Description and Assessment of State Approaches to Diversion Programs and Activities Under Welfare Reform. B. A Conceptual Framework for Examining Diversion Programs


The implementation of state-wide welfare reforms under the Section 1115 AFDC waivers and PRWORA has spawned numerous new and innovative strategies for providing assistance to families seeking cash assistance. One of the initial challenges involved in trying to understand such sweeping reforms is developing clear and consistent definitions of new approaches to providing assistance to families. Thus, before presenting a detailed description of the methods and results from the first phase of this study, we describe the conceptual framework that guided our data collection and analysis.


Conceptual Framework: Formal and Informal Diversion Activities

The starting point for this analysis is a distinction between policies and programs that are explicitly designed to divert potential TANF recipients from receiving assistance and those that may divert potential recipients from receiving assistance even though that is not their primary purpose. We refer to programs and activities that fit into the former category as formal diversion activities and the latter as informal diversion activities.

We define formal diversion programs as activities that are explicitly designed to provide assistance to TANF applicants in an effort to eliminate their need for ongoing cash assistance. Building on earlier research by Holcomb et al. (1998), (3) we examine three specific diversion programs and activities that fit this criteria: (1) lump sum payments; (2) exploration of alternative resources and (3) mandatory applicant job search requirements.

These three types of diversion activities are similar but not identical in structure and purpose. Lump sum programs are designed to keep families with a short-term financial need from ever entering the welfare system. Mandatory applicant job search programs are designed to serve two purposes: (1) to encourage job ready recipients to find employment quickly in an effort to reduce their need for ongoing assistance and (2) to send a clear message that program expectations have changed. The exploration of alternative sources of support with families is intended to discourage families from applying for cash assistance if other assistance is available to them and to help them think more broadly about how they can draw upon resources in their communities and families during times of need.

We define informal diversion as diversion that occurs as a response to program rules and requirements that are intended to impose a stricter set of expectations on recipients even though a potential TANF recipient has not participated in those activities. For example, some families who know they will be expected to look for work immediately (or almost immediately) may choose to look for work and find it on their own, eliminating their need to apply for assistance. Other families may not apply for assistance because they anticipate that they will not be able to meet the higher expectations set forth by the new program. Others may choose not to apply because they assume they are no longer eligible under the new program rules.

The distinction between formal and informal diversion is not always crystal clear. For example, although we examine job search as a formal diversion program activity, it is likely that mandatory applicant job search programs result in both formal and informal diversion. For families who apply for assistance, receive some job search assistance and find employment before their formal application for cash assistance is approved, mandatory applicant job search functions as it was intended - as an explicit, formal activity to divert families from receiving ongoing cash assistance. However, for families who choose not to apply for assistance because of the job search requirement - either because they think the requirement is too onerous, are already employed or don't feel capable of meeting the requirement-- a mandatory job search requirement will be diverting recipients informally rather than formally.

Similar to mandatory applicant job search, the exploration of alternative resources can also act as a formal and informal means of diversion. Families who are linked with alternative community or family resources are formally diverted from receiving assistance because their needs have been met through alternative resources. However, families who expect that they will be required to explore alternative resources even though they do not believe those resources can meet their needs may choose not to apply for assistance and be informally diverted from receiving assistance.

The primary focus of this analysis is on formal diversion programs. However, it is possible that diversion that occurs informally is having or will have as large an impact on receipt of AFDC/TANF and/or eligibility for Medicaid as formal diversion activities. Thus, whenever possible we include informal diversion activities in our discussion although, for analytic purposes, we have far less information at this point on this type of diversion than on formal diversion programs and activities.

Pre-PRWORA Formal Diversion Activities

Prior to the passage of PRWORA, under the flexibility provided to states through the Section 1115 waiver process, three states (Montana, Utah and Virginia) began operating AFDC demonstration programs to provide "would-be" AFDC recipients with assistance in the form of a lump sum payment. Four other states (Georgia, Illinois, Missouri and New Hampshire) received approval through the Section 1115 waiver process for demonstration programs that required applicants to participate in job search activities as a condition of eligibility. Wisconsin began to explore alternative resources with applicants for assistance when it implemented its Self-Sufficiency First waiver statewide in January 1996.

Current Diversion Programs and Activities Are Not Well Understood

As the emphases on moving recipients into the labor market quickly and on reducing the time families spend receiving assistance have heightened, diversion programs have become an increasingly common component of state efforts to reform their welfare programs. However, these programs are not well-understood in terms of their design, actual operation, or potential effects. In particular, state efforts to divert families from ever receiving welfare benefits could also increase the likelihood that these families are ineligible or, if eligible, fail to be considered for Medicaid eligibility.

Given the lack of consistent knowledge about what state diversion programs and activities "look like," a necessary first step involves developing descriptive information about diversion efforts in all fifty states and the District of Columbia. To fully understand the design and structure of state diversion programs, information is needed on: (1) how states are structuring their formal diversion efforts, (2) how decisions are made regarding the appropriateness of participants for diversion, (3) what choices TANF applicants have regarding their participation in diversion activities, (4) what kinds of support services are available, (5) what trade-offs/penalties are involved in participating in diversion, and (6) what provisions, if any, are in place to ensure that eligibility for Medicaid is pursued for diverted TANF applicants.

The two-phase structure of this study is deliberate in light of the gaps in knowledge. The first phase will develop the information and knowledge necessary to support the case study approach. The second-phase case studies build on the first phase and will continue the exploration and documentation of the important issues and questions involved in state efforts to implement diversion programs/activities as part of welfare reform.