours in work or directly work-related activities, and 16 hours in other activities that lead toward self-sufficiency. Job search and vocational education do not count for the first 24 hours as they do in current law's definition of work. Unlike the President's proposal, H.R. 4090 maintains a modified caseload reduction credit. Also, Representative Herger's bill would allow states to transfer up to 50% of their TANF block grant into the child care block grant. Like the President's proposal, the bill would create two new $100 million funds for family formation and marriage promotion activities (one requires state match). Legal immigrant benefit restrictions are maintained. This bill was reported out of the Ways and Means Committee on May 2, and has been amended to include a mandate that states implement full-family, full-check sanctions.

This bill focuses on the aspects of welfare reform over which the Committee has jurisdiction, addressing work requirements, expanded waiver authority and child care. It contains child care provisions not included in the Herger bill (H.R. 4090), but basically mirrors the Administration's proposal. It does not increase funds for child care. It retains state-set standards and does not include any further earmarks on the child care block grant. This bill was reported out of the full Education and the Workforce Committee on May 2, and has been amended to include a mandate that states implement full-family, full-check sanctions.

This bill includes an inflationary increase for the TANF grant, enhanced funding for TANF supplemental grants, a modified contingency fund, and increased funding for child care and the Social Services Block Grant. The bill restores benefits for legal immigrants. It provides child poverty reduction grants. Work participation rates would remain essentially the same as current law, and the caseload reduction credit would be replaced with an employment credit. The existing limitation on vocational education would be lifted. The bill would restrict state flexibility to move TANF funds into programs currently funded with state money. It includes new review and reconciliation requirements for sanctioned recipients.

This bill makes reduction of child and family poverty the statutory goal of the TANF program. It defines "work activity" to include education and job training at all levels as well as a parent's caregiving for a child under the age of six or over the age of six if ill or disabled or if after school care is not provided. It would count treatment for domestic and sexual violence, mental health problems, and substance abuse as "work activities." It would also stop the five year clock (measuring the lifetime limit of 60 months on assistance) if the recipient is engaged in an allowable work activity, including education and job training. It would prohibit full family sanctions and family caps. It would replace the "illegitimacy bonus" with a poverty reduction bonus and restore benefits to legal immigrants.

H.R. 4057
The Making Work Pay Act of 2002
Sponsor: Representative Sander Levin (D-Michigan)
This bill is a companion to S. 2058, introduced by Senator Lincoln.

This bill provides an employment credit to replace the caseload reduction credit. States would get credit for recipients they move from welfare to employment, credit for potential recipients diverted from the TANF program by receiving a non-recurring short term benefit, and (at state option) credit for families receiving substantial child care or transportation assistance. Recipients who qualify for Supplemental Security Income benefits would be removed from the work participation rate calculation rate for the entire year.

This bill includes an inflationary increase for TANF, a focus on reducing poverty, and continuation of current TANF waiver authority for states. It also lifts the limitation on counting education toward work participation rates.

On May 2, Senators Breaux (D-Louisiana), Hatch (R-Utah), Lincolin (R-Arkansas), Jeffords (I-Vermont), Snowe (R-Maine) and Rockefeller (D-West Virginia), all members of the Senate Finance Committee, announced agreement on a detailed set of principles for welfare reform. The agreement retains the current overall 30 hour per week work requirement with a overall participation rate that incrementally increases to 70%. The first 24 hours must be spent in a work activity as defined under current law (public and private sector work, six weeks of job search, vocational education) and the remaining six hours can be spent in activities as defined by the state that meet a participant's plan. Vocational education can count for up to 24 months. Adult basic education counts for up to three months and can be continued for an additional three months under certain circumstances. Substance abuse treatment counts for up to three months and can be continued for an additional three months under certain circumstances. These Senators also voiced support for increased child care funding.

This bill provides an employment credit to replace the caseload reduction credit. States would get credit for recipients they move from welfare to employment, credit for potential recipients diverted from the TANF program by receiving a non-recurring short term benefit, and (at state option) credit for families receiving substantial child care or transportation assistance. Recipients who qualify for Supplemental Security Income benefits would be removed from the work participation rate calculation rate for the entire year.

This bill includes a increase in the TANF base grant ($2.5 billion over 5 years), enhanced funding for TANF supplemental grants, a modified contingency fund, and increased funding for child care and the Social Services Block Grant. The bill restores benefits for legal immigrants. It provides child poverty reduction grants. Work participation rates would remain essentially the same as current law, and the caseload reduction credit would be replaced with an employment credit. The existing limitation on vocational education would be lifted.

The bill, like the President's proposal, raises the work participation rate by 5% a year to 70%. It would require 40 hours a week of participation by recipients, of which 24 would have to be in a work or work-related activity. provide $100 million in grants for promoting healthy marriage and two-parent families. It reauthorizes the block grant at the $16.5 billion level, and reauthorizes TANF supplemental grants. It would add $1 billion in funding over 5 years to the mandatory funding for the Child Care and Development Block Grant, and increase the amount that states could transfer from TANF to the child care block grant from 30% to 50%. The bill would million in grants for promoting healthy marriage and two-parent families. It would also provide $100 million a year for research and demonstration projects in marriage promotion, and $20 million a year for grants to promote responsible fatherhood. The bill would not change the existing prohibition on using TANF funds to provide benefits for legal immigrants. The bill establishes a program of demonstration projects in a state or portion of a state to coordinate multiple public assistance, workforce development, and other programs.

This bill mirrors House GOP and Administration proposals to raise the work participation rate requirement to 70%. It also would require recipients to participate in activities for 40 hours a week-20 hours of work, 20 hours of other activities. It phases out the caseload reduction credit, but allows states to get credit for those who left the caseload for employment within the past 12 months. The bill provides grants to encourage private/public partnerships to provide educational opportunities, grants to encourage child support collections and services for non-custodial parents. It allows states to count as engaged in work for up to 24 months 30% of the caseload. In addition, the bill provides an additional $1 billion for child care. The bill contains an option for states to serve legal immigrants with TANF funds and an option to extend transitional Medicaid assistance.