TANF "Leavers", Applicants, and Caseload Studies: Diverted and Applicant Populations

Synthesis of Findings from ASPE Grants to States and Localities to Study Welfare Reform Outcomes, with an Emphasis on TANF Applicants and Diversion

Since the passage of the Personal Responsibility and Work Reconciliation Act of 1996 (PRWORA), there has been a significant drop in the federal cash assistance caseloads. During this period, a large number of families have left welfare, leading to great interest among researchers and policymakers in studying the circumstances of welfare "leavers". However, much of the caseload decline may be due to changes in entries onto welfare, so it is also important for researchers to look at individuals and families who have applied for cash assistance.

To this end, ASPE funded ten different studies that have either focused exclusively on applicants and/or potential applicants to the Temporary Assistance for Needy Families (TANF) program or included an applicant component within the study. Six of these ten studies were funded through a request for applications from states and large counties in April 1999 with an emphasis on the study of applicants and potential applicants to the TANF program, including those who were formally or informally diverted from TANF.

The ten ASPE grantees with an applicant component to their projects included: Arizona, Florida, Illinois, New York, South Carolina, Texas, Washington, Milwaukee County in Wisconsin, and two consortia of counties in the Bay Area of California (Contra Costa and Alameda Counties and San Mateo, Santa Clara, and Santa Cruz Counties). Eight of these grantees have released final reports detailing their findings, allowing us to develop this brief synthesis of the studies of TANF applicants and diversion. New York and Washington are expected to release final reports in Summer 2002. In addition, researchers at the Institute for Research on Poverty (IRP) at the University of Wisconsin-Madison will be releasing the Wave Two survey report of the applicant study in Milwaukee County in Summer 2002.

As with the ASPE-funded studies of welfare "leavers", each of the grantees include both administrative and survey data, with some of the surveys including multiple waves. ASPE provided technical assistance to grantees while allowing them to determine the cohorts to be studied, the administrative data measures to be used, and the surveys to be administered. This synthesis of ASPE's applicant and diversion studies has many of the same inherent difficulties as previous syntheses of ASPE's leavers studies. These include variations in the time period studied by the grantees, as well as the period of time between the application period and the administration of the survey. Further, each survey was developed by a separate set of researchers in each state or locality, leading to differences in measured outcomes.

In addition to these issues, it became apparent from the beginning of the project that it would much more difficult to facilitate cross-study comparisons across the applicant grantees than it was for the "leavers" grantees. In both sets of studies, grantees had significant discretion over their research questions and construction of their surveys. However, while studies of TANF leavers used a common definition of leaver (as those who left TANF and remained off the rolls for at least two months), it was not possible to use a common definition of "applicant" or "diverted" populations because of the significant differences in states' application procedures and availability of administrative data on applications that are only partially completed.

While the definitions of the populations of applicants and divertees vary significantly across grantees, they can be divided into five general categories:

Participating in the state or county's formal diversion program. Many states have implemented formal programs to divert TANF applicants from entering cash assistance. The most well-known of these programs are those that pay grantees a one-time lump-sum payment in lieu of enrolling them in the TANF cash assistance program. Several of the states and counties receiving grants in FY 1998 and FY 1999 to study diversion have implemented a formal diversion program. However, only one of the ASPE grantees included here, Texas, decided to study formal diversion programs, specifically participants in the state's one-time lump-sum payment program. Others did not study this population, partially because of low participation in the programs.
Begin the application process but fail to complete it. Many states have the ability, either by administrative data or through intercept interviews within the welfare office, to begin collecting data on individuals as soon as they enter the welfare office and provide contact information to an intake worker. If researchers are able to begin tracking applicants at this point, then those individuals who do not complete their applications for whatever reason are often considered diverted applicants. This was a popular method for defining divertees among the ASPE grantees included in this synthesis; six of the eight chose to include this population of applicants in their sample of diverted applicants.
Complete the application process and determined to be eligible for TANF but do not enroll in TANF. Some individuals may complete their application process but decide not to enroll in TANF, even after being found eligible to receive cash benefits. At this point, the completed application is often already in many states' administrative data systems, making tracking of these individuals possible. Four of the ASPE grantees that have released findings included these individuals in their sample.
Ineligible for TANF for non-financial reasons. Often TANF applicants meet the income eligibility requirements of the TANF program but are denied benefits for other reasons. These non-financial reasons for denial may include: refusal or inability to participate in required job search or job readiness programs, lack of cooperation with the child support enforcement agency, and failure to meet particular requirements set in place by states or localities. Five of the ASPE grantees included here targeted these individuals as diverted applicants. There may have been some overlap between this population and those who completed their application but did not enroll for unknown reasons.
Receiving food stamps and/or Medicaid and appear to be eligible for TANF but do not receive TANF. Two of the grantees included in this synthesis - Florida and South Carolina - used administrative data from the Medicaid and/or food stamps program to help formulate a population of diverted applicants. While the two grantees approached the task differently, the basic theory was to use these data files to find a proxy for TANF divertees. If an individual received Medicaid or food stamps, appeared to be income eligible for TANF, and had not received TANF for a set period of time, then a reasonable assumption was made that they were informally diverted from receiving TANF. While there are many complicating issues surrounding this method, it is one way to try and identify individuals who were diverted from TANF before ever entering the welfare office to apply.

