The welfare bill [H.R. 3734, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996] was passed by Congress in August and awaits signature into law by the President. The bill slashes help for children and families in a broad range of safety net programs. Cuts in federal funds for these programs total $54 billion over six years.
The bill abolishes Aid to Families with Dependent Children (AFDC), the primary cash aid program for families, as well as JOBS (the work and training program for welfare recipients), and Emergency Assistance to Families with Children (a program that provided emergency help to families with children for a maximum of one month per year). These programs are replaced with a block grant of federal funds given to states. While states must operate a welfare program in all political subdivisions, the programs need not be uniform across the state (though families must get fair and equitable treatment). The program includes assistance to families, but there is no explicit requirement that families get cash aid, and it is conceivable that states could provide vouchers or services rather than cash help. Administration of the program could (but will not necessarily) change dramatically, with an option to have help administered and disbursed by private charities, religious organizations, or other private entities instead of by welfare offices.
Effective date. Effective October 1, 1996, no individual or family is entitled by federal law to receive welfare help. Generally, welfare provisions and the new block grant funding take effect July 1, 1997. However, states may choose to begin their program earlier by submitting a state plan to the Secretary of HHS. A summary of this state plan must be available to the public, and the plan itself must include assurances that local governments and private sector organizations have been consulted so that services are ìprovided in a manner appropriate to local populations,îand that those entities have had at least 45 days to submit comments on the plan..
Funding. Under current law, states receive federal funds on an open-ended, entitlement basis. Under the new law, states receive a "capped" block grant that is set at $16.4 billion nationally, and that never increases. The state's block grant is the equivalent of federal payments to the state in prior years for AFDC benefits, AFDC administration, Emergency Assistance, and JOBS. States can choose the higher of several base years to determine the level of their block grant: the average of federal payments for fiscal years 1992-1994; fiscal year 1994 plus (under certain circumstances) 85 percent of increased fiscal year 1995 spending for emergency assistance; or fiscal year 1995. No more than 15 percent of the block grant can be used for administration.
Additional, small sums are appropriated for several purposes, including supplemental grants to states that have high rates of population growth and that have low amounts of federal welfare spending per poor person; bonuses to "high performing" states; bonuses to states that demonstrate a net decrease in out-of-wedlock births; and loans at market interest rates to states.
Recession protection. Under current law, if caseloads go up due to a recession, federal funding can go up to meet the need. Under the new law, basic funding is capped and cannot increase. The bill does establish a $2 billion contingency fund that states can qualify for based on high rates of unemployment or sharp increases in food stamp participation. However, this $2 billion would have covered only a third of the additional AFDC costs fueled by recession-driven caseload increases in the early 1990s.
Maintenance of effort. Under current law, in order to receive federal funds for AFDC, JOBS, Emergency Assistance, and welfare-related child care, states had to provide matching funds that ranged from 50-78 percent depending on the state's poverty level and on the particular program. Under the block grant, states no longer have to provide matching funds. However, states must meet a "maintenance of effort" provision that requires them to maintain state spending equal to at least 75 percent of its fiscal year 1994 spending level for AFDC benefits and administration, Emergency Assistance, JOBS, AFDC-related child care, and At Risk child care. States that do not meet mandatory work requirements must satisfy an 80 percent maintenance requirement. To qualify for contingency funds, states must meet a 100 percent maintenance requirement. Thus, states face an important question: whether to maintain past investments in children and families, or to reduce funding as is allowed under the new law, leaving fewer dollars available to help children and making the state ineligible for contingency funds during a recession.
Transferability. States can transfer up to 30 percent of welfare block grant funds into either the Child Care and Development Block Grant or the Title XX Social Service Block Grant. No more than 10 percent of welfare block grant funds can be transferred into Title XX (funds transferred into Title XX may be used only for programs or services to children or their families whose income is less than 200 percent of federal poverty guidelines).
The combination of the transfer provision and the provision allowing states to reduce their level of welfare spending gives states flexibility about how to use funds, but also raises the danger that states may sharply reduce spending on basic subsistence help to children and families. The Center on Budget and Policy Priorities estimates that the combined effect would allow states to withdraw $38 billion in state funds from welfare and work programs over the next six years.
