In August 1993, the U.S. Department of Health and Human Services and U.S. Department of Agriculture approved Iowa's request for waivers of certain federal regulations governing the Aid to Families with Dependent Children (AFDC) program and the Food Stamp Program. Acting under these waivers, the state implemented its welfare reform program, known as the Family Investment Program (FIP), on October 1, 1993. The reforms embedded in FIP are numerous and comprehensive. They encourage and require welfare applicants and recipients to take specific steps toward self-sufficiency. These steps may include participating in job search or training activities, obtaining employment, and accumulating assets. The reform program stops short of actually requiring welfare recipients to achieve self-sufficiency.(1) Nonetheless, there is an implicit expectation that by following the required steps most of them will eventually leave cash assistance.

Several key provisions of FIP illustrate the emphasis in Iowa's welfare reform on movement toward self-sufficiency. To encourage employment, as well as the formation and preservation of two-parent families, FIP removes the 100-hour cap that the former AFDC program imposed on the number of hours per month that a parent could work for pay while the family remained eligible for cash assistance. To further encourage employment, a greater percentage of earnings is disregarded in determining eligibility and benefits under FIP than under AFDC. To encourage asset accumulation, the amount of assets that an eligible family may hold is higher under FIP than under AFDC, and interest and dividend income are excluded from the determination of FIP eligibility. To ease the financial burden of fully exiting from cash assistance, FIP offers former welfare recipients who obtain employment two years of child care assistance, rather than the one year that was available under AFDC. To promote planning for the future and positive steps toward self-sufficiency, FIP requires welfare recipients who are capable of working to develop plans for achieving self-sufficiency and to participate in the PROMISE JOBS employment and training program. Recipients who do not meet these requirements are assigned to the Limited Benefit Plan (LBP), a short-term alternative assistance program under which cash benefits are reduced and then terminated. The LBP provision of FIP is the subject of this study.

This chapter introduces the PROMISE JOBS employment and training program; briefly describes the LBP and its function within PROMISE JOBS; and discusses the origin, purpose, and methodology of the LBP Study.