Iowa's Limited Benefit Plan. B. Policy Changes in FIP and the LBP


There have been a number of changes in FIP and the LBP since the implementation of welfare reform in October 1993. Several of the changes have affected the activities that can be included in FIAs and pursued with assistance from PROMISE JOBS. One such change is a restriction on access to financial assistance for postsecondary education that was caused by budget concerns; this restriction led to an increased emphasis on employment in FIP. Another change is the expansion of access to existing PROMISE JOBS components and the introduction of several new components. In addition, changes in the LBP have occurred through a formal redesign of the plan as well as informal evolution in the administration of the plan. A change outside of FIP, but with bearing on FIP clients, is the rationing of access to certain state-administered child care assistance.

1. Focus on Employment

As designed, FIP balances the emphasis on employment and education/training ("human investment") as routes to self-sufficiency. However, as implemented, the program stresses employment. The most notable manifestation of this shift in focus from education/training to employment is the existence of a waiting list for PROMISE JOBS assistance with postsecondary education. This waiting list for financial assistance with tuition, child care, and transportation costs was established only 15 days after the October 1, 1993, implementation of FIP.(7) In 1994, PROMISE JOBS administrators authorized a total of 5,000 postsecondary classroom education slots for FIP participants. No additional slots were authorized in 1995, but 750 new slots were authorized in 1996.

FIP clients whose FIAs reflect their desire to pursue postsecondary education put their names on the waiting list for PROMISE JOBS assistance. While on the waiting list, they may pursue higher education on their own by applying for a Pell Grant and paying for any remaining tuition, child care, and transportation expenses out of their own resources. To satisfy PROMISE JOBS participation requirements, those on the waiting list must choose another activity until education slots become available, unless they are able to pursue postsecondary education on their own.

2. Changes in PROMISE JOBS Components

The tightly limited access to postsecondary education through PROMISE JOBS increased the demand for alternative training activities. The state responded to this in two ways in the spring and summer of 1996. First, it raised and then eliminated ceilings on enrollments in WEP and UCS. Second, it implemented a new PROMISE JOBS component, On-the-Job Training, and shortly thereafter eliminated the ceiling on enrollment in that component. In addition, the state responded to the pent-up demand for postsecondary education by allowing FIP participants to fulfill the PROMISE JOBS participation requirements through a combination of part-time education and part-time employment. This change makes it more feasible for clients to pursue postsecondary education without funding through PROMISE JOBS.

3. Formal Redesign of the LBP

The February 1996 implementation of the redesigned LBP was an important change in Iowa's welfare policy. It did not affect the LBP clients who are the basis for this study because they had entered the LBP under the old rules, which continued to apply to them. Nevertheless, understanding the LBP redesign is critical to understanding the evolution of Iowa's welfare policy.

Before the redesign, DHS and PROMISE JOBS caseworkers had reported to their supervisors that the LBP was complex, difficult to explain and understand, and often not taken seriously by clients until their benefits were reduced. Clients were confused because they were notified of their assignments to the LBP, but their cash grants were not reduced until three months later, after many had forgotten the notification or the reason for the action. Consequently, lawmakers changed the LBP. FIP recipients who entered the LBP after January 31, 1996, are subject to the rules of the redesigned LBP.

The redesigned LBP more clearly and immediately reinforces the notion that there are consequences for noncompliance with PROMISE JOBS participation requirements. Under the redesigned LBP, cash benefits are reduced immediately--rather than after three months--and are terminated following these three months of reduced benefits. For the first three months, the family receives cash benefits based only on the children in the family; the noncooperating adults are excluded from the benefit calculation. After this three-month period, cash benefits are terminated and the family remains ineligible for cash benefits for six months. The entire three-month period of reduced FIP benefits is a reconsideration period for those assigned to the LBP prior to signing an FIA. As under the old LBP, there are no reconsideration rights for those assigned to the LBP after signing an FIA.

The design changes in the LBP also acknowledge that some FIP recipients may enter the LBP more than once. Under the redesign, if a client enters the LBP, returns to FIP, and then re-enters the LBP, there is no period of reduced cash benefits, the client is immediately ineligible for cash benefits for a period of six months, and there is no reconsideration period. This design applies to all second and subsequent LBP assignments. The goal of this policy is to send a stronger message to those who have already been through the LBP that receipt of cash assistance is contingent on participation in PROMISE JOBS.

4. Informal Evolution of the LBP

The LBP has also evolved in less formal ways. Initially, caseworkers were instructed to present the LBP as an alternative to FIP for clients who expected to need only temporary assistance. The caseworkers informed the DHS central office that they were not comfortable advising these clients to select the LBP. Their discomfort stemmed from the recognition that these clients' expected needs for temporary assistance were frequently not realized. The result of this was a shift away from advising these clients to select the LBP. However, this evolution in the administration of the LBP has not addressed the risk associated with those clients who expect to need only temporary assistance and who enter the LBP without communicating with their caseworkers.

5. Rationing of Access to Child Care

The State Child Care Assistance Program, which is separate from FIP, is funded by the federal Child Care and Development Block Grant and by state appropriations. Historically, FIP clients who are on the waiting list for PROMISE JOBS postsecondary education assistance and are using alternative financing to attend college have relied on the State Child Care Assistance Program to help defray the child care component of college costs. Access to assistance through this program was rationed beginning in July 1995. The rationing initially took the form of a waiting list and subsequently took the form of more restrictive eligibility criteria. Rationing makes it more difficult for many FIP clients to obtain assistance with child care expenses, thereby increasing the cost of attending college for those without PROMISE JOBS postsecondary education assistance.

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1. In July 1996, the Department of Employment Services and parts of the Department of Economic Development were combined to form a new department called Iowa Workforce Development.

2. An On-the-Job-Training component was added July 1, 1996.

3. FIP applicants and participants who start new employment (or self-employment) may receive up to four months of full FIP benefits if: (1) they had less than $1,200 in gross earnings in the 12 months before the month in which the new employment began; (2) they report the new employment in a timely manner; and (3) the new employment begins after the date of application.

4. DHS views all assignments to the LBP as voluntary; in particular, entry into the LBP is viewed as a "choice" based on either actions or inactions of the client.

5. Under the redesigned LBP implemented in February 1996, the pre-FIA LBP provides only one opportunity to reconsider; this is during the three months of reduced benefits.

6. Occasionally a more complex pre-FIA LBP assignment will require technical assistance by the DHS central office. Examples of cases requiring technical assistance are (1) cases for which the computer system (IABC) cannot determine which persons on cash assistance should be in an LBP and (2) cases that need to have a partial or individual LBP entered.