The guarantee of help. Under current law, states have great flexibility to determine eligibility guidelines and the level of help. However, current federal law provides that if a child and family meet basic categorical requirements and income guidelines set by the state, they must be provided with cash aid. The new bill specifically eliminates this promise of help, and provides that there is no individual entitlement to aid established by federal law. This provision, however, does not bar states from building such a promise into state law.
Fair treatment and appeal rights. The state plan must explain objective criteria for the delivery of benefits and for fair and equitable treatment, as well as how the state will provide opportunities for recipients to appeal decisions against them. Current federal law and regulations are more explicit (for example, guaranteeing applicants a right to appeal if they are denied help, and guaranteeing that recipients get advance notice of being cut off so that they have time to prepare and can appeal if they believe they continue to qualify for help). Because the new provision is quite general, it will be important to flesh out due process protections in state law.
Work requirements. The new bill dramatically increases work requirements from current law without increased investment in work. Child care funds have increased, but still fall $2.4 billion short of the new need. Moreover, the Congressional Budget Office estimates there is a shortfall of nearly $13 billion in work-related costs. Individuals must participate in work activities within two years of receiving aid. Indeed, unless a state opts out of the requirement, within one year of enactment of the bill, individuals who have received aid for more than two months must participate in community service.
States must meet the following new work requirements:
|
Fiscal Year |
Minimum Percentage of Caseload Participating |
Minimum Hours of Work Required per Week |
|
1997 |
25 |
20 |
|
1998 |
30 |
20 |
|
1999 |
35 |
25 |
|
2000 |
40 |
30 |
|
2001 |
45 |
30 |
|
2002 |
50 |
30 |
These are percentages of all families receiving assistance (unlike present law, which allows certain adults to be excluded based on exemptions such as disability or age of child), except that states may exclude parents with a child under 1. States may also count parents with children under six working 20 hours as engaged in work. The scope of what counts as work is narrower than under current law, with a sharply diminished emphasis on training and education: recipients can only count twelve months of vocational education towards work requirements, and only 20 percent of the caseload can count vocational education activities towards work requirements. Starting in 1999, individuals may satisfy participation requirements by at least 20 hours of work, with the remaining required hours met through work-related or high school equivalency education.
The effect of existing state waivers on work requirements. The bill provides that for any state with a waiver in effect as of the bill's date of enactment, the changes made by the bill (which seem to include the work requirements) do not apply to the state for the duration of the waiver "to the extent such amendments are inconsistent with the waiver." According to HHS, at least 33 states have waivers relating to "work requirements."
Individual work penalties. Adults cannot be penalized for failure to meet work requirements if their failure is based on inability to find or afford child care for a child under 6. Otherwise, if an adult recipient refuses to participate, states shall reduce the family's assistance by a pro rata amount (at state option, the penalty can be higher, and can include termination of help to the entire family). Adults can lose Medicaid as well as cash aid.
State work penalties. States that fail to meet work requirements face fiscal penalties of up to 5 percent for the first year they violate the work requirements, and greater penalties in subsequent years (up to a maximum of 21 percent of the block grant).
Family cap. There is no explicit family cap provision in the bill, which is therefore a state option but not required.
Minor parents. Minor parents can only receive block grant funds if they are living at home or in another adult-supervised setting. They must attend high school or an alternative educational or training program as soon as their child is at least twelve weeks old.
Time limit on help. Federal funds can only be used to provide a total of five years of aid in a lifetime to a family (except that states may give hardship exemptions to up to 20 percent of their average monthly caseload). There is no requirement that states provide vouchers to meet the needs of children once the family has reached its time limit. Moreover, aside from the hardship exemption provision block, grant funds cannot be used to aid children beyond the time limit. While a portion of Title XX Social Services Block Grant funds may be used to provide some vouchers for children, this is inadequate given a 15 percent cut in Title XX funding.
