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A Good Time for Welfare Reform
An improved economy and lighter welfare caseloads
give states a little welcome leeway in their efforts to change
"welfare as we know it."
State Legislatures Magazine - July/August 1997
By Jack Tweedie
States could hardly have picked better timing to
take on the difficult challenges of welfare reform. A strong economy
and rapidly declining caseloads give states a running start on
moving welfare people into jobs. Don't misunderstand. States still
must move many more recipients into jobs than have left welfare
so far. An economic downturn would undermine even their current
achievements. But current conditions give them a good job environment
and more resources to concentrate on fewer cases. States are learning
which approaches work. And the early progress can contribute to
the momentum necessary to transform the welfare system from one
that writes checks to one that prepares recipients for work and
provides them with needed support services such as child care
and transportation
UNDERSTANDING THE CASELOAD REDUCTION
Across the country, caseloads declined by 20 percent
from January 1993 to January 1997. This is the largest decline
in over 50 years. In 17 states, caseloads declined by more than
30 percent. In 17 others, they declined between 21 and 30 percent,
so that two-thirds of all the states have had declines of more
than 20 percent. In only four states have caseloads increased
during this time.
The drop has occurred for a number of reasons, but
it is difficult to say exactly why such a large decline has happened
now. In the past, welfare caseloads have been strongly affected
by the economy and the number of jobs, especially low-wage jobs,
that are available. The strong economy across the country is probably
the primary reason that caseloads have dropped. The critical question
is how much difference state and federal welfare reforms have
made. A recent report by the White House Council of Economic Advisers
credits 44 percent of the drop to the falling unemployment rate
and 31 percent to welfare reform. While no one method of calculating
these effects is necessarily accurate, this estimate does highlight
the critical role of the economy and the potential effect of welfare
reforms.
Linking caseload drops and welfare changes is tricky.
Some of the largest caseload drops have been experienced by states
that are aggressively pursuing reforms, such as Indiana, Oregon
and Wisconsin. However, large drops have also occurred in states
that have not yet implemented major reforms, such as Alabama and
West Virginia. And even in the aggressive states, their declines
have occurred despite the fact that the reforms are still being
implemented. In short, states' new programs have probably not
had a major impact so far. The good news is that those effects
are still to come. Welfare programs across the country have started
to focus on helping people find work and increasing the support
services they provide for those who do. As these programs expand,
more recipients will leave the welfare rolls for jobs. At the
same time, we need to be cautious. We still do not understand
which programs work best--what mix of incentives and services
enables recipients to find and keep work. Nor do we know what
is happening to families that leave welfare.
In an important way, welfare reform has contributed
to the caseload decline. The debate about a new welfare system
encouraged new attitudes toward welfare and work in the public,
in welfare offices, and among recipients and potential recipients
themselves. During the late 1960s and early 1970s, welfare was
largely accepted as an entitlement--single parents were entitled
to a basic level of support if they stayed home to raise their
children. Of those eligible for welfare, around 70 percent applied
for and received benefits during the 1960's. By the mid-1970s,
the participation rate was over 90 percent. Because of changes
in the characteristics of women receiving welfare and increases
in the number of non-welfare women with children in the workforce,
more welfare recipients are expected to work. Even before they
enter welfare offices, applicants know that more is going to be
expected of them and that they can count on welfare for only a
limited time.
The recent changes in welfare across the country
have driven that point home. When applicants walk into the welfare
office, they are going to hear about job searches, work requirements
and time limits. Participation rates are going back down as many
potential applicants do not apply or carry through their applications.
Some will find work on their own rather than be required to do
so by welfare officials. Others will depend on support from families
or community networks. Some, however, may be falling into more
desperate poverty, even becoming homeless and losing their ability
to care for their children.
WELFARE REFORM IS MORE THAN REDUCING CASELOADS
This last group is the one that needs the most watching.
Even though caseloads have been dropping in many states for a
few years, we do not really know what happens to the families
that leave welfare. In most states, these families drop out of
official sight unless they come to the attention of the child
welfare system because of neglect or abuse or they return to the
welfare office.
Caseload reductions are therefore only part of the
story. Moving a family off welfare is the start--the critical
challenge is enabling parents to support their families without
needing welfare. States need to track families that leave welfare.
Tracking is even more important as families lose benefits because
parents do not meet new work requirements or their time limits
run out. Knowing what happens to families after welfare will give
us a clearer understanding of which programs work better. Tracking
will also help child welfare officials identify families that
cannot care adequately for their children. Officials can then
step in to provide whatever assistance or services are necessary
to protect the children and to keep the family together if that
is possible.
TAKING ADVANTAGE OF THE CASELOAD REDUCTION
Declines in the caseloads alter the challenges that
face states. Smaller caseloads mean that less money is needed
to pay benefits. Spending necessary to provide existing services
also goes down. At the same time, federal welfare money was calculated
using the much higher caseload numbers. States can increase services
provided to recipient families without increasing state spending.
Of course, states can also maintain the existing level of services,
reduce state welfare spending and allocate it to other purposes
such as schools, prisons, or tax reductions. While this is an
attractive option, it is important to remember that the federal
law substantially increases the work mandates that states have
to achieve. States' work participation rates rise to 50 percent
by FY 2002. And families will start hitting their five year time
limits about the same time. State programs have a ways to go before
they can meet these mandates.
States should recognize that the families leaving
welfare and driving the caseload reductions are generally those
with the most skills and work opportunities. The families remaining
on welfare face the most challenges in finding work and supporting
their families without cash assistance. Two-thirds of them do
not have high school diplomas and half of them do not have recent
work experience. Even states that have been successful in moving
recipients into jobs must develop new approaches to work with
these hard-to-place recipients. States should also prepare for
the possibility of an economic downturn where caseloads will rise
again and spending will increase, but no more federal money is
likely to be available unless the downturn is severe. The recent
caseload decline gives states the flexibility they need to address
these issues without needing new state money. Their actions while
caseloads are down will make a big difference when conditions
change.
![[Picture]](file:///\\SCRUFFY/SHARE/NCSLNET/WELFARE/PURPLEBA.GIF) Welfare Reform
Human Services and Welfare
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