Non-cash welfare reforms resulted in fewer recipients
Welfare is still a mammoth program, but increasingly comes in the form of services and support, not cash — and many poor people are less interested in applying than they were when it was dollars on the line, rather than access to education, day care and transportation, a Government Accountability Office report said this week.
Through 2005, states saw a decline in the number of people on Temporary Assistance for Needy Families (TANF), or welfare, but 87 percent of the decline was attributed not to newfound employment and rising income, but rather to people whose income levels made them eligible for the program yet chose to no longer participate.
The decline in the appeal of federal assistance coincided with toughened requirements for the program, including “mandatory work requirements; changes to application procedures; lower benefits; policies such as lifetime limits on assistance; diversion strategies such as providing one-time, nonrecurring benefits instead of monthly cash assistance to families facing temporary hardships; and sanctions for noncompliance,” the report said.
The expenditure of welfare dollars remains high, but the percentage dedicated to direct financial support has plummeted in recent years, increasingly going to non-cash services, including job training, prevention of out-of-wedlock pregnancies, education and transportation for job searches.
In fiscal year 2011, states spent more on non-cash assistance, at $19 billion, than they did on direct assistance, at $11 billion — a striking reversal from years gone by.
Those non-cash expenditures include $3.4 billion in child care, $2 billion on prevention of out-of-wedlock pregnancies, and $172 million on transportation, the vast majority of which was not for job access.
Idaho, Connecticut, Massachusetts and Wisconsin all spent the vast majority of their federal TANF money on non-cash services, while South Dakota, Washington state, Maine, Kentucky and California still favored straight cash.
Welfare reforms set up TANF in 1997 as a program of block grants to states, imposing a five-year lifetime limit on benefits and other requirements, but leaving states leeway to apportion the money as they saw fit.
But states are not required to use the money exclusively on families that are on TANF, and can instead use it to prop up existing social service agencies. They are not required to report what portion of the non-cash assistance funds go to families in the TANF caseload, making it impossible to know how much of the money intended to move families off the welfare rolls is actually being spent for that purpose, as opposed to providing services for the general population.
“States still spend some portion of TANF funds on welfare-to-work programs for the cash-assistance population, but their new and varied uses of TANF funds for non-cash services over time beyond this population raise questions about how state efforts are contributing to TANF purposes. Yet, without an accountability framework that encompasses the full breadth of states’ uses of TANF funds, Congress will not be able to fully assess how funds are being used, including who is receiving services or what is being achieved,” the report found.
Although federal law requires states to impose work-related requirements on at least half of the families on its welfare rolls, the law provides several loopholes, which states avail themselves of liberally, it said.
“While the rate specified in law is 50 percent, states have used various policy options, such as credits for caseload reductions and spending above [the state’s required share], to reduce their required rates below 50 percent, as permitted by law. TANF also provides states some flexibility regarding which families to include or exclude in calculating their rates,” the report said. “Over the years, states have typically engaged about one-third of work-eligible families in allowable work activities nationwide and generally met their reduced rates.”
The percentage of people on welfare who engage in work-related activity, including education, has actually decreased slightly, despite a 2005 law intended to boost rates.
“In fiscal years 2007 through 2009, from 29 [percent] to 30 percent of TANF families participated in work activities for the required number of hours, which is similar to the 31 to 34 percent of families who did so in each year from fiscal years 2001 through 2006,” the GAO found.
The amount of direct cash assistance available to families varies widely by state.
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