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

07/01/2004

South Carolina's welfare reform program - known as the Family Independence Program (FIP) - was implemented in October 1996 as an AFDC waiver. The waiver remained in effect until September 2003. The cash assistance program is limited in duration to 24 months out of 10 years and no more than 60 months in a lifetime. To qualify, a family of two must have income less than $480 per month (or only $5,800 per year); once a family's earnings exceed the income limit ( the equivalent of 30 hours per week at minimum wage for a family of two), it is no longer eligible to receive assistance. Maximum benefits are only $204 per month for a family of three, an amount that has not changed in 15 years. Families who leave welfare due to earnings may receive up to two years of child care, transportation assistance, and other work-related expenses. The state's welfare caseload declined sharply after FIP was implemented-by 39 percent between 1998 and 2000. However, between 2000 and 2003, the average number of families per month increased by 25 percent.

Under the waiver, South Carolina could exempt recipients who were not "determined able to engage in work" and who were not provided transportation and child care services. They could count a wider variety of activities as meeting the participation requirement than they can under TANF. Officials expect service spending to go up as a result of the lapsed waiver.

The legislature was involved in establishing time limits, reasons for exemptions, extensions, and other such policies. But once welfare reform was completed, legislators lost most interest in TANF. In recent years, relatively minor changes were made as DSS promulgated regulations, which the legislature would review and pass, often with little debate. One exception to the general tendency of the legislature to show little interest in TANF occurred when it recently directed DSS to spend part of the TANF grant on abstinence-only pregnancy prevention programs.

Other than these actions, however, the legislature has given DSS discretion in using the TANF block grant to meet the purposes of the TANF program. The TANF surplus grew during the period of 1996 through 1998. Beginning in 1999, an increasing variety of programs were funded under the block grant, such as "First Steps," a school readiness program that provided services to pre-first-grade children and their families (this program also received general fund dollars).

In response to the economic downturn, the legislature severely cut the DSS budget. The DSS "base budget" was first reduced from $119 million to $102 million between SFYs 2001 and 2002. It declined further to $94 million in SFY 2003 and then to $78 million with the recently enacted budget for SFY 2004. These cuts were largely dealt with by cutting a variety of service contracts; by eliminating an agency that administered pregnancy prevention and after-school programs; and by reducing staff in the department. Positions were cut by 33 percent between January 2001 and June 2004-and by using TANF where allowable to cover the costs of "high-stakes" programs involving children-at-risk, such as foster care and emergency shelters. DSS also instituted a two-week mandatory unpaid furlough for all staff for the fiscal year ending June 2004.

South Carolina transfers a comparatively small share of its federal TANF grant and state MOE dollars to child care programs (about $4 million to CCDBG annually). It typically transfers a larger share to SSBG. Currently, TANF does little contracting for services. Virtually no legislative lobbying occurs on TANF issues.

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