The work requirements and time limits included in the federal welfare reforms of 1996 made it especially important to move the hardest-to-employ welfare recipients into jobs and help them become economically self-sufficient. To address this need, Congress authorized the Welfare-to-Work (WtW) grants program. This program built on the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, which created the work-focused, time-limited Temporary Assistance for Needy Families (TANF) program.(1) PRWORA was designed to move people off the welfare rolls and into employment quickly, and the WtW grants program provided additional resources targeted to those who were particularly disadvantaged and likely to have the greatest difficulty finding and holding a job.
This report presents findings from a multi-site evaluation of the WtW grants program. Mathematica Policy Research, Inc. (MPR), the Urban Institute, and Support Services International, Inc., conducted the congressionally mandated evaluation under contract to the U.S. Department of Health and Human Services (DHHS). The evaluation documented the implementation of WtW programs funded by the grants in states and localities across the nation and analyzed outcomes for participants in selected programs. Given the evaluation’s design, the findings presented here give a useful picture of how enrollees fared after entering WtW-funded programs; however, they are not indicative of the contributions that the programs themselves may have made to the enrollees’ employment and well-being. Exhibit I.1 summarizes the evaluation’s main findings and Exhibit I.2 identifies lessons learned from the evaluation regarding program design and implementation.
| Program Services |
|---|
| Study site programs focused, as intended, on employment rather than education and training, but many went beyond job readiness/ job search assistance. WtW programs in the study sites followed four models: pre-employment preparation and job placement, direct employment, post-employment skills development, and a rehabilitative model for absent fathers on probation or parole. |
| Program Cost |
| The average study site WtW program cost $3,607 per enrollee, about the same as typical JOBS programs created under the earlier Family Support Act. Average WtW costs in these sites, adjusted for inflation, were only moderately higher than in the WIN programs of the 1980s, but considerably lower than in supported work programs. |
| Program Targeting |
| WtW enrollees faced employment challenges that were typical of those faced by the TANF population after several years of caseload decline. In most sites, more than a third of WtW enrollees were high school dropouts, and more than one in five had work-limiting health problems. But the employment histories of enrollees prior to program entry were not consistently weaker than those of the TANF population, indicating that the enrollees were not harder to employ than TANF recipients in general. |
| Participants’ Employment Outcomes Over Two Years |
| Most enrollees found jobs, but their employment was unstable. Except in two sites that targeted employed persons, few enrollees were working at program entry, but most — two-thirds or more — worked at some time during each of the next two years. However, their jobs were often unstable; in most sites about 40 percent of enrollees were employed at the end of the second year after program entry. |
| Employment fell between the first and second years after program entry. Except for one site, WtW enrollees were less likely to have worked during the second year following entry than during the first. The median reduction in those who worked during the year was 10 percentage points. |
| Enrollees employed after two years worked a lot for low wages and limited fringe benefits. Employed enrollees worked nearly full-time, on average. Wages averaged about $8 per hour in 7 of the 11 sites, and one in five had employer-sponsored health insurance. However, wages and/or insurance coverage were somewhat better in 6 sites after two years than after the first year. |
| Participants’ Well-Being Two Years After Entering WtW |
| Poverty was common among WtW enrollees two years after program entry, but it was lower among those who were employed. Mean household incomes were stable from the end of the first year following entry to the end of the second, as were poverty rates, which exceeded 60 percent in all but two sites. Poverty rates were 16-43 percentage points lower for the employed than the not employed. But, even among the enrollees who were employed two years after program entry, the poverty rate exceeded 50 percent in all but two sites. |
| Effective Inter-Agency Partnerships Are Important |
|---|
| The legislation that authorized the WtW grants, the Balanced Budget Act of 1997 (BBA), required local programs funded by the grants to be implemented within a framework of partnership with local TANF agencies. However, effective partnerships were often slow to develop. In combination with falling welfare caseloads, this often resulted in low numbers of referrals of welfare recipients by TANF agencies to WtW programs, thereby exacerbating the difficulties that many local WtW programs experienced in achieving their enrollment targets. In sites where effective partnerships ultimately did develop, they resulted in improved access for welfare recipients to the workforce development system. |
| Increased Service Capacity is an Important Legacy |
