Celebrating 20 Years of Welfare Reform – Part 5: The Future of Welfare Reform

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August 31, 2016

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.

I remember talking to a state legislator at a conference several years after PRWORA was passed. I asked if his state was doing any welfare reform legislation “this year.” His reply was something to the effect of, “We do welfare reform every year.” I didn’t know if he was serious or joking, but he probably was accurate.

Human services work is never done. No matter the success, there is always opportunity to generate and execute on a new vision for improvement. On August 22, 2016, I participated in a panel discussion at the U.S. Capitol on the 20th anniversary of welfare reform, entitled in part “Learning from the Past to Guide the Future.” Panel and audience comments reinforced that more is expected and can be done.

We need to have a common framework to drive future reforms. At a very high level, I see four critical areas where agreement is needed to execute on the next generation of TANF.

  1. Outcomes. Outcomes should be measurable, meaningful and memorable. We need consensus on what TANF is about and how success will be measured. It should not be evaluated by process measures (which remain important for program operators), but rather by the impacts it delivers, such as sustainable employment, long-term reduction in public benefits, and family functioning. My philosophy: process measures matter today; long-term sustainable outcomes matter tomorrow.
  2. Incentives. There should be clear incentives to drive state behavior consistent with desired outcomes and states should be able to create incentives for program participants and stakeholders.
  3. Accountability. Program integrity and personal responsibility are critical components. Accountability follows clarity of outcomes.
  4. Flexibility. State flexibility must be retained; it drove real change in the 1990s. Inflexible, “one-size-fits-all” policies suppress innovation, limit results, and ignore local conditions and individual characteristics.

In my previous blog, I suggested that debate and controversy remain. A healthy debate drives accountability, challenges status quo and forces assessment of data, impacts and best practices. Here are some of the issues on which I’ve observed debate along with some of my personal perspectives.

Use of TANF Funding. Some say state spending under PRWORA has strayed too far from the goal of work. Yet the four purposes for TANF funding in PRWORA (provided verbatim below) clearly speak to broader family goals. Work and income are critical elements for stabilizing a family, but other issues can destabilize a family and inhibit the ability to get and keep a job. Addressing a broader array of issues supports family stability, employment and a reduction in welfare dependency. The goals of TANF are to:

  1. “Provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives;
  2. End the dependence of needy parents on government benefits by promoting job preparation, work, and marriage;
  3. Prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for preventing and reducing the incidence of these pregnancies; and
  4. Encourage the formation and maintenance of two-parent families.”

Work. Simply put, income through employment should remain a central theme.

The Work Participation Rate (WPR). There are questions about WPR efficacy. I said in an earlier post that WPR was critical in changing the culture of state programs. It served us well for a time, shifting states’ focus from maintenance to job placements, but I believe WPR is now antiquated. It has become a process exercise on how to include or exclude persons and certain activities (limited by PRWORA) to meet requirements. The WPR or its successor measure should recognize any activities that fit within all four stages of moving someone to sustainable work:

  1. Prepare for a job
  2. Get a job
  3. Keep a job
  4. Land a better job

Welfare recipients may need help with some or all stages; sometimes they just need a little temporary boost and are capable of doing the above themselves. Such is the diversity of this transitional system we now call TANF and why one-size-fits-all doesn’t work.

Outcomes. Outcomes could be in lieu of or in addition to a modified WPR. Suggestions have included defining outcomes in federal law, allowing state-by-state negotiations, waivers and a phased approach. Each has advantages and disadvantages including time to implement, unintentional limitations and how (and who) to set parameters. Here are some examples of strategies and measures to drive outcomes:

