Final Synthesis Report of Findings from ASPE "Leavers" Grants. State TANF Policies

11/27/2001

Under TANF block grants, states have substantial flexibility in determining the length of time families can receive cash assistance (time limits), the penalties for not complying with program rules (sanctions), and the generosity of cash grants, as well as how benefits are reduced as a family moves from welfare to work. Differences in state policy choices may well affect the rate at which families leave TANF, the employment status and material well-being of these families, and their use of government aid after leaving the TANF program.

Table II.1 (appearing at the end of this chapter) shows the time limit and sanction policies that prevailed in 1997 in the states in which the ASPE-funded leaver studies were conducted. We focus on 1997 because this is when states began implementing their TANF programs, and most of the studies provide some data on families that exited welfare just prior to or during that year.

Table II.1
State Welfare Policies: Time Limits and Sanctions, 1997

State

Time Limit Initial Sanction Maximum Sanction
Arizona 24 out of 60 months Adult portion of benefit for one month or until compliance, whichever is longer Adult portion of benefit for six months or until compliance, whichever is longer
District of Columbia 60 months Adult portion of benefit for one month or until compliance, whichever is longer Adult portion of benefit for six months or until compliance, whichever is longer
Florida 48 months and 24 out of 60 months or 36 out of 72 months1 Entire benefit until in compliance for 10 working days Entire benefit for three months or until in compliance for 10 working days, whichever is longer
Georgia 48 months 25% until compliance Entire Benefit permanently
Illinois 60 months 50% until compliance Entire Benefit for three months or until compliance, whichever is longer
Iowa 60 months Adult portion of benefit for three months Entire benefit for six months
Massachusetts 24 out of 60 months Written warning Entire benefit until in compliance for two weeks
Missouri 60 months Adult portion of benefit until compliance Adult portion of benefit for six months or until compliance, whichever is longer
New York 60 months Adult portion of benefit until compliance Adult portion of benefit for six months or until compliance, whichever is longer
South Carolina 24 out of 60 months Case is closed. Unit must reapply and comply for one month Case is closed. Unit must reapply and comply for one month
Washington 60 months Adult portion of benefit until compliance Adult portion of benefit for six months or until compliance, whichever is longer
Wisconsin 60 months Minimum wage times the number of hours of non-participation until compliance Entire benefit and must reapply.
Cuyahoga Co. 36 out of 60 months Adult portion of benefit for one month Entire benefit for six months.
Los Angeles Co. No limit Adult portion of benefit until compliance Adult Portion of benefit for six months or until compliance, whichever is longer
San Mateo Co. No limit Adult portion of benefit until compliance Adult Portion of benefit for six months or until compliance, whichever is longer
1The 24 out of 60 month limit applies to non-exempt recipients who have received less than 36 months of assistance during the previous 60 months and are 1). over age 24 or 2). under age 24 with a high school diploma/ GED. The 36 out of 72 month limit applies to non-exempt recipients who 1). have received benefits for 36 of the previous 72 months or 2). are under age 24, have not completed high school/ GED, are not enrolled in a high school equivalency program, and have little or no work experience.
Sources: See Appendix B for a complete listing of the leavers studies referenced.
Data reported from Urban Institute's Welfare Rules Database. All data are reported as of 7/97.

First, consider time limits. Families subject to shorter time limits may feel pressure to leave welfare sooner than families that are years away from exhausting their benefits. Also, leavers who have nearly exhausted their benefits may be more reluctant to return.

Out of the fifteen studies, seven are based in locations that as of 1997 allowed welfare recipients to receive benefits for the federally-imposed maximum of 60 months (5 years) and placed no intermittent time limits on receipt (see Table II.1). Florida and Georgia have a shorter lifetime limit of 48 months. And Arizona, Florida, Georgia, Massachusetts, South Carolina, and Cuyahoga county all have intermediate time limits, not only restricting the total number of months a family can receive benefits but also prohibiting a family from receiving their lifetime allotment over a single time period.7 For example, in Massachusetts, families can only receive benefits for 24 months in any 60 month period. Because of these intermediate time limits, both the Massachusetts and South Carolina leaver studies can assess the status of leavers that reached their initial time limits. Finally, California, the site of the Bay Area8 and Los Angeles county leaver studies, had no time limit in 1997; however, California imposed the standard 60 month lifetime limit retroactively in 1998 (Welfare Rules DatabaseWRD).

Next, consider states sanction policies. In general, states have imposed tiered sanctions, beginning with less severe sanctions at first and escalating penalties for

repeated instances of non-compliance. Note that leavers who were sanctioned off the rolls may be less "job-ready" then other leavers. Further, they may return to TANF at higher rates than non-sanctioned leavers upon coming back into compliance with program requirements.9

Table II.1also shows the initial and maximum sanction in each of the fourteen states covered by the leaver studies.10 Generally, for the first instance of non-compliance with program rules, a familys TANF benefit is either reduced by a set percentage (usually 25 percent) or the adult portion of the benefit is eliminated (effectively turning a 3 person unit into a two person unit, for example). The District of Columbia, Illinois, Missouri, New York, Washington, and California restore benefits once a family complies with program rules while other states specify a minimum amount of time the family must make do with lower benefits even after it has come into compliance. For example, Iowas initial sanction removes the adult portion of a familys benefit for three months regardless of whether the family quickly complies with program rules. Two states, however, have substantially stronger initial sanctions. In Florida, the familys entire benefit is eliminated until the family is in compliance with program requirements for 10 working days. And in South Carolina, the case is closed, and the family must reapply for benefits and comply with program rules for one month.