| WtW grants afforded many nonprofit community-based organizations their initial opportunity to serve TANF recipients and/or noncustodial parents. Thus, the program increased the pool of qualified organizations with which TANF agencies can contract for employment services in the post-WtW era. |
| Program Flexibility Encourages Innovative Programming |
| Flexible rules allowed WtW grantees and their service providers to develop creative program service approaches and administrative practices. These included partnerships with employers, transitional and supported employment, and post-employment case management and job retention services. Some grantees pressed for additional flexibility to provide a broader range of pre-employment services, and Congress responded in 1999 with amendments to the program that permitted up to six months of pre-employment skill-enhancement training. |
| Stringent Eligibility Criteria and Fiscal Requirements May Result in Low Enrollments |
| The BBA required WtW grantees to spend at least 70 percent of their grant funds on services for enrollees who met very detailed and restrictive eligibility requirements. Up to 30 percent of grant funds could be used to provide services to enrollees who met less stringent eligibility requirements. The former requirement contributed to the widespread problems that grantees experienced in achieving enrollment targets during the early years of the WtW program. |
| A Mid-Course Correction to a Temporary Program May Be Ineffective |
| Amendments to the BBA passed in 1999 loosened the criteria that defined the enrollees on whom at least 70 percent of grant funds had to be spent. In response to requests from grantees for additional flexibility to provide a broader range of pre-employment services, the amendments also expanded the list of allowable pre-employment program activities to include up to six months of vocational education or job training. However, the potential for these changes to have effects were limited because the final program rules reflecting the amendments were published late in the life of the time-limited (five years) grants program and, in that context, grantees were reluctant to revise existing procedures and referral agreements with local TANF agencies. |
| Temporary Funding May Accentuate Program Design and Implementation Problems |
| The BBA required that grant funds be spent within three years of their receipt. The 1999 amendments extended that period by two years. Despite the extension, some local WtW administrators continued to believe that temporary funding compounded problems associated with the design and implementation of their programs. These included the reluctance of TANF and other agencies to refer clients to WtW rather than to service providers with whom they had long-term relationships. The administrators also viewed short-term funding as an impediment to identifying and correcting program design problems. |
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Congress created the WtW grants program to complement TANF’s “work first” focus, in recognition that certain people would require higher investments of resources over a longer period of time than the general TANF caseload to achieve employment success. The program was established by the Balanced Budget Act (BBA) of 1997.(2) WtW funds were targeted to high-poverty areas and individuals who were likely to need intensive services, including long-term welfare recipients, high school dropouts, substance abusers, and those approaching their TANF time limits. WtW programs could also serve noncustodial parents who had severe employment problems. Long-term post-employment services to achieve economic self-sufficiency were encouraged; beginning a job, either subsidized or unsubsidized, was assumed to be just the first step.
Understanding the WtW grants program requires background on how the policy decisions that created it dovetailed with the substantial policy changes incorporated in the TANF program. Welfare reform, as manifested in PRWORA, changed the nation’s social assistance system in three important ways, by providing:
These changes in welfare contributed to a dramatic decline in caseloads. The welfare rolls, which had already begun to shrink in the mid-1990s, continued to decline after the passage of PRWORA. The number of cases receiving cash assistance under AFDC and later TANF decreased from 5.05 million in January 1994 to 2.01 million in July 2002.(3) Prior research suggests the caseload reduction was due to a combination of a strong national economy and the welfare reform policies emphasizing employment (see, for example, Wallace and Blank 1999).
The legislation establishing the WtW program — the BBA of 1997 — placed it in the framework of the workforce development system, but with important ties to the TANF program. TANF recipients were the primary target group for WtW-funded services and were subject to state and federal welfare policies, which meant that WtW programs and enrollees had to follow those policies. The BBA gave the Department of Labor (DOL) administrative authority for the WtW program at the federal level and gave local workforce investment boards (WIBs) primary responsibility for local program operations. The job of moving WtW-eligible persons into employment was shared by the human services agencies responsible for TANF and its work programs, and the workforce development system that oversaw WtW-funded programs.
