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Human Services - Summary of President Bush's Welfare Reform Reauthorization Proposal Click here for a printer-friendly version of this summary (Adobe Acrobat Reader Required)

SUMMARY: THE PRESIDENT'S WELFARE REFORM REAUTHORIZATION PROPOSAL

On February 26, 2002, President Bush announced his proposal for welfare reform reauthorization. The President emphasized four themes: promoting work, strengthening families, enhancing state flexibility, and showing compassion to those in need. It is expected that there will not be an administration bill; however, his proposal will be reflected in legislation that will be offered in April through the Chairman of the House Human Resources Subcommittee of the House Ways and Means Committee, Representative Wally Herger (R-CA). Congressman Ben Cardin (D-MD) has already introduced an alternate proposal, H.R. 3625. The president's plan does reflect the HHS listening sessions with states in several respects. It ensures that TANF block grant funding is maintained, including the supplemental grants and the contingency fund, as NCSL requested. However, the new work requirements raise concerns for the states.

President Bush proposes maintaining full funding--$16.5 billion-- for the Temporary Assistance for Needy Families (TANF) block grant. State Maintenance of Effort requirements (MOE) remain the same. He also proposes continuing the TANF supplemental grants at $319 million a year. These grants, which expired in FY 2002, provide additional funding to states with historically low welfare spending and with large population increases. The President proposes restoring the Contingency Fund, which also expired in FY 02 at $200 million. These were all NCSL priorities. Note: the economic stimulus package contains funding, recently sent to the President's desk for his signature, for the supplemental grants and the contingency fund.

There are other important funding related provisions in the President's proposal. The bill would allow TANF funds carried over from one year to the next to be used as flexibly as current year funds. Under existing law, the funds cannot be used for purposes other than assistance-- cash, food, and housing. The President would also end certain limitations on serving the unemployed by clarifying the definition of "assistance" to allow the unemployed to receive child care and transportation services without triggering the lifetime time limit on assistance. In addition, the President would allow states to designate some or all of current year or previous year TANF funds as "rainy day funds," and those funds would be shown as obligated. However, those funds would remain in the federal Treasury until used.

The most radical differences between the current TANF law and the President' reauthorization proposal involved work rates and work requirements. The Administration proposes increases the required number of hours spent in work activities from 30 to 40 hours (24 hours or work or a directly work-related activity and 16 hours of other activities). The Administration also proposed raising the work participate rate states are required to meet from 50% to 70% by 2007 and eliminating the caseload reduction credit, which allows states to reduced their work participation rate by the decline of their caseload, by the third year of the reauthorized program. In FY 2003, the states would receive the full caseload reduction credit; in FY 2004, 50% of the credit; and in FY 2005 the credit would be eliminated.

The Bush model is a full engagement model with self-sufficiency plans required with 60 days. The new participation requirement is 40 hours of week, of which 24 hours is directly work-related and 16 can be other services that will help a recipient become self-sufficient. (The states determine what activities count in the 16 hours).

The only activities that count are work or directly work-related activities: unsubsidized employment; subsidized private sector employment; subsidized public sector employment; on-the-job training; supervised work experience; and supervised community experience. NOTE: States do get partial credit toward the work participation rate for recipients who meet the 24 hour requirement, even if they don't meet the full 40 hours.

After the 24 hour requirement is met, activities that move families to self-sufficiency count toward participation. States define the activities, which could include education or counseling.

The separate work requirement for two-parent household is eliminated, as requested by NCSL. Single parent and two parent households must meet the 40 hours a week requirement and count in the work participation rate. In two parent families, hours of both parents can be combined. As in current law, states have the option of exempting parents of children under 12, but they still must be participating at some level. The exception is parents of children under six who can't find child care. Teen parents in school meet both the 24 and 40 hour requirements.

There are some areas of flexibility. States have three months to serve clients with any services that meet TANF goals and have these clients meet the 24 hour work requirement. Examples of such services include substance abuse treatment, rehabilitation services, and job training. This is a single block of time available once in every 24 month period. For the first month after the case is opened, states have the option of not counting recipients in their caseload. States do get some credit for moving recipients to work. Recipients leaving TANF for reasons related to employment/earnings count toward the work participation rate for three months.