Focusing on the maximum sanction, Table II.1 shows that ten of the ASPE leaver studies are based in states that impose full-family sanctions, removing the adult unit head and the children from the TANF rolls. Georgia and Wisconsin not only impose full-family sanctions, but their maximum sanctions are also permanent sanctions; families that reach this point can never return to cash assistance in these two states. In Iowa and Ohio (Cuyahoga County), the full family sanction lasts 6 months, while Arizona, Florida, Illinois, Massachusetts, and South Carolina impose shorter sanctions for families that begin to comply with program rules. DC, Missouri, New York, Washington, and California (site of the LA and Bay Area studies) do not use full family sanctions.

The generosity of a state's welfare program also affects its leavers' outcomes. For example, recipients in states with higher basic benefits and higher earnings disregards can remain on the rolls while working for longer than families in less generous states. As a result, leavers in more generous states may have higher incomes than leavers from less generous states in the months following their TANF exits simply because those with lower incomes do not leave the rolls. On the other hand, leavers may be more likely to return to welfare if the program offers generous assistance.

Table II.2 shows the 1997 maximum TANF benefit a family of three could receive in the 14 states covered by the ASPE leaver studies, as well as earned income disregards in each state. Massachusetts clearly has the most generous policies, with a high maximum benefit and large earnings disregards.11 California, New York, Washington, and Wisconsin all have high benefit levels (in excess of $500 per month for a family of three) with the standard earnings disregard (the first $120 of earnings and one third of the remainder are disregarded). Ohio (Cuyahoga County) and Florida have modest benefits but generous earnings disregards.12

Table II.2
State Welfare Policies: Program Generosity, 1997
State Maximum Benefit for a Family of 3 ($) Earned Income Disregards Working at $7 an Hour 20 Hours/Week
TANF Benefit(1) ($) Total Income(2) ($)
Arizona 347 $120 and 33.3% first 4 consecutive months, $120 next 8 months, $90 thereafter 26 1,096
District of Columbia 379 $120 and 33.3% first 4 consecutive months, $120 next 8 months, $90 thereafter 58 1,133
Florida 303 $200 and 50% of the remainder 102 1,150
Georgia 280 $120 and 33.3% first 4 consecutive months, $120 next 8 months, $90 thereafter 103 1,135
Illinois 377 66.7% 178 1,197
Iowa 426 20% and 50% 185 1,176
Massachusetts 565 $120 and 50% of the remainder 324 1,335
Missouri 292 $120 and 33.3% first 4 consecutive months, $120 next 8 months, $90 thereafter 0 1,053
New York 577 $120 and 33.3% first 4 consecutive months, $120 next 8 months, $90 thereafter 256 1,283
South Carolina 200 $120 and 33.3% first 4 consecutive months, $120 next 8 months, $90 thereafter 200 1,189
Washington 546 $120 and 33.3% first 4 consecutive months, $120 next 8 months, $90 thereafter 225 1,190
Wisconsin 518 $120 and 33.3% first 4 consecutive months, $120 next 8 months, $90 thereafter 197 1,163
Cuyahoga Co. 341 $250 and 50% of the remainder for first 12 months, then $90 thereafter 165 1,169
Los Angeles Co. 565 $120 and 33.3% 244 1,274
San Mateo Co. 565 $120 and 33.3% 244 1,274
1 For benefit computation, information on payment standards (not shown) is also required.
2 Total Income includes earnings of $602 ($7 an hour working 20 hours per week), TANF benefit, Food Stamp benefit, EITC and subtracts FICA tax. At this wage level there is no federal tax liability and we are assuming no state tax liability.

The last two columns of Table II.2 show how benefits and disregards interact as a single mother with two children on TANF begins to earn money through a part-time job. In Missouri, a family in which the mother works for 20 hours a week at $7.00 an hour would no longer be eligible for TANF. In Arizona, DC, Florida, and Georgia, monthly cash assistance benefits would be around $100 or less for such a family. The state that pays the highest TANF benefit to this prototypical family is Massachusetts at $324.

Because the family is earning $602 a month from the mothers job, they would be eligible to receive $241 through the federal Earned Income Tax Credit 13(per month) and would owe $46 per month in FICA taxes. In addition, while this familys TANF benefits phase out, it is still eligible for food stamps. This reduces some of the variation in total income between states as food stamp benefit levels are computed using the same federal formula in all states; thus, families in low TANF benefit states may receive greater food stamp benefits than otherwise similar families in high TANF benefit states. In 9 out of the 14 states, the monthly total income of this prototypical family making the transition from welfare to work falls between $1,100 and $1,200 (excluding state taxes and credits). This familys total income would vary from a low of $1,053 in Missouri to a high of $1,335 in Massachusetts. Note that in Missouri, this family would have left TANF entirely, while in Massachusetts, it would still be receiving benefits. Thus, one might expect to see higher levels of hardship among leavers in Missouri than in Massachusetts.

While every aspect of states TANF policies (for example, work requirements and diversion policies have been ignored), are not reviewed here, some general observations about the policy context in which the ASPE leaver studies are based can be made. For example, California (LA and Bay Area studies), New York, and Washington generally pursued policies that would be expected to produce lower exit rates from welfare but higher incomes for those families that do leave. Conversely, states with lower benefits and more severe sanctions such as Arizona and Georgia may move families off the welfare rolls faster but their leavers may have lower total incomes. Finally, other studies are based in states that pursue a mix of policies that are likely to have offsetting effects on the outcomes of leaversfor example, Massachusetts and Cuyahoga County have strict time limits and full family sanctions but very generous earnings disregards.