Description and Assessment of State Approaches to Diversion Programs and Activities Under Welfare Reform. G. State Approaches to Lump Sum Payment Programs As Formal Diversion


The foregoing discussion illustrates that there are numerous components of lump sum payment programs and a variety of ways in which states have chosen to structure these diversion programs. How these programs are structured can suggest something about the role played by lump sum diversion within the states' overall approach to welfare reform.

States can be characterized as making it easy for TANF applicants to be diverted where the lump sum payment program policies use relatively broad eligibility criteria, allow lump sum payments to be used for more than just work-related needs, and don't impose stringent repayment requirements or other penalties on lump sum payment recipients. States can also be seen as deliberately limiting the number of participants in their lump sum payment programs when the program policies use very specific eligibility criteria, limit the use of lump sum payments to work-related needs, and impose onerous repayment requirements and automatic penalties.

The components of lump sum payment programs may indicate that the states view such programs primarily as supports for obtaining or maintaining employment, or suggest that the states view their program as means to expand emergency assistance for short-terms needs of families without reducing these families' lifetime TANF limits. States can opt for more or less oversight on how recipients use the lump sum payments or on how programs are administered at the county level.

The following brief descriptions provide four examples of the various approaches taken by states to structuring their lump sum payment programs.

Florida: Florida's lump sum payment program represents an unusual combination of 1) being among the most relaxed in terms of determining family needs and monitoring the use of the lump sum payments, and 2) having among the most stringent repayment terms if reapplication for TANF assistance is made during the three-month period of ineligibility - the entire amount must be entirely repaid before receiving further assistance. The state emphasizes a collaborative approach between the caseworkers and the families in determining whether to participate in the program. Families can only participate in the lump sum program one time.

Idaho: Idaho's lump sum payment program is unique in that it imposes the most severe automatic penalty on lump sum payment recipients: a two-for-one reduction in the recipients' lifetime limit of 24 months of TANF assistance. The program also imposes among the most severe restrictions on eligibility for TANF assistance following receipt of lump sum assistance: a two-for-one period of ineligibility during which families cannot reapply for assistance. Caseworkers explore every other option with applicants before they consider lump sum payment. The applicants' circumstances are reviewed very carefully to determine if a lump sum cash payment is the best option for them. Applicants are expected to consider fully the penalties associated with lump sum payments before agreeing to be diverted; they can only participate in the lump sum payment program one time.

Kentucky: Kentucky's program is unique because applicants may draw down the maximum lump sum payment - $1500 - over a 12-month period as long as they present eligible expenses. (Washington is the only other state where a recipient can draw down the maximum amount.) Although Kentucky has a 12-month period of ineligibility for TANF assistance, families can reapply for assistance during this period without a repayment penalty when there is job loss through circumstances beyond the person's control or an unexpected problem affecting the person's ability to care for their children. Caseworkers are expected to interpret these exceptions liberally because the state is not interested in unduly penalizing diversion recipients.

Minnesota: Minnesota's maximum lump sum payment amount is the highest among the states: $3052. Minnesota uses third party payments to distribute the lump sum payments; eligible families are almost never given cash. This form of diversion is intended to be used very infrequently and only for families who will be stabilized permanently; Minnesota has a substantial emergency assistance program for which a family would be considered first. Families receiving lump sum assistance are ineligible for TANF assistance for a period equivalent to number of months of TANF assistance represented by the amount of the lump sum - a maximum of four months. The period of ineligibility is absolute, there are no exceptions for reapplication. A family cannot receive lump sum payment assistance again for three years.