An Overview of Welfare Reform

An Overview of Welfare Reform

Welfare Reform & Beyond PowerPoint Presentation The Brookings Institution Spring 2002 Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 1 Session 1 Overview and History of Welfare Reform Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 2 Poverty Rates for Children in the U.S. Have Been Higher than Those for Other Age Groups 35 30 65 years and over Percent in Poverty 25

20 Under 18 years 16.2 15 18 to 64 years 10.2 10 9.4 5 0 66 968 970 972 974 976 978 980 982 984 986 988 990 992 994 996 998 000 9 1 1 1 1 1 1

1 1 1 1 1 1 1 1 1 1 1 2 Year Source: U.S. Census Bureau Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 3 Two Views of Poverty The poor are victims of their circumstances and do not have opportunities to advance The poor are responsible for their circumstances and do not take advantage of available opportunities The emphasis of antipoverty policy in the U.S. has shifted between these two views The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 emphasizes the second view

Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 4 The Measurement of Poverty The Census Bureau uses a set of money income thresholds that vary by family size and composition to determine who is poor The poverty thresholds do not vary geographically; they are updated annually for inflation but they have not kept pace with rising real incomes In determining whos poor the Census Bureau counts money income before taxes and does not include non-cash benefits, the EITC, or workrelated expenses. The National Academy of Sciences has recommended changes to deal with these and other issues. The thresholds in 2000 were: 1-person under 65 $8,959 3-person family (adult and 2 children) 13,874 4-person family (adult and 3 children) 17,524 Source: U.S. Census Bureau

Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 5 Countries that Spend More on Social Welfare (as percent of GDP) Have Lower Child Poverty Rates Cash and noncash social expenditures exclude health, education, and social services, but include all forms of cash benefits and near-cash housing subsidies, active labor market program subsidies, and other contingent cash and near-cash benefits. Nonelderly benefits include only those accruing to household heads under age 65. Source: Institute for Research on Poverty (IRP), University of Wisconsin-Madison Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 6 Government Benefits Lift Children Out of Poverty Work Pays Better than Welfare $20,000 Annual Family Income (2000 dollars) $18,000 $16,000 2000 Poverty Threshold for a Single-Parent, Two-Child Family

EITC Food Stamps $14,000 EITC $12,000 Food Stamps $10,000 $8,000 Food Stamps $6,000 $4,000 Net Earnings Net Earnings Full-time, minimum-wage job Full-time job at $7.50 an hour TANF

$2,000 $0 $0 Source: Sawhill/Thomas Brookings (2002) Annual Family Earnings (2000 dollars) Source: Center on Budget and Policy Priorities; U.S. Census Bureau Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 7 Poverty is Related to Work and Family Structure 80% Poverty Rate (2000) 70% 70% 60% 50% 40%

30% 21% 20% 10% 6% 0% Female head, no worker Female head, with worker Married couples Source: U.S. Census Bureau Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 8 Political Background to the 1996 Welfare Reform Legislation Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002

9 Overview of the Aid to Families with Dependent Children Program (AFDC) Established in 1935 as part of the Social Security Act Shared cost program between federal government and states Originally intended primarily for widows, AFDC increasingly served never-married mothers States had discretion primarily over setting income eligibility limits and benefit levels Activity requirements were weak and generally focused on education and training rather than work States were not allowed to time limit beneficiaries Beginning in early 1990s, states increasingly used waivers to try new approaches to reducing welfare dependence Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 10 Characteristics of the AFDC Caseload Majority are racial and ethnic minorities 4 percent of mothers in 1995 worked full-time, and another 5 percent worked part-time Total expected duration of all welfare spells was

13 years; more than 76 percent were expected to stay on for more than 5 years total Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 11 Efforts at Comprehensive Welfare Reform Usually Failed Nixons Family Assistance Plan (1969-1972)-failed to pass Congress Carters Program for Better Jobs and Incomes (1977)--failed to pass Congress Reagans 1981 Budget Act changes--moderate cutbacks Reagans New Federalism (1982)--never introduced in Congress Family Support Act (1988)--incremental reform Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 12 Why Did Welfare Reform Legislation Pass in 1996 After Many Previous Failures Dramatic caseload increases after 1988 fostered perception that program was out of control Public opinion