Medicaid for block grant families and families that lose welfare. The bill does not create a Medicaid block grant (which was proposed under the original bill). Generally, states must continue providing Medicaid to families that would be eligible for AFDC under the terms that applied on July 16, 1996, including the rules for determining income and resources. This means that families that would have qualified for AFDC under old guidelines but that lose cash aid because of new block provisions (such as the five-year time limit or lower eligibility guidelines) will at least continue to qualify for Medicaid. However, states may deny Medicaid to adults who lose cash aid because they do not meet work requirements.
The bill eliminates the guarantee under current law that child care help will be provided to families on welfare that need child care to participate in work or training, and to former welfare families that previously received one year of transitional child care help if they left welfare due to earnings. It also eliminates the special category of "At Risk" child care, which helped families that would be at risk of welfare receipt if they did not get child care help.
In place of these programs, the bill combines new child care funding with the existing Child Care and Development Block Grant (CCDBG). Generally, the provisions of current CCDBG law (including health and safety protections) apply to this new combined funding stream. The total funding for this new program is $22 billion over seven years. This combined new funding stream provides approximately $6.6 billion over six years more in "capped entitlement" funding than states spent in 1995. "Capped entitlement" funding means that funding is guaranteed to be available up to a set limit. Despite this new money, if all states meet their welfare work targets OMB projects that child care funding falls $2.4 billion short of the need for welfare families.
Of the $22 billion, $7 billion is provided as "discretionary" funding -- slightly more than is now provided under the existing CCDBG. "Discretionary" funding must be appropriated by Congress, and there is no guarantee that it will be. The remaining $15 billion is provided as a capped entitlement. To receive the entitlement money, states must maintain spending at their 1994 or 1995 level (whichever is higher), and must provide state matching funds for $6.6 billion in "new" child care money at the 1995 Medicaid match rate. States must set aside a minimum of 4 percent of child care funding for improving quality, expanding the supply, and providing consumer education. This is approximately $38 million less than the $157 million states are now spending for these activities under the current CCDBG set-aside it replaces.
The bill cuts $23 billion from the Food Stamp program over 6 years (not including cuts to legal immigrants). It reduces food stamp help for millions of poor families with children that pay more than 50 percent of their income for housing by capping the Food Stamp deduction for shelter costs. Under current law, excess shelter costs of families with children would have been taken into account in calculating the amount of Food Stamps they received. Adjustments to the Thrifty Food Plan, a low-cost food budget which is used to calculate the amount of Food Stamps a family receives, will reduce aid to millions more. According to the Center on Budget and Policy Priorities, households with incomes below half the poverty line ($7,800 for a family of 4) would absorb about half of the Food Stamp cuts. Families with children would shoulder about 70 percent of the cuts, and about 300,000 legal immigrant children would lose Food Stamps. Childless, non-disabled individuals aged 18-50 can only receive 3 months of Food Stamp help in a 3-year period unless they are working or participating in a workfare program at least 20 hours per week (except that they can get an additional 3 months of help, for a total of 6 months of aid, if they subsequently go to work and lose their job during that 3-year period). The bill does not contain the House's provision for optional Food Stamp block grants.
The bill cuts close to $3 billion over six years from child nutrition programs. These cuts include reductions in the Child and Adult Care Food Program (CACFP), including reduced nutrition aid to family day care providers that do not operate within a low-income geographic area or that are not operated by a provider who is low-income. These reductions are likely to force CACFP sponsors serving hundreds of thousands of children to drop out of the program, reducing nutrition aid to poor children in day care. The bill also eliminates the option of serving an additional meal or snack to children in child care centers for more than eight hours per day.
The bill establishes a new definition of childhood disability, limiting SSI to children who meet a set of official conditions called the medical listings. The use of assessments of a child's functioning and references to maladaptive behavior are eliminated. Using these more restrictive criteria, more than 300,000 children will be denied SSI by 2002. Children who lose SSI will continue to receive Medicaid only if they are eligible on other grounds. CBO estimates that roughly 40,000-50,000 of these children will lose Medicaid.