Although the BBA required this collaboration between human service agencies and the workforce development system, effective partnerships were often slow to develop. Most local WtW programs participating in this evaluation’s implementation study reported that they expected TANF agencies to refer substantial numbers of WtW-eligible welfare clients to them (Nightingale et al. 2002; summarized in Appendix G of this report). Yet the actual number of referrals was often low — due in part to falling caseloads and institutional barriers to effective partnerships — and this contributed to the difficulties many WtW-funded programs experienced in achieving their enrollment targets. But in sites where effective collaborations did develop, they resulted in improved access for welfare recipients to workforce development systems that, as a consequence of WtW, had more providers and offered more diverse services.
The Workforce Investment Act of 1998 (WIA) changed the institutional foundation on which the WtW grants program rested.(4) WIA consolidated existing training and workforce development programs and gave state and local agencies the responsibility for implementation. In contrast to its forerunners — the Comprehensive Employment and Training Act (CETA) of 1973 and the Job Training Partnership Act (JTPA) of 1982 — WIA emphasized employment preparation and placement services in addition to job training services, rather than solely or primarily encouraging the latter. WIA also required local WIBs to create one-stop centers to deliver a variety of services to job seekers and employers. Seventeen federal employment and training programs — including the WtW grants program but not TANF — were designated as mandatory partners for one-stop centers, meaning that program services had to be accessible to eligible persons through these centers. TANF was designated an optional partner. In this manner, both WIA and WtW played an important role in promoting linkages between TANF employment programs and the workforce development system.
The goal of the WtW grants program was to serve the hardest-to-employ TANF recipients and help them obtain employment that could ultimately result in long-term economic independence. Federal rules governing the program specified the following objectives:(5)
In order to address the employment and service needs of its diverse target population, WtW grants could fund a broad range of employment services. Allowable WtW program activities, as specified in section 5001(C)(i) of the BBA, included the following:
Amendments to the BBA passed in 1999 expanded this list of allowable activities to include up to six months of pre-employment vocational education or job training.(6)
Congress authorized $3 billion — $1.5 billion each for fiscal years 1998 and 1999 — for the WtW grants program and specified how the WtW funds were to be distributed. About 8 percent of the total funds were set aside at the national level for the following: Indian and Native American programs, evaluation activities, and federal-level program administration, such as reporting, performance management, technical assistance, and monitoring. Of the remaining funds, about 75 percent were distributed to states as formula grants and 25 percent were used for competitive grants awarded directly by the Secretary of Labor.(7)
Formula grants totaling about $2 billion were allocated by DOL to states based on their shares of the national poverty population and TANF caseload. States were required to provide one dollar in matching non-federal funds for every two dollars of federal funds provided. They also had to pass at least 85 percent of their formula funds on to local WIBs. They could retain 15 percent of formula funds for WtW projects of their own choice (that is, as “discretionary” funds).
Competitive grants were awarded directly to local grantees by DOL. These grants could be sought by local WIBs, government entities, or community-based, private, and other organizations. A total of about $860 million was awarded in competitive grants in May 1998, November 1998, and October 1999.
Congress also established eligibility criteria and spending rules for the WtW grants to ensure that the funds were used primarily to help individuals who had specific disadvantages in the labor market. As originally enacted, the BBA required that WtW grantees spend at least 70 percent of their grant funds on long-term TANF recipients, those within a year of reaching a TANF time limit, or noncustodial parents of children in a long-term TANF case. These individuals were required to display two of three specific problems affecting employment prospects: (1) lack of a high school diploma or GED and low reading or math skills, (2) a substance abuse problem, and (3) a poor work history. The remaining funds (no more than 30 percent of the grant) could be spent on people who met less stringent criteria: TANF recipients, or noncustodial parents of children receiving TANF, who had characteristics associated with long-term welfare dependence, such as being a school dropout or a teen parent, or having a poor work history.