  • Engagement. While it measures process, engagement based on evidence-based practices reflects a path to outcomes and bolsters public confidence that welfare recipients are doing something in exchange for benefits. The challenge is that the “something” is often not counted in WPR. An engagement measure could recognize activities to address substantial barriers. A broader engagement rate, in lieu of or in addition to a modified WPR, could be considered.
  • Job Retention. I view job retention as the most important measure of work. It incorporates job placement, a wage/income level sufficient to keep someone in the job, employee satisfaction and employer satisfaction. But job retention alone is an inadequate measure as it only focuses on those who are already working.
  • Multi-generation. Also referred to as intergenerational and two-generation, this is an old concept that is growing in emphasis in human services. We’ve heard the “break-the-cycle” sound bite for decades. Some people just need a referral to a job, but sometimes you can’t provide services to only one member of a family and expect full-family functioning and employment success. Family stability is a huge influencer of long-term success in employment and remaining off of welfare. The challenge is in finding an effective way to measure this, but the law should allow state flexibility to address this issue, just as it did around work strategies in 1996.

Education and Training. The debate on immediate job placements versus education and training continues; both options should be on the table. Entry-level jobs are often the right first step to a better job and training can be an option later. If available jobs are in the middle (or higher) skills categories, training may be the primary strategy. Given reports of a shortage of workers for middle-skills jobs (but not for low skills) nationally, it makes sense to give states flexibility to invest in a reasonable amount of education and training. Those are jobs that will drive long-term sustainable outcomes.

Non-TANF Reforms. We need to inject more of an employment focus into other programs that serve low-income families and drive tighter integration to align eligibility, work expectations and measures. Programs should provide meaningful choices so that employment and opportunities for earned income gains are desirable (or at least not substandard) options for program participants. And for critics who say TANF hasn’t solved poverty, I say it won’t by itself. However, it can be one piece of a larger puzzle. A congressional committee reported that 80 programs are currently targeted at poverty, so alignment is critical. Education and economic development are also key pieces of the puzzle.

Funding. States make the case that just as in business, there is a cost to investing in research and development and a cost of inflation (federal TANF money has stayed flat since 1996). Some say the caseload decreases have allowed states to reinvest in ways that make the funding levels adequate. I think flexibility and the opportunity to align other programs hold great potential in promoting employment and controlling the long-term cost curve, and both allow for tradeoffs as part of the funding discussion.

Time Limits. Federal law limits the use of federal funds for cash welfare payments to no more than five years with some exceptions. Some states have implemented more restrictive limits. Time limits have changed the view of welfare to a transitional program and put pressure on states to develop effective programs. I think that there is still much to learn and discourage a dramatic change in the federal limit. Let states continue to test time-limit strategies and their impacts on families and other programs.

Waivers. Contrary to my tone on waivers, I do believe there is potential for a waiver process to test and evaluate dramatic changes, provided it isn’t in lieu of existing flexibility and isn’t cumbersome for states. A waiver process could exist for two situations:

  1. Strategies outside the parameters of any current or future PRWORA/TANF limitations.
  2. Multi-program strategies that cross federal programs and federal agencies. This isn’t a new concept and has occurred on a limited basis, but it has not been easy, fast or common. Since families often receive benefits from multiple programs, this is a natural progression and a chance to test tighter integration and alignment.

I have been asked where I buy my rose-colored glasses. Let me be clear: I do not think welfare reform has been perfect, I do think more can be more done, and there are examples of where it hasn’t worked for some. But overall, I do consider PRWORA successful. My opinions are based on discussions with thousands of welfare recipients, case workers, colleagues and other stakeholders over three decades, and I truly believe the system we have now is far superior to AFDC. It clearly has created opportunities that didn’t exist and has given welfare recipients clearer choices and helped them move into the workforce.

I have thought that the TANF block grant created an entrepreneurial spirit in government and program participants that was sorely lacking in AFDC. The funding structure changed the mindset of state government. With a fixed amount of money, states were incentivized to control costs so they could reinvest and redirect savings into broader and better initiatives to move families from welfare to work. Work and income incentives helped participants see a path where work was more economical, practical and desirable than staying on welfare – a path not clear in the old AFDC system. Wherever welfare reform goes next, I hope that it does nothing to stifle this entrepreneurial spirit.

Thank you for reading my five-part series. Now let’s go put more people to work and strengthen more families.