Despite the differences in the definitions of the study populations among the ASPE grantees, some themes have emerged across the studies. Below are cross-state findings in a number of number of different areas. First, there are data on the characteristics of applicants across the various study area. Next, outcomes of the applicants are synthesized in the areas of employment and earnings, participation in government programs, and eventual receipt of TANF cash assistance. Finally, the applicants' experiences with the TANF application process in their state or county are cited.

Characteristics of Applicants

Each of the studies contains information on the demographic characteristics of applicants in the study area, including their age, race/ethnicity, educational attainment, marital status, and the number of children in the household. These characteristics varied greatly across the study areas, and no conclusions can be made regarding the effects of varying demographic characteristics on outcomes for applicants. However, the information is useful for descriptive purposes.

The majority of case heads were in the 18-35 age range. However, some studies had a significant number of older applicants (24 percent over age 35 in Contra Costa County, 18.8 percent over age 35 in Arizona, and 24 percent over age 40 in South Carolina).
The race/ethnicity of the applicant population varied along with the natural demographics of each of the various study areas. The percentage of applicants/divertees who were African-American ranged from 6 percent in Arizona to 76 percent in Milwaukee County, while the percentage of Latino/Hispanic applicants ranged from 11 percent in Milwaukee County to 50 percent in Contra Costa County The percentage of TANF applicants who were white ranged from 10 percent in Milwaukee County to 51 percent in Arizona.
A few of the grantees collected information on the educational attainment of the primary caretaker of the applicant unit. These grantees found that between 37 and 58 percent of the TANF applicants/divertees had less than a high school education, while 34 to 54 percent had either a high school diploma or General Equivalency Degree (GED).
In the few areas that collected data on marital status of the applicants, the largest percentage of respondents (44 to 80 percent) were never-married single parents. In addition, a significant percentage of respondents were divorced or separated. Fewer than one-fifth of the applicants were married at the time of the surveys.
Most of the studies asked the respondents about the number of dependent children living in the household. In each study area, between one-third and one-half of respondents had only one children living in the household. The percentage of applicants with three or more children in the household ranged from 18 percent in South Carolina to 38 percent in Milwaukee County.

Employment and Earnings

Each of the grantees reported findings on the employment rates of applicants and divertees in the period preceding and following their application for TANF. Most of the studies included both administrative data from the Unemployment Insurance (UI) data system and the results of survey questions about the employment of applicants. In general, the data show either a steady employment rate or slight decline in employment during the period just prior to application, then a small but constant increase in employment in the months following diversion from TANF.

Grantees also used both UI administrative data and survey data to report on the earnings of TANF applicants. In general, there was a significant dip in earnings in the period immediately prior to application/diversion. This drop is very likely associated with applicants' decision to apply to TANF. The period in which the application/diversion took place was followed by a noticeable increase in earnings over the following year.
Three of the grantees reporting administrative data on employment in the quarter of application to or diversion from TANF report rates similar to those of the ASPE "leavers" studies around 60 percent. Three report somewhat lower employment rates of between 31 and 45 percent. Some possible reasons for the differences in employment rates include policy differences within the individual states, difference in the definition of diversion, and varying definitions of the quarter of exit.
Grantees reporting survey data found slightly lower employment rates, particularly at the time of application. For example, 12 percent of respondents to a survey at the time of application in Milwaukee County said that they were currently employed, while 28 percent in Arizona reported being employed in a similar survey. One explanation for the lower employment rates from survey data might be that administrative data report employment at any time within a quarter, and the surveys show employment at one point in time. Thus, an individual might lose her job and choose to apply for TANF, but still be recorded by administrative data as employed in that quarter.
As mentioned above, employment rates generally increased in the period following diversion from TANF, according to both administrative and survey data. Administrative data showed a steady but small increase (less than 5 percentage points) in employment across most grantees in the year following diversion. The exception was Florida, where the increase in the employment rate between the study quarter and 15 months after diversion was 14 percentage points (from 38 percent to 52 percent). Increases in employment were also shown in survey data findings reported in Arizona, Illinois, and San Mateo County.
Administrative data from each of the studies showed a sudden drop in applicants' earnings in the quarter of TANF application, followed by a steady gain in earnings over the year following diversion. Mean earnings in the quarter before application ranged from about $1,800 to $2,500 in the non-California areas this range fell to about $1,500 to $2,000 in the application quarter. Earnings then steadily increased over the next year; in the fourth quarter after application, the range of earnings was approximately $2,200 to $3,000. Earnings in the five counties in California were higher than those in the other study areas, possibly due to higher standards of living in the Bay Area of California.
Of those TANF applicants who were employed in the period following application/diversion, many worked in the service or clerical field. Median hourly earnings varied greatly across studies but generally were above the minimum wage. Those individuals who were not employed generally cited illness or injury, child care, or a preference to stay home with the child as a major reason for their unemployment.