Public opinion had not united around all of the proposals in PRWORA: public had shifted to overwhelming support for work requirements for custodial parents, while remaining more divided on hard time limits and family caps Republicans in Congress were not trusted more than President Clinton on welfare reform issues in 1996 The AFDC program was very unpopular because seen as anti-work and anti-family. The public was willing to accept almost any alternative to the status quo Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 13 Why Did Welfare Reform Legislation Pass in 1996 After Many Previous Failures Cont. Social Science knowledge and evaluation studies increased policymaker concern about intergenerational transmission of welfare receipt and length of welfare spells gave support to work first approaches Budgetary considerations: Republicans needed to find budget savings (especially from cuts in Food Stamps and benefits to legal immigrants) in order to finance tax cut and budget balancing promises in the Contract with America State experiments under waivers increased confidence in

innovative capacity of states Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 14 Why Did Welfare Reform Legislation Pass in 1996 After Many Previous Failures Cont. Critical role for political bargaining: Bill Clinton promised to end welfare as we know it Republicans in Congress committed to welfare reform by Contract with America Moderate Democrats in Congress followed President Clinton to the right in order to avoid being seen as more liberal than President Clinton on welfare issues Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 15 Session 2 A Primer on the Major Programs Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 16

Overview of the 1996 Welfare Reform Law Temporary Assistance for Needy Families Non-marital Births Supplemental Security Income for Children Child Support Enforcement Welfare for Non-citizens Child Care Food Stamps Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 17 Five Components of TANF 1. End Cash Entitlement 2. Block Grant Funding 3. Work Requirements 4.

Sanctions 5. 5-Year Time Limit Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 18 Purposes of TANF 1. Provide assistance to needy families with children 2. End welfare dependency by promoting job preparation, work and marriage 3. Prevent non-marital pregnancies 4.

Encourage formation and maintenance of two-parent families Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 19 Provisions in Welfare Reform Law Designed to Reduce Non-marital Births Congressional findings on the negative effects of non-marital births Three of four TANF purposes address family formation Performance bonuses tied to purposes of law Illegitimacy reduction bonus

Require teens to attend school Require teens to live at home or other supervised setting Abstinence education Child support enforcement Paternity establishment National goals to prevent teen pregnancy States establish numerical goals for reducing non-marital births Annual ranking of states on non-marital pregnancy ratios by HHS Allow family cap Allow reduction in cash benefits for non-marital births Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 20 Elements of the Work Support System Earned Income Tax Credit (EITC) Food Stamps and Child Nutrition Medicaid and SCHIP Child Care Housing Child Tax Credit Child Support Enforcement Workforce Development & Job Advancement Services State Income Supplements Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002

21 Support for Working Families Increases Dramatically, 1984-1999 51.7 Billions of 1999 Dollars 50 40 30 Child Care SCHIP Child Tax Credit Medicaid EITC 20 10 5.6 0 Spending in 1999 under: 1984 Law

1999 Law Source: Congressional Budget Office Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 22 Session 3 How States Have Responded Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 23 Under TANF States Have Discretion To: Set eligibility limits and benefit levels for cash benefits (as before) Define who receives various benefits and services Set income supplements for working families Offer other carrots Set stricter sticks than those in federal law Spend funds on a variety of services other than cash benefits Save block grant funds for economic downturns Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 24

States Have Very Different Resources Under the TANF Block Grant Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 25 Most States Have Allowed Maximum Benefit Levels to Continue to Decline with Inflation Between 1994 and 2000 maximum benefits for a family of 3: Declined more than inflation in 7 states Declined equal to inflation in 29 states Declined less than inflation in 12 states Increased in real terms in 3 states Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 26 Many States Have Enacted Earnings Supplementation Policies to Help Low-income Working Families 47 states have changed earnings disregard policies 16 states have adopted state earned income credits And enacted other policies to help them work: All states adopted more generous auto asset policies

44 states increased asset limits 40 states ended 100-hour work limit for two-parent families 11 extend Transitional Medicaid eligibility beyond 12 months Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 27 TANF and State EITC Policies do not Provide Substantial Earnings Supplementation to Many Low-income Working Families In the 13th month of benefit receipt: 4 states would give a family of 3 working 20 hours per week at minimum wage nothing, 21 less than $200 per month, and 26 more than $200 per month 22 states would give a family of 3 working 35 hours per week at minimum wage nothing, 21 less than $200 per month, and 8 more than $200 per month 42 states would give a family of 3 working 35 hours per week at $8.00 per hour nothing, 7 less than $100 per month, and 2 more than $100 per month All figures are for 2000 Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 28

