Federal law restricts states from using TANF funds to provide benefits to most families for more than five years (though states can exempt up to 20 percent of their caseload from the federal time limit). Beyond the limitations on the use of federal funds, the law gives states the flexibility to design their own time-limit policies. For example, states can set time limits shorter than five years. States can also use maintenance-of-effort or other state funds to provide benefits that do not count against the federal time limit or that assist those who have exhausted their federal time limit. Many states have already established time limits under federal waivers. In general, these tend to be shorter than five years, but allow opportunities for exemptions and extensions.
Although time limits are widely supported, no evaluations of this approach have been completed. The first state-initiated time-limit programs are still relatively new, and only a handful of people had reached the time limits as of late 1996. The stated goal of time limits is the same as that of work first-to move welfare recipients into paid employment. Time limits can help to motivate participants in their job search, and in doing so may bolster the program's success. However, as time limits change the nature of welfare, they affect work first programs as well. Program planners and administrators who couple a work first program with time limits should be aware of the following issues:
- Time limits raise the stakes for welfare-to-work programs. Given the importance of minimizing the number of people who reach the end of the time limit, time limits put added pressure on states and localities to design and implement effective programs to help welfare recipients find jobs.
- Time limits increase the importance of serving the entire time-limited caseload. The program should be able to serve all those subject to the time limit. The criteria for exemption or deferral from work first need to be coordinated with the criteria for exemption from or extension of the time limit. In addition, the program needs to take special care to avoid serving only the most job ready, and to give special attention to those who have a more difficult time finding work.
- Time limits increase the importance of moving participants into and through the program quickly. Time limits make it more important than ever to utilize activities that are short term and have open entry, as participants cannot afford to wait for activities to begin. If access to work first is limited or there are delays in enrolling, states should consider waiting until participants are in the program to start their state's time-limit clock. (Note, however, that the time limit on federally funded assistance will still apply.)
- Time limits change the environment of work first. Staff and participants need to understand the time limits thoroughly and to take them into account when designing employment plans. Staff need to prepare applicants and recipients early on, explaining the terms of the time limit and spelling out what it means for them. It is not yet clear what program strategy makes the most sense in the context of time limits. Some argue that a rapid employment focus is best, because it helps recipients find jobs quickly and thereby save their months of welfare eligibility. Others contend that recipients should use those scarce months for education or training that will prepare them for jobs that will allow them to stay off welfare.
- Time limits can penalize participants who combine welfare and work. Welfare recipients can use up valuable months of eligibility for low partial grants, especially if financial incentives allow more families to combine welfare and work (see section 38). Discuss these trade-offs with participants who work; some may choose to "bank" their time on welfare for when they might need it more. Program planners may also want to consider either not counting against the time limit any months during which participants work or counting each of those months as only a portion of a month (again, they will need to use state funds to do this).
- Time limits pose risks not just for long-term recipients but also for those who cycle on and off welfare. In the context of a time limit, program planners may want to invest more in services that help people keep jobs. You may also want to design the time limit so that it is not a lifetime limit. (Note, however, that the five-year time limit on federal funds is a lifetime limit.) For example, a Florida pilot program limits welfare receipt to 24 months in a 60-month period or 36 months in a 72-month period, depending on participant characteristics. An alternative is to allow participants to earn back time on their time-limit clocks by working. For example, participants in Vermont's Welfare Restructuring Project can earn back six months on their time limit for every year they work and do not receive welfare.
- Time limits may increase opportunities to invest in work first programs. The expected savings resulting from time limits on welfare receipt may provide opportunities for programs to make up-front investments in serving more participants or improving program services.