The Welfare-to-Work Grants Program: Enrollee Outcomes One Year After Program Entry. WtW in the Context of Welfare Reform

02/01/2004

The WtW grants and the programs funded by them were to complement and supplement  but not duplicate  states' TANF funds and work programs. The federal TANF legislation enacted in 1996 solidified a trend among states to replace the former welfare system under the Aid to Families with Dependent Children (AFDC) program, which was based primarily on income transfers and benefit entitlements, with a work-based system of temporary public assistance. Welfare reform changed the nation's social assistance system in several ways, and shifted the focus to employment, which influenced the manner in which WtW grant-funded programs were implemented.

First, states have substantial flexibility in implementing TANF, meaning policies and programs vary considerably across states. States determine how to use their TANF block grant to fund cash assistance, work-related services, and other supports for low-income families with children. States also decide what types of work requirements are imposed on recipients and which individuals are subject to these requirements (within federal parameters). In contrast, the WtW legislation includes very specific provisions about who is eligible, and funds were specifically earmarked for employment services and could not be used for cash assistance payments. TANF recipients are the primary target group for WtW-funded services and are subject to state-determined welfare policies, which means WtW programs and participants must follow those policies.

Despite the flexibility states have, however, federal law specifies that federally funded welfare payments can only be temporary. More specifically, welfare is intended to be a short-term step toward securing employment and self-sufficiency. Unlike AFDC, TANF provides short-term assistance only  federal law stipulates that individuals can receive federal cash assistance for a maximum of 60 months in their lifetime, but states can opt to institute shorter time limits. Nearly all recipients of federally funded TANF cash assistance are, therefore, subject to a time limit. Some states, though, have decided to use state funds, rather than federal funds, to pay for some cash benefits, which allows them to extend the five-year time limit.

Congress underscored the emphasis on work by requiring states to meet steadily increasing requirements for the percentage of their TANF cases that must be engaged in unsubsidized employment or work-related activities. States were to have 45 percent of their caseload participating in work activities in fiscal year 2001 and 50 percent in 2002. To meet these goals, most state TANF policies stress job search activities and encourage or require recipients to find employment rapidly, rather than provide education or training.

The legislative and program changes in welfare contributed to a dramatic decline in caseloads. The welfare rolls, which began to shrink in the mid-1990s, continued to decline after the passage of PRWORA and the BBA. The number of cases receiving cash assistance under AFDC (and later TANF) decreased from 5.05 million in January 1994 to 2.01 million in July 2002, according to reports by DHHS (2003).(6) Prior research suggests the caseload reduction was due to a combination of the continuing strong national economy and the welfare reform policies that emphasize employment (see, for example, Wallace and Blank 1999).

Congress enacted the WtW grants program to complement state welfare reform policies by concentrating additional resources on parents who were particularly disadvantaged and likely to have the greatest difficulty finding and holding a job. The BBA gave authority to DOL to administer the WtW grants program, and local workforce investment boards (WIBs) have primary operational responsibility. In effect, at the local level, the job of moving welfare recipients into employment is shared by human services agencies responsible for TANF and its work programs, and the workforce development system, which oversees WtW grant programs.

Congress established eligibility criteria and spending rules for WtW grants to ensure that the funds were used primarily for individuals who had specific disadvantages in the labor market. As originally enacted, the BBA required that WtW grantees spend at least 70 percent of their grant funds on long-term TANF recipients or recipients within a year of reaching a TANF time limit, or noncustodial parents of children in a long-term TANF case. These individuals were further required to display two of three specific problems affecting employment prospects: (1) lack of a high school diploma or GED and low reading or math skills, (2) a substance abuse problem, and (3) a poor work history. The remaining funds, no more than 30 percent of the grant, could be spent on people who met less stringent criteria: TANF recipients (or noncustodial parents of TANF children) who had characteristics associated with long-term welfare dependence, such as being a school dropout or a teen parent, or having a poor work history.

As WtW grant programs were being implemented beginning in 1998, it became clear that the combination of the strict eligibility criteria and the "70-30" spending requirement were contributing to slow enrollment. In response, Congress modified the WtW legislation in 1999 as part of the fiscal year 2000 appropriations legislation for the Departments of Labor, Health and Human Services, Education, and related agencies.(7) While the amendments left in place the requirement that 70 percent of WtW funds be spent on a defined category of participants, they broadened the population in two ways to make it easier for TANF recipients and noncustodial parents to qualify for WtW services under the 70 percent category:

  • TANF participants qualified simply by being long-term recipients. The amendments removed the requirement that long-term TANF recipients exhibit additional barriers to self-sufficiency, such as low skills, substance abuse, or a poor work history. TANF recipients were eligible if they had received assistance for at least 30 months, were within 12 months of reaching a time limit, or had exhausted their TANF benefits due to time limits.
  • Noncustodial parents qualified under less restrictive rules. Noncustodial parents were eligible if: (1) they were unemployed, underemployed, or were having difficulty making child support payments; (2) their minor children were receiving or eligible for TANF, or received TANF in the past year, or were eligible for or received assistance under the Food Stamp, Supplemental Security Income, Medicaid, or Children's Health Insurance programs; and (3) they made a commitment to establish paternity, pay child support, and participate in services to improve their prospects for employment and paying child support.

The definition of the 30 percent category was also broadened to include youth who have received foster care, custodial parents (regardless of TANF status) with incomes below the poverty level, and TANF recipients who faced other barriers to self-sufficiency specified by the local WIB.

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