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Community Impacts of Welfare Reform

Community Impacts of Welfare Reform. Personal Responsibility and Work Opportunity Reconciliation Act (PL104-193) in August 1996

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Community Impacts of Welfare Reform

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  1. Community Impacts of Welfare Reform • Personal Responsibility and Work Opportunity Reconciliation Act (PL104-193) in August 1996 • Temporary Assistance to Needy Families (TANF) consolidates Aid to Families with Dependent Children, Emergency Assistance, and Job Opportunity and Basic Skills into a block grant

  2. Work Provisions of TANF • TANF recipients must secure a job after two continuous years on assistance • States must reduce the TANF rolls (working or off assistance) by at least 25% for single-parent headed households and 75% of two-parent households by FY97 • States have the discretion to exempt single parents with children under the age of one

  3. Work Provisions of TANF • A variety of activities can be counted toward meeting work requirements • unsubsidized or subsidized employment • on-the-job training • work experience • community service • 12 months of vocational training

  4. Work Provisions of TANF • Welfare to Work Challenge Fund • 3 billion over two years to provide grants to states and local communities for employment assistance to hard to employ TANF recipients • receiving welfare for 30 or more months and face removal from rolls in 12 months • face two or more labor market deficiencies (no diploma, low reading or math skills, in need of substance abuse treatment, or poor work history • Monies are available formula grants to states (15%) and 85% through Private Industry Councils and competitive grants to local communities

  5. Cap on TANF Eligibility • Families who have received assistance for five cumulative years will no longer be eligible for cash assistance • States may exempt up to 20% of the caseloads due to hardship factors • States can make the lifetime cap shorter • The five year limit does not apply to child-only cases (where there is no eligible adult)

  6. Food Stamp Eligibility • Able-Bodied adults 18-50 years of age without dependents must work 20 hours a week to receive food stamps and can receive only 3 months of benefits over a 3 year period • Benefit levels were reduced 3% across the board

  7. Teen Parents • An unmarried teenage parent must now live with a responsible adult or in an adult-supervised setting in order to qualify for TANF • It is the responsibility of the states to assist teen parents in securing an adult-supervised facility when necessary • Teen parents with no high school degree must be enrolled in high school or a GED program or some sort of alternative education or training program approved by the state • In order to prevent teenage pregnancy, $50 million a year are made available to states to promote abstinence programs

  8. Impact on Immigrants • Legal Immigrants who received SSI and Medicaid benefits before August 22,1996 remain eligible • Refugees, political asylees, and those who deportation has been withheld are eligible for 7 years • All aliens lost eligibility for food stamps - they become eligible after ten years of working • Legal immigrants are not eligible for most federal assistance for the first five years -- after then they may qualify for TANF depending on state regulations -- eligible for food stamps after 10 years

  9. Child Care Funding • New Child Care and Development Fund • Block Grant • Funds used to address child care needs of low-income working families • A minimum of 4% of state and federal funds must be set aside to improve the quality and availability of safe child care for all families • States must establish a referral service for parents who need assistance in selection of a child-care provider • States may transfer up to 30% of TANF block grant to the child care block grant

  10. Devolution • Devolution is a trend that demands local government to assume greater responsibility for program design, implementation, evaluation, and strategic resource allocation decision • The hypothesis is that local governments, officials, and citizens are ready to discharge these responsibilities with more efficiency than “big government”

  11. Impacts of Devolution • Rural and Urban-Core communities are overwhelmed with the demands of devolution • typically do not have any full-time administrative staff--often just volunteers • Many local officials little knowledge and experience in fiscal and administrative management, evaluation, performance-based budgeting, and fiscal impact analysis

  12. Impacts of Devolution • Shifting decision-making to local communities means shifting decision-making to identifiable individuals • Policies may produce identifiable winners and losers (among service delivery agencies and recipients) within the community • Communities that are rural or very urban are unable to be as competitive for block grant funds • Communities dependent on high levels of welfare payments will be adversely impacted

  13. Impacts of Devolution • Geographic Isolation and low population density in rural places making training and program delivery expensive to deliver to disperse population