As WtW-funded programs were being implemented beginning in 1998, it became clear that the strict eligibility criteria and the “70-30” spending requirement were factors behind low rates of enrollment in local programs (Perez-Johnson and Hershey 1999, Perez-Johnson et al. 2000, Nightingale et al. 2002). In response, Congress modified the WtW legislation in the 1999 amendments to the BBA. While the amendments maintained the requirement that 70 percent of WtW funds be spent on a defined category of participants, they broadened the population in two ways to make it easier for TANF recipients and noncustodial parents to qualify for WtW services in that category:
The definition of the 30 percent category was also broadened to include youth who had been in foster care, custodial parents (regardless of TANF status) with incomes below the poverty level, and TANF recipients who faced other barriers to self-sufficiency specified by the local WIB.
The WtW grants program was created as a temporary complement to TANF-funded employment support programs, and grantees were initially expected to spend the funds within three years of their receipt. Because of the early enrollment difficulties, the 1999 amendments to the WtW program extended the funding period to five years. Nevertheless, the loosening of the eligibility criteria had limited effects for two reasons. First, DOL did not issue final rules that reflected the 1999 amendments until January 2001, well into the amended scheduled life of the program (DOL 2001). Second, the changes in eligibility criteria came so late that many local WtW programs were reluctant to revise their intake procedures, agreements with TANF agencies, forms, and reporting systems, opting instead to continue using the original eligibility criteria (Nightingale et al. 2002).
Despite the extension, the administrators of several local programs participating in this evaluation told us in 2003 — as they had several years earlier — that the short-term grant funding compounded the problems of implementing WtW programs (Nightingale et al. 2003; Nightingale et al. 2002). Some administrators believed that the temporary funding made it more difficult to establish ongoing referral arrangements with TANF and other agencies, which often had networks of permanent programs to which they were accustomed to referring clients. Some also noted that longer-term or permanent funding would have facilitated the development and improvement of their programs.(8)
No additional appropriations for the WtW grants program were made after fiscal year 1999, and on January 23, 2004, Congress rescinded the 1999 WtW state formula funds that remained unexpended.(9) The rescission accelerated the termination of WtW grants to the states, all of which were due to expire during fiscal year 2004. However, to ease the potential negative consequences of this early termination of the FY1999 WtW formula grants, Congress also established a process that allowed active participants in WtW-funded programs to transfer into programs funded under the Workforce Investment Act or other appropriate one-stop services.
When Congress established the WtW grants program, it also mandated its evaluation. Although the BBA gave DOL responsibility for administering the WtW grants program, it gave DHHS responsibility for evaluating it and reporting findings to Congress. DHHS contracted with MPR to conduct the evaluation.
The evaluation of the WtW grants program, conducted in 11 local sites,(10) had 4 core components:
The outcomes analysis is the source of most of the findings presented in this report. However, this report does reference selected key findings from the first three core components of the evaluation. In addition, Appendix G provides brief summaries of findings from those components.
In addition to the four core components, the evaluation included a detailed process and implementation study focused on tribal programs, as well as three “special studies,” each focused on either a specific WtW site or a specific segment of the WtW target population. The tribal study documented welfare and employment systems operated by American Indian and Alaska Native WtW grantees, the supportive services they provided, and how these tribal grantees integrated funds from various sources to move members from welfare to work (Hillabrant and Rhoades 2000; Hillabrant et al. 2001). Appendix A summarizes findings from the tribal study. The three special studies examined: (1) the provision of WtW services to noncustodial parents (Martinson et al. 2000), (2) a WtW-funded initiative in the state of Washington designed to increase child support payments (Perez-Johnson et al. 2003), and (3) two WtW programs in Philadelphia (VanNoy and Perez-Johnson 2004). Appendix G includes summaries of these studies.
Originally, this evaluation was to estimate, using an experimental design, the net impacts of the WtW grants program on participants and apply those estimates in an analysis of the program’s costs and benefits. Slow enrollment in WtW programs rendered this evaluation design unworkable. Given service providers’ difficulties in meeting their enrollment goals, they were uniformly (and understandably) unwilling to allow the random assignment of enrollees to treatment and control groups, as the diversion of some eligible individuals into a control group where they would have received minimal or no services would have further hindered programs’ achievement of enrollment goals.