If a state does not meet the work participation rate, which will increase to 70% of the caseload, it will lose 5% of its TANF grant, have to make up that reduction with state funds, and its MOE requirement goes up by 5%.

• The Administration's Full Engagement Model
• Universal Engagement

The Administration would add to the existing purposes of the TANF an overall purpose of improving the well-being of children. The proposal also would revise an existing goal to read "to encourage the maintenance and maintenance of healthy two parent married families and responsible fatherhood."

The President creates two pools of dollars to support marriage and family formation activities. President Bush would eliminate the existing $100 million Illegitimacy Reduction Bonus and establish a research and demonstration projects and technical assistance primarily focused on family formation and healthy marriage activities. The Administration also proposes to redirect $100 million of the current $200 million High Performance Bonus funds to create a competitive $100 million grant program available to a limited number of states, territories, and tribal organizations to develop innovative approaches to promoting healthy marriage and reducing out-of -wedlock births. This program will require a dollar for dollar match to participate. States can use their federal TANF funds to meet the matching requirement. The President rejected suggestions that he earmark the block grant for this purpose.

The President's 2003 budget would increase funding for the community-based abstinence education grants from $40 million in FY 2002 to $73 million in FY 2003, an 83 % increase. The President also proposes to continue the current funding of $12 million for the Adolescent Family Life Program.

States would be required as part of their state plan to provide: 1) explicit descriptions of their family formation and healthy efforts; 2) numerical performance goals, and 3) annual reporting of state achievement. States would also be required to describe their efforts to provide equitable treatment of two-parent married families.

The Administration proposed federal matching for states to provide up to greater of $100 per month or $50 over the current state pass-through to families that receive TANF (starting October 2004). This support must be ignored for purposes of calculating a family's eligibility for TANF. The Administration also proposes giving states the option of providing families that have left welfare the full amount of child support collected for them. Federal cost sharing would be provided. Under this proposal states would be required to provide child support orders for TANF families every three years. Other child support proposals include: a $25 dollar user fee for federal child support services for non-TANF families; lowering the threshold for passport denial for non-payment of child support form $2,500 to $5,000, and the ability of states to withhold limited social security benefits to collect past-due child support.

Under current law, states can compete for bonuses that are designed to recognize and reward high performing states. The President would replace the current High Performance Bonus with a $100 million High Performance Bonus with a $100 million bonus to reward Employment Achievement. The formula for measuring state performance will be developed in consultation with the states and will specify annual numerical targets for individual states. All states could be eligible for bonus in any given year if their performance meets established targets.

Under the President's plan, states would be required to establish specific numerical performance goals for accomplishing each of the TANF purposes, including measures consistent with the Employment Achievement Bonus indicators. States would decide on their performance goals and would be required to describe them in their state plans.

All existing TANF waivers would end. However, the Administration proposes to allow states to seek new waives for integrating funding and program rules across many federal programs. The Cabinet secretaries of each federal department with jurisdiction over the affected programs would be able to negotiate terms and waive any rules. The agencies involved would be Health and Human Services, Department of Agriculture, Department of Education, Department of Labor, and Department of Housing and Urban Development. Cost neutrality would be required, but would be applied across all of the affected programs.

The President has proposed restoring Food Stamps benefits to legal immigrants who lost them with the passage of PRWORA in 1996. NCSL has long sought this restoration. However, the President does not propose an option to allow states to use TANF funds for legal immigrants, an option NCSL supports.

The Administration proposes to provide technical assistance to tribes to help them implement effective TANF programs and family formation activities on tribal lands.

The Administration's proposal maintains the current lifetime time limit of 60 cumulative months of federally funded assistance and the 20% exemption from the time limit.

The President's plan does not increase funding for the Child Care and Development Fund Block Grant.

The President restores over time the ability of states to transfer up to 10% of their TANF grant into the Social Services Block Grant. The existing limit is 4.25%. That would increase to 5% in FY 2004, 6% in FY 2005, 8% in FY 2006 and 10% of FY 2007.