Celebrating 20 Years of Welfare Reform – Part 4: 20 Years Later, Did Transformation Occur?

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August 29, 2016
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Insights and Reflections from the Front Lines
A Series of Blogs by Welfare Reform Veteran Doug Howard

Part 4: 20 Years Later, Did Transformation Occur?

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.

Efforts to incorporate employment strategies began as early as the late 1960s under the very limited and poorly funded Work Incentive Program. There were a limited number of welfare-to-work demonstrations around the country in the 1970s and 1980s, and states implemented bigger (but still limited) employment programs under authority created in the Family Support Act of 1988 and under the early 1990s waivers. However, the game changed in 1996 with the passage of PRWORA and the Temporary Assistance to Needy Families (TANF) block grant. Every state had to develop a mandatory statewide work program to serve its welfare caseload and had the first real opportunity outside of the waivers to dramatically alter policies.

In human services, it was rare to operate without federal rules for everything. With AFDC rules wiped out, some states initially struggled with the question of flexibility. I had colleagues ask, “Should we ask for federal permission?” My position was “no” – we’d been given the authority; we needed to take advantage of it, show we could be responsible, and design better programs and services.

The federal agency role changed from one of prescribing policy, to that of a technical-assistance facilitator. As a result, states sought ideas from their communities. Partnerships developed with community-based organizations, nonprofits, for-profits and statewide services associations. And human services agencies began seeing employers as customers in addition to AFDC recipients.

States were required to engage a minimum portion of their welfare caseloads in a defined set of employment or employment-readiness activities, referred to as the “work participation rate” or WPR. I saw WPR as one of the most critical elements of PRWORA in changing the culture of state programs. It forced states to redesign programs that focused on employment rather than maintaining income levels through benefits payments. Yet the efficacy of WPR is a hot debate topic that I’ll save for discussion in my final blog.

There is consensus that employment is preferable to welfare, but the “how” is sometimes in dispute. One key debate is rapid job attachment versus training and education. What’s better: placement in the first available job regardless of what it is, or investing in training and education to improve employability and income potential? Which path gets families off of welfare more quickly and keeps them off? The single right answer is, in my opinion, that there is no single right answer. States use both methods, and have developed earn and learn (part-time work and training), work experience, and sector-based strategies (which focus on targeted training and placements in industries with high job demand). The best strategy can vary based on each individual welfare recipient’s characteristics and local conditions.

There are a few key questions to address when assessing the right employment strategy for welfare recipients. Are jobs abundant or scarce and what skill levels are required? Are the jobs sustainable? What is the availability of child care and transportation? Are there enough employers and job openings to focus on specific sectors? State successes have resulted in large part from the flexibility to engage in a range of employment strategies.

States took the flexibility given and the informal mantels of “laboratories of innovation” and “laboratories of change” and implemented better services and strategies. I believe the following examples of change wouldn’t have evolved as effectively (if at all) under the old AFDC framework.

  • Policy Changes. States implemented increased rewards and risks for program participants. Examples of rewards include work incentives to make work pay and allowing increased assets (such as a more reliable car). Examples of risks include more serious sanctions for failing to take steps to employment.
  • Investments in Child Care, Transportation and Other Supportive Services. Spending has grown, helping to eliminate barriers to work which we were not able to address under AFDC.
  • Modeling the World of Employment. If you miss work, you face discipline or job loss. If you miss required activities in the TANF program, you lose some or all of your welfare payment.
  • Diversion. The opportunity to tailor TANF plans to individual participants – as opposed to the AFDC “one-size-fits-all” system – allowed states to test whether welfare applicants are better served by putting them on a recurring cash grant, or providing one-time funding or services to remove a barrier to employment. States have experimented with one-time cash payments, vouchers, immediate and focused employment placement services, and other up front services.
  • Performance-based Contracting. Many states utilize partners and contractors as program operators, and create accountability through shared risks and incentives. Better performance means a better return on investment (ROI) for government and higher payments to program operators; lower performance means a lower ROI for government and lower payments to program operators.
  • Technology. Better technologies to track and manage cases exist, and methods of interaction now include web-based learning and job searches, texting, kiosks, remote video interviewing, use of smartphones to access data and submit documents, distance case management and more.
  • Outcomes Focus. AFDC was about predicting caseloads and costs. With TANF, the attention turned to job placements and caseload declines. I now see more thinking about longer-term results like sustainable employment, family stability and functioning, and reducing recurring welfare usage. I like to use the phrase “long-term sustainable outcomes.” As an example, job retention can’t exist if there isn’t a job placement, a reasonable income or path to a higher income, participant satisfaction, and employer satisfaction. All of these combine to create a long-term sustainable outcome (income from sustained employment).

States took their new-found flexibility and made changes that resulted in better service to more families. Even with these promising outcomes, debate and controversy remained.

I will talk about the future in my fifth and final blog on welfare reform.