Given the impossibility of a rigorous experimental approach to estimating program impacts, DHHS consulted with its partners in the evaluation’s inter-agency workgroup — DOL, the Department of Housing and Urban Development, and the Office of Management and Budget (OMB) — and with MPR to develop an alternate evaluation design. The new design focused on analyzing participant outcomes such as employment, rather than the impact that the program had on outcomes. The alternate design and data collection instruments for all components of the evaluation received formal clearance from OMB.
A critical implication of this design change is that none of the findings presented in this report on outcomes should be interpreted as estimates of the net impacts of the local WtW programs that participated in the evaluation. This evaluation focused on program implementation and the extent to which enrollees entered and sustained employment and were able to leave the TANF rolls as intended by the program design. However, findings from the evaluation do not provide a valid basis to judge whether enrollees did so more or less than they would have in the absence of the WtW grants program.
The findings for WtW enrollees that are presented in this report are based on individual-level data from three main sources:
This report presents new findings on outcomes for WtW enrollees pertaining to their experiences during the second year following program entry. It also includes earlier results from each of the core components of this WtW evaluation. With these data, the report examines employment patterns over the full two years following WtW enrollment and the well-being of participants and their families at the end of that period.
The remainder of this report is organized in five chapters. Chapter II answers the question “What localities and programs were included in the evaluation?” This chapter also examines the background characteristics of the WtW participants included in our study sample and, by comparing them to a reference sample of TANF recipients in the same localities, answers the question, “Were WtW participants a particularly hard-to-employ segment of the TANF population?” Chapter III draws on the findings from the WtW process and implementation study and examines two key research questions: “What populations were targeted by the WtW programs?” and “What services did these programs offer?” Chapter IV presents findings on whether enrollees achieved success in the labor market. Finally, Chapter V answers the question, “How were WtW enrollees faring two years after entering the program?” The answers to these key research questions provide the basis for our conclusions regarding the WtW program, which are presented in Chapter VI.
Appendices A and G provide individual summaries of reports on each core component or special study under this evaluation, with the exception of the outcomes analysis, which is the principal focus of the body of this report. Appendix H provides a complete list of reports prepared under the WtW evaluation.
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(1) Public Law 104-193, section 103, August 22, 1996.
(2) Public Law 105-33, section 5001, August 5, 1997.
(3) After bottoming out at 2,006,155 families in July 2002, the U.S. total TANF caseload increased to 2,032,157 families in June 2003, which was the most recent month for which caseload statistics were available at the time this report was being written (DHHS 2004).
(4) Public Law 105-220, August 7, 1998.
(5) DOL’s Employment and Training Administration wrote the final rules for the WtW grants program. They were published in the Federal Register on January 11, 2001. The objectives quoted verbatim here appear on page 2712.
(6) Public Law 106-113, Title VIII, sections 801-807, November 29, 1999.
(7) Formula and competitive grants combined totaled about $2.76 billion. Tribal programs received about $30 million. The remaining funds (about $210 million) were used for federal research, evaluation, technical assistance, administration, reporting, and monitoring.
(8) Nightingale et al. 2002 and 2003 are both summarized in Appendix G of this report.
(9) Public Law 108-199, the Consolidated Appropriations Act, Section 105, January 23, 2004, rescinded grantees’ formula funds that were unexpended on the date that the Act was passed. The final rescinded amount had not been determined at the time this report was being prepared because states were still closing out their grant activities.
(10) The 11 sites, described in Chapter II, were selected to include a wide range of program sponsors, geographic regions and populations, and program approaches, but do not represent the programs funded by WtW grants in a statistical sense.
(11) Evaluation sample enrollment began and ended at different times in the study sites, as sites were recruited and became ready for sample enrollment at different points. The earliest sites began sample enrollment in July 1999, and the latest ended in December 2001. In most sites, sample enrollment was conducted over 20 to 24 months, but in three sites the enrollment period ranged from 27 to 29 months.
(12) Details on how the surveys were conducted and data were processed are provided in Appendix F of this report and Appendix C of Fraker et al. (2004).
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