Many States Have Enacted Sticks to Encourage Work Stronger than Those Required by TANF Initial Work Requirements: 43 states require work activities in less than 24 months 20 states do not exempt caregiver of youngest child of 6 months or older Sanctions: 15 states have 100% sanction for first-time violators 21 states have worst case sanction of 100% for at least three months 22 states apply sanctions to food stamps or Medicaid Time Limits: 6 states have lifetime time limits less than 60 months 14 states have intermittent time limits less than 60 months Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 29 States are Responding to Time Limits in Very Different Ways A few states (e.g., MI, NY) will pay for those hitting time limits out of state funds Some states will use state funds to pay benefits to children in families hitting time limits Some states (e.g., WA) will exempt most families

hitting caseloads Ohio uses outreach to ensure that families hitting time limits retained eligibility for Food Stamps and Medicaid Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 30 But Many States Have Also Been More Reluctant to Impose Strong Sticks to Discourage Non-marital Births 23 states adopted family caps, all by 1997 No states adopted teen mother exclusions Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 31 What Factors Explain Overall Patterns of State Policy Choices? Little evidence of race to the bottom Some evidence of emulation of best practices For sticks policies, political factors are

associated with more conservative policy choices States that receive larger TANF grants per poor person are likely to have more generous income supplementation policies Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 32 States Have Shifted their Funding Priorities Away from Cash Assistance Emergency Assistance: $3.2 11% $31.1 $ in billions JOBS: $1.6 5% $22.8 Other:

$4.3 19% Child care: $2.3 10% Admin: $3.4 11% Work activities: $2.3 10% Cash: $21.9 73% Admin: $2.4 11% Cash: $11.5 50% 1995 .

2000 Source: Congressional Research Servive Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 33 Proportion of TANF Funds That Were Left Unspent, 1997-2001 Source: Center on Budget and Policy Priorities Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 34 Implications for TANF Reauthorization Absence of race to the bottom weakens case for increased federal control of TANF choices-but things may change during a recession States may respond to time limits in very different ways Poorer states need more resources to carry out more effective work support policies States will need more resources to carry out both safety net and work support policies during a recession

Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 35 Session 4 Welfare Reform Results to Date I: Caseloads Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 36 AFDC/TANF Caseload, 1960-2001 Millions of Familie s TANF Caseload, 2001 5 2.1 2.05 2 O N D J F M A M J

J A S Month 4 3 2.103* 2 1 2001 1999 1997 1995 1993 1991

1989 1987 1985 1983 1981 1979 1977 1975 1973 1971 1969 1967 1965

1963 0 1960 Millions of Families 6 2.2 2.15 Year *Based on nine month average (October 2000-June 2001); Recessions are noted by shaded area. Source: Congressional Research Service and U.S. Department of Health and Human Services Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 37 Declines in Overall TANF Caseloads Since the Early 1990s Resulted From Hot Economy Welfare Reform Policies to Make Work Pay Source: Rebecca Blank, September 2001

Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 38 Declines in Caseloads Have Varied Dramatically Across States Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 39 Differences in Federal Food Stamp Payments Do Not Compensate for TANF Funding Differences Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 40 Differences in States Rates of TANF Caseload Decline Result From: State policy choices Strictness of work requirements, especially Immediate work requirements Strict policies on exempting mothers of young children Strict sanctions policies Generosity of benefits and earnings disregards

State economic conditions (e.g., unemployment rates) Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 41 Caseload Change Has Been Inconsistent Across States Over the Past Year Source: Center for Law and Social Policy Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 42 The TANF Caseload is Changing Over Time increasing share of of cases are child only increasing share of cases live in large cities But: national caseload does not show significant change in characteristics of those remaining on the rolls Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 43

Annual Average Food Stamp Participation, 1969-2001 25000 20000 18440 * 15000 Participants (Thousands) Monthly Food Stamp Participation Rate, 2001 10000 18440 19000 18500 18000 17500 17000 16500

16000 J 5000 F M A M J J A S Months Year Source: U.S. Department of Agriculture Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002

