Spending on Social Welfare Programs in Rich and Poor States. Final Report.. Mississippi's Response to Federal Welfare Reform

07/01/2004

Mississippi began to reform its welfare programs with passage of a bill in late 1992, though its AFDC waiver request was not approved by U.S. Department of Health and Human Services until mid-1995. The waivers involved two programs, Work First and Work Encouragement. Work First, the larger program, made benefits contingent on fulfilling work requirements and introduced new mandatory processes for applicants. After the enactment of TANF at the federal level, the Mississippi legislature passed its TANF program, called the TANF Work Program (TWP), in early 1997. The debates over the early AFDC reforms and the TANF program were very divisive, especially along racial lines (Breaux, et al. 2000) and in the early 1990s, when the state legislature focused on out-of-wedlock births and marriage.

Mississippi's TANF program features immediate work requirements, time limits, full family sanctions, a family cap, and transitional child care and transportation services. Maximum cash benefits for a three-person family are $170 per month, which was increased from $120 in 2000, the only increase in the stipend in the last 26 years. In determining benefits, Mississippi disregards all income for some families for up to six months; otherwise, it disregards $90 of earnings. Its asset rules are somewhat more liberal than average: it disregards the entire value of one vehicle and $2,000 in assets beyond that. The state's sanctions are strict, however. Its first sanction for non-compliance with work requirements is imposed for two months, a longer than average duration for full family sanctions. The state does not have a diversion program. Its lifetime time limits (60 months) follow the federal law.

The low benefits, the severity of the sanctions, and early problems of implementation (such as complex applications processes involving multiple local agencies) probably contributed to the very large caseload declines of the 1990s-72 percent between 1995 and 2000. Since 2000, caseloads rose 23 percent through 2003. Yet, even with the caseload increases, TANF assistance plays a relatively small role in Mississippi's safety net. Only 1.3 percent of the Mississippi population received TANF assistance in 2001, compared, for example, to 10.7 percent of the population who received Food Stamps. Federal spending on Food Stamp benefits was 9.4 times greater in 2001 than total TANF assistance payments (Mississippi Department of Human Services 2003).

Mississippi's large decline in caseloads and its low benefits meant that it was able to accumulate large TANF surpluses. By 2000, the state could pay very little of its current year TANF grant on assistance. In fact, by 2001, it spent none of its current-year TANF grant on cash assistance. The surplus allowed the state, by 2000, to transfer the maximum amounts from TANF to CCDF and SSBG (30 percent of the grant in FFY 2002), and to increase other non-cash spending. In FFY 2002, major categories of spending under TANF included work subsidies, education, and training (25 percent); child care (37 percent, including the 20 percent transferred to CCDF); transportation and other supportive services (19 percent); and transfers to SSBG (10 percent).

In the last two fiscal years, however, moderate increases in caseloads have pushed up spending on TANF assistance, including cash payments, child care (for persons on assistance), and transportation services. The TANF block grant has also been used to fund additional programs while it pulled back from others. TANF thus serves as a "cushion" that agencies have used to fund high-priority items. For example, in FY 2004, about $26 million (about 27 percent of the annual block grant) was allocated to child welfare programs. Despite the attractive match rate for such programs (usually the same as under Medicaid), the state reduced its appropriations for this already cash-strapped, high-stakes service area-and TANF was used to compensate. By contrast, TANF funding was reduced or eliminated for several other programs in FY 2004, including fatherhood programs, SSBG, an adolescent offender program, some child care programs (not CCDF), education programs, and programs under the Attorney General.

During these tight budget years, the state has also struggled to satisfy its Maintenance of Effort (MOE) requirement. Among other things, they moved assistance families with two parents into a separate state program funded with MOE dollars (thus freeing $2 million in TANF), and they identified dollars spent in existing state programs that they could count as MOE. Such programs included certain university scholarships for low-income families, after-school programs, and mental health services.

Although TANF supports a wide array of services, "welfare" is still not a popular program in the state. The program is identified with minorities and the public perception is still that people do not want to work. Even state child advocacy organizations pay little attention to TANF per se. However, there have been effective advocacy efforts for child care, e.g., the Low Income Child Care Institute, run by a former director of the state Office of Children and Youth.

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