  14. Devolution and Welfare Reform • Communities must • move welfare recipients into jobs (or something like them) • find ways to provide child care and transportation for new workers • provide stop gap support to newly employed welfare recipients if their wages fall short of their monthly needs (and they most likely will) • cope with economic adjustments required when transfer dollars no longer flow through their economies

  15. Assumptions • There are enough jobs to absorb the influx of welfare recipients • If not enough jobs are available the economy can grow to absorb them before the 60 month lifetime limit ends • Everyone is ready to enter the workforce • New jobs will pay enough to welfare recipients that they will no longer need public assistance • Shortfalls between wages and monthly costs can be absorbed by private and voluntary sources within communities

  16. Welfare Recipients 1993-1998

  17. How Do We Define Success • Welfare rolls have decreased precipitously • States that do not meet targeted cut-off points will loose funding • Are people really moving off welfare and to work?

  18. Reasons Why People Leave TANF Rolls -- Successes? • Changing requirements mean people are no longer eligible • Children may have aged-off • Marriage • Requirements are too great to receive benefits • Sanctions for non-compliance • Jobs obtained -- just one reason for leaving rolls

  19. Early Outcomes of Welfare Reform • Nationally, nearly 50% of parents who have left welfare, since the reform, do not appear to have a documented job • The vast majority of welfare recipients who have been successful in securing employment are being paid wages that keep them embedded in poverty • Many of these jobs offer few opportunities to climb the career ladder • Few of these jobs offer benefits of any kind

  20. Outcomes - Workforce Investment Act • 1998 legislation sending block grant formula funds and competitive grants to states and local governments to • invest in workforce efforts that serve to increase employment, retention, and earnings of participants • increase the occupational skill attainment of those who enter the workforce investment system • Help improve the quality of the workforce and as such the productivity and competitiveness of the workforce • Reduce dependence on welfare by equipping individuals with the skills they need to effectively move into the workforce

  21. Workforce Investment Act • Targeted audiences include adults, dislocated workers, and youth • States must establish local Workforce Investment Boards • These boards must be a majority (51%) of business sector representatives • The chair must be a business person • Must assist the governor in developing a five year investment plan • Monitor and evaluate • Determine how money will be distributed • Develop performance measures

  22. Workforce Investment ActState Board • State boards must assess labor market needs including • needs in current and projected employment • skills needed to capture these opportunities • workforce skill existing and the match with current needs • type and availability of workforce investment activities across the state • prepare an annual report to the US Department of Labor

  23. Workforce Investment ActLocal Board • Prepare a strategic plan for local workforce investment for subsequent submission to the governor for approval • Undertake the development of a one-stop and providers of youth services • Identify and approve eligible providers of training and intensive services • Prepare the local budget • Provide oversight to the work that is being done locally • Develop performance measures

  24. Workforce Investment ActLocal Board • Contribute to the development of an information system that helps contribute to the understanding of the dynamics of the labor market • workforce investment needs • current and projected employment opportunities • education and credentials needed to qualify for these jobs • Seek to engage employers in hiring participants in the one-stop centers

  25. Workforce Investment ActYouth Involvement • Youth Service Providers participate by • tutoring, teaching study skills, and encouraging H.S. completion • involvement with alternative H.S. programs • Summer employment opportunities that provide career exploration and occupational skills • adult mentoring programs of at least one year • comprehensive guidance and career counseling • opportunities for leadership development

  26. Potential Community Responses • Individual Development Accounts • Welfare to Work raises people only to the poverty level and does not provide assets to buffer live events • There is a great deal of disparity of assets in the nation, even more than income disparity

  27. The Asset Gap

  28. How IDAs Work • Participants (welfare recipients and other qualified low-income citizens) open an account • Typically participants save $15 a month and the savings are matched 6:1 • Money can be used for home purchase, education, or starting a small business

  29. Growth of IDAs • There are over 100 IDA programs that are on-going in the US • 24 states have includes some form of IDAs as part of their state’s welfare reform plan • In 13 sites, the Corporation for Enterprise Development administers over 2,000 accounts • this will be the first large-scale evaluation • early results seem to be promising

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