Participation in Medicaid and Food Stamps

Government programs such as Medicaid and food stamps are important supports to low-income families not receiving cash assistance as they move towards self-sufficiency. Each of the ASPE grantees studying TANF applicants and diversion collected administrative and survey data on the receipt of these programs. While the level to which applicants were enrolled in these programs varied across the different sites, the data show that program receipt declined across each of the study areas in the year following TANF application/diversion.

State administrative data from five of the applicant studies reveal that between 15 and 35 percent of the population receive food stamps in the first quarter after application for TANF. In three of the study areas, receipt of food stamps fell gradually over the next three quarters.
Survey data from the two California studies show a decline in food stamp receipt between surveys administered at six and twelve months after diversion. However, Illinois survey data show an increase in receipt of food stamps between the time of application and the administration of the survey six to nine months later (from 49 to 66 percent).
Five applicant studies used administrative data to determine the number of TANF applicants and divertees enrolled in the Medicaid program. Medicaid enrollment among family heads in the fourth quarter following application/diversion ranged from 23 percent to 56 percent. South Carolina was the only site in which more than half of the applicants received Medicaid in any one of the four quarters following their application.
Survey data collected by a few of the grantees also showed varying levels of enrollment in the Medicaid program. Twelve months after diversion from TANF, 41 percent of those interviewed in Contra Costa County were receiving Medicaid benefits, compared to 55 percent of respondents in Arizona.
Researchers in Milwaukee County, Wisconsin interviewed individuals at the time they applied to the TANF program. They found that 61 percent of the applicants surveyed were receiving food stamps in the month prior to applying for TANF, while 77 percent of the respondents were enrolled in Medicaid in the preceding month.

Returns to TANF

While those applicants who are diverted do not, by definition, receive TANF at the time of application, many eventually reapply for TANF and receive cash assistance. In fact, those studies that also followed TANF entrants show that equal number of those who were originally diverted from TANF cash assistance and those who entered the program in the application quarter are receiving TANF cash assistance at 12 months after the study quarter.

The six studies that used information from their state or county's TANF administrative data base to report findings in the area of TANF recidivism had a wide range of findings. The percentage of applicants or divertees who were receiving TANF three months after applying and being diverted from the program varied from 22 percent in Contra Costa County to virtually none in South Carolina. A reason for this discrepancy might be South Carolina's definition of their diverted population, described above.
Three studies asked applicants/divertees about receipt of TANF in their surveys. At twelve months after diversion from the cash assistance rolls, receipt of TANF ranged from 13 percent to 36 percent.

Experience with the TANF Application Process

Participants in four of the studies Arizona, Illinois, South Carolina, and Contra Costa County reported findings about applicants' experiences with the TANF application process in their state or county. As these questions were all asked in a slightly different way, it is difficult to synthesize these findings across the studies.

Both Arizona and Contra Costa County were able to discern from administrative data the reasons for denial of TANF application among so-called "diverted" applicants. In both locations, nearly half of the applications were denied because of a failure to complete the interview process. Other reasons included a failure to comply with program rules or a voluntary withdrawal of the application by the applicant herself.
Contra Costa County compared their administrative data on the reason for denial with the results of a survey question in which applicants were asked to give the reason they thought their application was denied. Two out of five respondents said their application was denied due to "administrative hassles", while another 19 percent listed employment as the reason for not finishing the application process.
Arizona found that, among diverted applicants, 39 percent did not complete the application process because of issues related to income, such as finding a job or making too much money. However, 32 percent of respondents cited issues related to the application process (too many hassles or having to provide too much documentation) as the major reason they did not complete the process.
In Illinois, 20 percent of those respondents whose applications were denied or who withdrew their applicants felt that they did not go onto TANF because they had too much income or assets, while another 19 percent did not provide the paperwork that was required. The majority of these individuals reported receiving job search and job assistance services while their application was being considered.
South Carolina asked those who were receiving food stamps and income-eligible for TANF, but not receiving TANF, why they had not gone on welfare. The majority of this population 59 percent said that they only wanted food stamps and did not want to be on welfare. An additional 16 percent said they did not know that people could get cash assistance, while another 12 percent said they had not applied for TANF because they did not think they would be eligible.

Thus, overall, the population of TANF applicants and divertees is difficult to define, and thus a hard population for which to determine outcomes. However, some generalizations can be made across the ASPE-funded studies of TANF applicants and diversion. First, there appears to be a significant dip in earnings just prior to application to TANF this dip and the decision to apply for TANF might be related somewhat. The drop in the employment rate during this time is much less pronounced than the dip in earnings. In addition, there is moderate use of food stamps and Medicaid among this population, decreasing gradually in the year following the application to or diversion from TANF. Finally, a fair number of applicatants reapply for TANF and eventually receive cash assistance in the year following the initial diversion.