Celebrating 20 Years of Welfare Reform – Part 3: Implementing Comprehensive National Reform

You are here

August 24, 2016
By: 

Insights and Reflections from the Front Lines
A Series of Blogs by Welfare Reform Veteran Doug Howard

Part 3: Implementing Comprehensive National Reform

The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) was signed into law on August 22, 1996, marking one of the most significant social policy reforms in recent history. It dramatically transformed the entitlement system Aid to Families with Dependent Children (known as AFDC or ADC), which had emphasized cash welfare payments over employment. Doug Howard, a former state administrator who ran welfare programs in Iowa and Michigan, shares his insights in a series of blogs about the transformation that started before 1996 and has continued over two decades.

In 1995, the national discussion turned to overhauling the welfare system for the entire country. But welfare wasn’t the only reform topic being debated between governors and Congress – and states’ experience with waivers came in handy. The year prior, initial discussions took place around reforming Medicaid, which was referred to as the “Pac-Man” of state budgets. A number of governors advocated for a block grant (a fixed amount of federal money each year instead of open-ended matching costs) in exchange for flexibility. The idea was that states would carry the financial risks of fixed funding if they had the ability to make policy changes. Not surprisingly, this became very political, with competing proposals from a number of directions, which ultimately resulted in an inability to effect major Medicaid reforms.

As the discussion turned to nationwide welfare reform, interest grew. National associations, advocacy groups and think tanks got involved, often with very different recommendations and positions on the proposed changes. States were also very engaged in the discussion. Much like Medicaid reform, a core theme for states was the willingness to take a fixed block grant and carry the risks of future cost increases in exchange for significant state flexibility. There were plenty of ideological and philosophical divides. Concerns included specific policy provisions like time limits, trust issues related to not having a national AFDC safety net and allowing state programs to diverge from each other, the question of what would happen if the economy soured, and states having no access to additional federal money, as well as many others.

I spent 30 weeks in D.C. in 1995 and 1996 working on behalf of Iowa’s Governor Terry Branstad – who also personally spent time in D.C. on the issue – passing along what we learned under waivers and what we thought we needed for the future. The future, we argued, was in the flexibility that would drive innovation to allow states to focus on moving program participants into the workforce and changing welfare from a maintenance trap into a time-limited transitional program.

Finally, the third Congressional version of welfare reform passed (the first two were vetoed) and PRWORA was signed into law on August 22, 1996. The Republican-led Congress checked off welfare reform on their “Contract with America” and President Clinton talked about “ending welfare as we know it.” But states had to move from theory and sound bites to making it work.

Immediately after PROWRA was signed, I invited two people to Iowa for a private meeting. One was a major national advocate who had expressed many concerns and opposition of parts of PRWORA. The other was a U.S. Department of Health and Human Services Administration official who had to cautiously support PRWORA, balancing the Administration’s prior concerns with the fact the President had signed the bill. Since I had been a very vocal supporter of PRWORA, the three of us were in different spots.

The purpose of the three-person meeting was to put our differences aside and look at what was in the bill and figure out how to really make it work. PRWORA had eliminated almost all federal eligibility and payment rules and replaced the AFDC system with TANF block grant. We looked at the major purposes of the Act and how states might frame them. We talked about work requirements and time limits and the associated implications for state administration of the programs. We talked about technical assistance that the federal government could provide, the role of state peer-to-peer sharing, and the role of research. That meeting reflected the broad need for debate adversaries to accept change and work together for the best possible results.

It is important to note that while changes to AFDC (welfare reform) received most of the attention, PRWORA included other reforms. There was a child support section to improve collections for families, which actually had more pages than the welfare section. One example was new hire reporting, which required employers to report new employees to a designated state agency within a few weeks of hire. This enabled agencies to identify employment of those who owed child support up to five months sooner than they had been able to under the old system, which meant increased collections for families. PRWORA also had provisions on child care, food stamps, Supplemental Security Income, child protection and program eligibility for immigrants.

Implementing national welfare reform at the state level was not like flipping a light switch. States were at very different starting points. Many states had already operated reforms under waivers and could simply extend or refine what they had; others needed to start from scratch. Some states had authority to change things administratively and could move quickly; others needed legislative action coupled with administrative rules, a combined process that could take well over a year. But what I saw, regardless of concerns raised during the debate, was a growing hunger in my peers around the country to drive innovation and find better ways to design and run programs. 

In the next blog post, I’ll share some of my observations in the 20 years since the passage of PRWORA.