Note: Recessions are noted by shaded area;* Participation for January-October, 2001 44 2001 1999 1997 1995 1993 1991 1989 1987 1985 1983 1981 1979

1977 1975 1973 1971 0 1969 Number of Participants (Thousands) 30000 O Participation Rate of All Eligible Children Participation Rates in the Food Stamp Program Have Fallen Dramatically 100 90 89.5

80 67.7 70 60 50 40 30 20 10 0 1994 1995 1996 1997 1998 1999 Year Source: U.S. Department of Agriculture Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002

45 Food Stamp Participation Rates Have Fallen Because: Low-income working families: leave TANF without informing welfare office unaware of eligibility have trouble with office visits are not willing to put up with hassle State welfare offices: divert families erect barriers to avoid federal sanctions do not follow up with TANF leavers Federal policies, especially quality control system Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 46 Annual Average Number of Unemployment Insurance Claims, 1967-2001

Unemployment Insurance Claims, 2001 M onthly Average (Thousands) Average Number of Claims (Thousands) 700 600 600 454 400 200 0 J 500 F M A M J J

A S O N Months 400 367 * 300 200 100 0 Year Source: U.S. Department of Labor Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 Note: Recessions are noted by shaded area; *Average for January-November, 2001 47

Annual Average Unemployment Rate, 1961-2002 Annual Average Percentage 10 8 6 5.55* 4 2 0 2002 Note: Recessions are noted by shaded area, *Average for January-February, 2002 2000 Source: Bureau of Labor Statistics Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 1998

1996 1994 1992 1990 1988 1986 1984 1982 1980 1978 1976 1974 1972

1970 1968 1966 1964 1962 Year TANF Leavers Who Lose Their Jobs Often Do Not Qualify for Unemployment Insurance Because: they leave work voluntarily because of child care problems, illness, etc. they have not worked enough or have insufficient earnings to qualify (most recent quarter issue) they are not available for full-time work Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 49 Small Percent of Eligible Families Receive Child Care Subsidies Studies show Child Care subsidies are received by only 12%

of families who meet federal income eligibility guidelines and by less than half of those leaving welfare Many low-income families have access to unpaid or informal care States ration care by: Setting eligibility below the federally-permitted 85% of state median income Establishing administrative processes and waiting lists that discourage applications Co-payment requirements or limited reimbursement of providers Source: U.S. Department of Health and Human Services Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 50 Session 5 Welfare Reform Results to Date II: Economic Well-Being Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 51 Percentage of Married, Single, and Never-Married Mothers Working,

1985-2000 80 Married Mothers 75 Percentage of Mothers Working Single Mothers 70 Never Married 65 65.8 60 55 50 45 40 39.3 35 85 9

1 86 9 1 87 9 1 88 9 1 89 9 1 90 9 1 91 9 1 92

9 1 93 9 1 94 9 1 95 9 1 96 9 1 97 9 1 98 9 1

99 9 1 00 0 2 Year Source: Gary Burtless, The Brookings Institution, 2001 Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 52 Overall Unemployment Rate Vs. Rate Among Women who Maintain Families 9 8 7 6 5 4 3 2 1 Unemployment Rate Among Women who Maintain Families

Overall Unemployment Rate D ec em be r 20 00 Ja nu ar y 20 Fe 01 br ua ry 20 01 M ar ch 20

01 Ap ril 20 01 M ay 20 01 Ju ne 20 01 Ju ly 20 01 Au gu st Se 20 pt 01 em be r2

00 O 1 ct ob er 20 N ov 01 em be r2 D 00 ec 1 em be r2 00 Ja 1 nu ar y 20

02 0 Source: Bureau of Labor Statistics Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 53 State Leavers Studies: Employed After Leaving Welfare Percent of Welfare Leavers 80 74.7 70 60 56.8 50 40 30 20 10

0 Employed at Interview Ever Employed Source: Congressional Research Service Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 54 Work Pays Better than Welfare Annual Family Income (2000 dollars ) $20,000 $18,000 2000 Poverty Threshold for a Single-Parent, Two-Child Family EITC $16,000 Food Stamps $14,000 EITC

$12,000 Food Stamps $10,000 $8,000 Food Stamps $6,000 $4,000 Net Earnings Net Earnings TANF $2,000 $0 $0 Full-time, minimum-wage job Full-time job at $7.50 an hour