The bill cuts billions of dollars of help for legal aliens, including children. Effective immediately upon enactment, legal aliens now in the country may not receive SSI or Food Stamp help (even if they currently receive these benefits). They will lose this help as soon as their cases are reviewed. At state option, as of January 1, 1997 legal aliens may also be denied welfare help, child care, social services, and non-emergency Medicaid.
Legal aliens who enter the country after the date of enactment of the bill are subject to even more sweeping denials of help. During the first five years after entry, they are barred from receiving most non-emergency means-tested federal help (including child care, Food Stamps, SSI, and welfare). After the first five years, the general rule in determining eligibility for means-tested federal programs is that the income of the legal alien's sponsor will be deemed available to the alien until the alien becomes a citizen. The practical effect of this policy is that many very poor legal aliens may be denied help based on the income of their sponsors. States may also choose to deem sponsors' income in determining eligibility for state means-tested help.
The bill makes a broad array of child support changes that are generally very positive. These changes move states towards more centralized, automated systems that are capable of taking steps to locate noncustodial parents and to begin enforcement actions automatically, which may help stretch scarce staff time and resources. The bill builds on successful state models, requiring all states to have in place practices that pioneering states have shown to be effective (for example, the bill creates both national and state new hire reporting registries, so that child support withholding can begin quickly when a noncustodial parent changes jobs; it requires states to report child support delinquencies to credit bureaus without waiting for a request to do so; and it requires states to have the authority to withhold, suspend, or restrict the use of drivers' licenses, professional and occupational licenses, and some recreational licenses). It improves interstate enforcement by bolstering federal services to locate parents across state lines and by requiring all states to have in place common paternity procedures in interstate cases.
The bill ends the $50 child support pass-through that previously gave children on welfare at least some benefit from child support paid on their behalf. However, it does give children formerly on welfare priority over the state in most instances when back child support is collected and support is owed both to the child and to the state.
Though there are a number of effective dates, the general rule is that the new child support provisions take effect October 1, 1996. Because many of the changes require state legislative action, however, the bill provides a grace period so that states can pass required legislation during the first regular state legislative session that begins after the bill becomes law.
The bill cuts 15 percent of funding for the Social Services Block Grant. While it allows states to transfer up to 10 percent of the welfare block grant into the Social Services Block Grant, such a transfer could be made only at the expense of reduced cash aid for children and families. Moreover, such transferred funds may only be used for children and families under 200 percent of poverty. The social services cuts mean that communities will have fewer resources for services to low-income children, families, elderly, homeless and disabled individuals.
The welfare bill contains very few references to child protection programs because generally the federal guarantees of foster care and adoption assistance (room and board/subsidies, administration and training) and of Medicaid for foster and adopted children are maintained as in current law. A child's eligibility for federal foster care and adoption assistance will be based on the eligibility of the child's family for AFDC according to rules in effect on June 1, 1995, rather than on the family's eligibility for the new welfare block grant.
The bill does not contain the child protection block grants in the House-passed bill. The independent living services program for older youths in foster care and the range of family preservation and family support and other child abuse prevention and treatment, abandoned infant assistance and adoption opportunities programs are maintained as in current law. However, the 15 percent reduction in Title XX Social Services Block Grant funds likely will result in cutbacks in child protective services in many states.
The few foster care amendments in the bill require that states consider giving preference to an adult relative over a non-related caregiver when determining a foster care placement for a child and open up eligibility for IV-E foster care payments to for-profit child care institutions as well as non-profit and public institutions. Enhanced funding for states' foster care, adoption and child welfare tracking systems is extended for one year and the Secretary of HHS is required to undertake a national random sample study of abused and neglected children.
For further information, contact:
Children's
Defense Fund
HN3208@handsnet.org
|
Welfare |
Deborah Weinstein |
(202) 662-3565 |
|
Child Support | Nancy Ebb |
(202) 662-3539 |
|
Child Care |
Helen Blank |
(202) 662-3547 |
|
Child Protection |
MaryLee Allen |
(202) 662-3573 |
|
Health |
Stan Dorn |
(202) 662-3595 |
Date posted: Thu Aug 8 21:08:53 PDT 1996
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