Welfare-to-Work Grants Programs: Adjusting to Changing Circumstances. Appendix A: WTW Grants Program and Welfare Reform


The purpose of the federal WtW grants was to fund programs to help the hardest-to-employ welfare recipients, and other low-income parents obtain employment that could ultimately result in long-term economic independence. WtW funds were to especially target those parents in need of intensive services: long-term welfare recipients, high school dropouts, substance abusers, and persons approaching their TANF time limits, although the details of the eligibility criteria were modified over time. Programs funded by WtW grants, which could be operated by various public and non-public entities, were able to provide a range of employment-related services and were expected to complement state welfare reform policies and programs.

Eligibility criteria. Congress established strict 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 As originally enacted, the BBA required that WtW grantees spend at least 70 percent of their grant funds on (1) long-term TANF recipients or recipients within a year of reaching a TANF time limit, who also had two of three specific problems affecting employment prospects; or (2) noncustodial parents of children in a long-term TANF case, who themselves faced two of the three specified problems. The three problems specified in the original language of the BBA were (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.

Changes in the 1999 Amendments. 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 was 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 other related agencies. 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: (1) TANF participants qualified simply by being long-term recipients, easing the requirement that they have additional barriers to self-sufficiency; and (2) noncustodial parents qualified under less restrictive rules, namely that they had a child who had received, or was eligible to receive, some public assistance in the prior year and that they were committed to establishing paternity and paying child support.

Congress also extended the grant period from three years to five years, in part because it was clear that the start-up was taking longer than expected due in large part to the complex eligibility criteria.

Broad range of employment-related services. To address the employment and service needs of such a diverse target population, WtW grants could fund a broad range of employment services, including:

  • job creation through short-term public or private sector wage subsidies;
  • on-the-job training;
  • job readiness programs;
  • job placement services;
  • pre-employment vocational educational or job training;
  • post-employment education or training;
  • vouchers for job readiness, job placement or post-placement services;
  • community service or work experience;
  • job retention services; and
  • supportive services such as transportation or child care services, substance abuse treatment, and housing assistance (if such services were not otherwise available to the participant).

Formula and competitive grants. Congress authorized $3 billion for the WtW grants program — $1.5 billion in FY 1998 and $1.5 billion in FY 1999 — to help move welfare recipients into jobs, and included specific provisions about how the WtW funds were to be distributed. About 5 percent of the funds were set aside at the national level for Indian and Native American programs, for evaluation activities, and for federal-level program administration. The rest was distributed through competitive and formula-based grants. One-quarter of the grant funds was distributed competitively based on applications submitted to DOL (these are referred to as competitive grants). The other three-quarters of the federal WtW grant funds were allocated to states according to a formula based on each state's share of the poverty population and number of adults on welfare.

A total of $2.5 billion dollars in WtW grant funds was distributed by DOL in fiscal years 1998 and 1999: $2 billion was allocated by formula to states (formula grants), $472 million was allocated competitively to grantees that submitted applications (competitive grants), and $12.8 million was distributed to 93 tribal program grantees. The rest of the funds were devoted to national activities including evaluation and reporting. Governors designated which state agency received and administered the formula funds. The state WtW agency (usually the state workforce development or employment/training department) then distributed 85 percent of the grant to local Workforce Investment Boards (WIBs), according to the same formula used for allocation of funds to the states. Locally, competitive grantees and WIBs (primarily as formula subgrantees) were responsible for program design, administration, and service delivery.

WtW in the context of welfare reform. Federal welfare reform legislation in 1996 changed the nation's social assistance system in terms of the focus on employment and in several other ways, which influenced how WtW grant-funded programs were implemented. First, states have substantial flexibilityin 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 work requirements within federal parameters. TANF recipients are the primary target group for WtW-funded services and they are subject to state-determined policies, which means WtW programs and participants must understand those policies.

Despite the flexibility states have in TANF, however, federal law specifies that federally funded welfare payments can only be provided for a temporaryperiod. Individuals can receive federally funded cash assistance under TANF for just 60 months in their lifetime, and states can apply shorter time limits as well. Some states, though, have decided to use state funds, rather than federal funds, to pay for some cash benefits, effectively extending 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 in work activities in fiscal year 2001 and 50 percent in 2002. Most state TANF policies, therefore, stress job search activities and encourage or require recipients to find employment rapidly, rather than provide education or training. State policies and procedures regarding both time limits and participation rates influence policies regarding WtW grant-funded programs and participants.

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