Annual Family Earnings (2000 dollars) Source: Isabel Sawhill and Adam Thomas, Brookings Institution, 2001 Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 55 Family Income by Source for Female Heads with Children (Bottom Fifth), 1993-2000 8,597 7,690 Income 6,941 8,080 1,196 1,158 7,759 7,866 7,447

1,533 7,480 1,457 1,311 1,333 1,068 1,373 3,298 4,659 4,758 3,380 4,121 3,809 Other 3,681

Means-tested 4,448 Earnings 3,148 EITC 2,500 1,377 216 1993 1,774 1,906 1,890 1,998 395 495

582 570 598 740 888 1994 1995 1996 1997 1998 1999 2000 1,608

Year Note: Components do not equal total because taxes are not shown Source: U.S. Census Bureau Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 56 Family Income by Source for Female Heads with Children (Second Fifth), 1993-2000 17,631 16,126 15,476 15,154 2,200 2,195 Income 1,919 2,328 15,359

14,649 13,653 16,567 2,212 2,636 2,433 2,089 3,289 1,927 4,080 5,678 4,901 5,605 6,415 Other 6,477

11,710 9,931 Means-tested Earnings EITC 8,671 7,069 6,898 6,675 1,121 1,349 1,421 1,615 1,942 2,040 2,084

1994 1995 1996 1997 1998 1999 2000 5,708 4,979 701 1993 Year Note: Components do not equal total because taxes are not shown Source: U.S. Census Bureau Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002

57 Child Poverty Rates Have Fallen Since 1993 1996: TANF Enacted 30 Percent in Poverty 25 Percent in Poverty, 1960-2000 20 20.5% 15 16.2% 12.2% 10 5 Percent in Poverty by Broader Definition, 1978-2000

9.6% 0 Year Source: U.S. Census Bureau Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 58 Measures of Food Insecurity Have Not Increased for Children in Households 20 18 17.4 16 14.9 Percent 14 Percent of Food Insecure without Hunger

12 10 8 6 5.8 3.7 4 Percent of Food Insecure with Hunger 2 0 1995 1996 1997 1998 1999 Year Source: U.S. Department of Agriculture Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002

59 Child Victimization Rates, 1990-1999 Victimization Per Thousand 20 15 13.4 11.8 10 5 0 1990 1991 1992 1993 1994 1995 1996

1997 1998 1999 Year Source: Congressional Research Service Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 60 Other Important Research on Impacts RAND Study Synthesizing Available Academic Research Positive impacts on caseload, employment, earnings, poverty, and family income Negative impacts on the use of Medicaid and food stamps Uncertain but weakly positive effects on marriage and fertility MDRC Studies of Adult Outcomes Under State Waivers Work requirements increase employment and earnings but not income Work requirements combined with earnings supplements do increase income

MDRC Studies of Child Outcomes Under State Waivers No adverse impacts from work requirements Positive impacts when work requirements combined with earnings supplements for school aged kids Some evidence of negative impacts for adolescents Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 61 Session 6 Welfare Reform Results to Date III: Family Formation Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 62 Family Formation Reducing Teen Pregnancy and Childbearing Reducing Non-marital Childbearing Among Adults Encouraging Unmarried Parents to Get Married Helping Married Parents Stay Married Ensuring that Non-custodial Parents Fulfill their Responsibilities Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002

63 Poverty Rate for Children in Female-Headed and Married-Couple Families, 1974-2000 45 36.4 35 30 27.9 25 Female-Headed 20 Married 15 10 5 5.3

4.7 20 00 98 19 96 19 94 19 92 19 90 19 88 19 86 19

84 19 82 19 80 19 78 19 76 19 74 0 19 Percent in Poverty 40 Year Source: U.S. Census Bureau Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002

64 The Impact of Changes in Family Structure on Child Poverty Rates 25% 20% 18.3 15% 14.9% Actual Child Poverty Rate 10% 13.9 Child Poverty Rate if no change in the percent of female-headed families 5% Source: Isabel Sawhill and Adam

Thomas, Brookings Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 98 19 96 19 94 19 92 19 90 19 88 19

86 19 84 19 82 19 80 19 78 19 76 19 74 19 72 19 19 70

0% 65 Teen Birthrate, 1980-2000 62.1 53 48.5 50 40 30 20 10 2000 1999 1998 1997 1996 1995

1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982

1981 0 1980 Rate per 1,000 Women 15-19 60 Year Source: National Center for Health Statistics Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 66 What Has Contributed to the Decline in Teen Pregnancy and Birth Rates? New or more effective efforts to prevent teen pregnancy New messages associated with welfare reform More conservative attitudes Fear of AIDS and other STDs New forms of contraception Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002

67 What Do We Know About Effective Teen Pregnancy Prevention Efforts? Two different multi-site programs with rigorous evaluation reduced pregnancies by one half At least 4 different sex education curricula have been carefully evaluated and found to be effective Programs that teach about contraceptives do not increase sexual activity Jury still out on abstinence education Media campaigns are a promising new approach Source: National Campaign to Prevent Teen Pregnancy Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 68 Number of Births, Birth Rate, and Percent of Births to Unmarried Women, 1940-2000 1400 1345.9 Number of Births (1000s) Birth Rate Per 1,000 Women 15-44

Percent of Births to Unmarried Women 60 1000 50 45.2 800 40 33.2 600 30 400 20 200 10 7.1

89.5 0 3.79 1940 0 1950 1960 1970 1980 1990 2000 Year Source: National Center for Health Statistics Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 69

Rate or Percent Number in 1000's 1200 70 Contribution of Teen Birth Rate to Nonmarital Birth Ratio 35% N o n m a r ia l B ir t h R a t io 34% 34.1% 33% 33.0% 32% Nonmarital Ratio if no decline in teen birth rate Actual Nonmarital Birth Ratio 31%

30% 29% Year Source: National Center for Health Statistics, 2000 and 2001. Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 70 Percent of Children Living with Two Natural, Step, or Adoptive Parents 90% Percent of Children 85% 85.2 80% 75% 69.9 70% 65%

60% 55% 50% Year Source: U.S. Census Bureau Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 71 Child Support Collections and Paternity Establishments Are Up 1,600 $17 1,555 $15 1,200 $13 $11 1,400

1,000 9.8 $9 800 676 $7 600 $5 400 $3 200 $1 0 1994

2000 1994 Paternities Established in Thousands Child Support Collections in Billions 17.9 2000 Year Source: U.S. Department of Health and Human Services Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 72 Session 7 Issues for TANF Reauthorization I: Funding and Program Goals Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002

73 Issue: Overall Level of TANF Funding Options: Maintain current funding level (TANF funding of $16.5 billion per year; States required to spend 7580% of FY 1994 level) Lower funding Adjust block grant for inflation Add adjustment mechanism for economic conditions Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 74 Issue: TANF Allocation Formula Options: Do nothing Restore expired supplemental grant Gradually adjust funding formula to give greater weight to number of poor children in a state Preserve grant levels for richer states, while adding funding for poorer states to bring them up to national median in per-poor-child allocations Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002

75 Effect of Restoring Supplemental Grant on State Funding Differentials Note: Reinstated supplemental; total annual cost = $300 million Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 76 Effect of Adjusting TANF Grant for Inflation on State Funding Differentials* Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 77 Issue: TANF Funding and Recession Options: Do nothing Restore and improve contingency fund, and change eligibility criteria to make it more accessible for states Make TANF block grant explicitly counter-cyclical (e.g., by tying it to the unemployment rate) Allow states to put TANF dollars in rainy day funds

Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 78 Issue: Goals of TANF Options: Do nothing Rewrite purposes to include poverty reduction Rewrite purposed to include child well-being Rewrite purposes to give increased attention to marriage, responsible fatherhood, and/or teen pregnancy prevention Increase reporting on goals and outcomes Revise rewards and penalties for performance Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 79 Session 8 Issues for TANF Reauthorization II: Family Formation Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 80

Issue: Teen Pregnancy Options: Do nothing New emphasis on reducing teen pregnancy fund programs that work establish a national clearinghouse on programs that work make reducing teen pregnancy a purpose of the law Reauthorize abstinence education change funding level give states more flexibility to define program allow spending on programs that include information about birth control Tie the illegitimacy bonus in current law more closely to state efforts Experiment with complete elimination of welfare benefits for young unwed mothers Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 81 Issue: Marriage Options: Do nothing Require state plans to describe activities to promote family formation and marriage

review state programs treatment of single vs. married parents Grants for promoting marriage and reducing out-ofwedlock births TANF set-aside for marriage Demonstration and evaluation fund Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 82 Issue: Responsible Fatherhood Options: Do nothing Changes in child support enforcement, including pass-through Education, training, employment programs Demonstration and evaluation fund Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 83 Session 9 Issues for TANF Reauthorization III: State Flexibility and Tribal TANF Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002

84 How Much State Flexibility? Time Limits and Sanctions Work Participation Standards Job Retention and Advancement Tribal TANF Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 85 Issue: Time Limits Options: Do nothing: 5 year federal limit with 20% exemption End 5 year federal limit: let states decide Stop clock or allow earn back of time for work or other circumstances Provide public jobs after time limit Modify 20% exemption

Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 86 Issue: Sanctions Options: Do nothing: states must reduce or terminate benefits for non-compliance Require full-family sanctions Prohibit full-family sanctions Require pre/post-sanction review and services Ensure that sanctions can be cured Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 87 Issue: Work Participation Standards Options: No change: 50% of families in work activities 30 hours/week (90% for 2parent families). Limits on education and training. Caseload reduction credit. Raise work participation rates Increase number of required hours End higher rate for two-parent families Allow more education, training, and treatment Let states define allowable activities Replace caseload reduction credit with employment credit

Require assessments or universal engagement End state waivers Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 88 Issue: Education, Training, Job Retention and Advancement Options: Do nothing: Some flexibility in current law; bonus for job entry, retention, wage gain Strengthen performance goals and incentives Allow more education and training - alone or combined with work Fund research and demonstration projects Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 89 Issue: Making Work Pay and Supplementing Incomes Options: Do nothing Raise the minimum wage and index it for inflation Add a second tier to EITC and integrate with Child Tax Credit

Provide federal incentive for states to expand their EITCs Encourage states to strengthen work supports by increasing TANF funding Improve application for food stamps and other non-cash benefits, provide incentives to increase access Expand Medicaid coverage to parents Increase funding for child care Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 90 Issue: Tribal TANF Options: Do nothing: Tribes opt to run TANF; negotiate time limits/ work requirements; define service areas/population. Funds transferred from states federal block grant. Create separate federal tribal block grant Access to performance bonus and contingency fund Strengthen equitable access for tribal members served by states Research, evaluation, technical assistance Promote economic development Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 91

Session 10 Issues for TANF Reauthorization IV: Work Supports Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 92 Work Supports Make Work Pay and Supplement Income Child Care Provide Safety Net for Unemployed Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 93 Existing Work Supports 51.7 Billions of 1999 Dollars 50 Child Care

SCHIP 40 Child Tax Credit Medicaid 30 EITC 20 10 0 5.6 Spending in 1999 under: 1984 Law 1999 Law Source: Congressional Budget Office Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 94 Issue: Making Work Pay and Supplementing Incomes Options:

Do nothing Raise the minimum wage and index it for inflation Add a second tier to EITC and integrate with Child Tax Credit Provide federal incentive for states to expand their EITCs Encourage states to strengthen work supports by increasing TANF funding Improve application for food stamps and other non-cash benefits Expand Medicaid coverage to parents Increase funding for child care Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 95 Issue: Child Care Options: Do nothing; many new investments already Provide more federal funding for child care More funding for Head Start and universal pre-K Allow states to spend a higher percentage of TANF money on child care Increase quality set asides within child care block grant Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 96

Issue: Providing a Safety Net for the Unemployed Options: Do nothing Provide a contingency fund to pay for increase in caseloads during recessions Reform Unemployment Insurance Encourage states to provide community service jobs Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 97 Session 11 Issues for TANF Reauthorization V: Immigrant Issues Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 98 Non-citizen Declines in Welfare Programs, 1994-1999 19.9% 14.8% 4.9% 2.0%

5.7% 17.0% 7.7% 3.9% -15% 1994 -32% 1999 -48% -60% TANF SSI Food Stamps '94-'99 Decrease (if significant)

Medicaid Source: Based on Urban Institute analyses of the 1995 and 2000 CPS Data Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 99 Issue: Non-citizens Options: Status Quo 1996 dividing line 5-year ban and permanent ban eligibility variations across programs exceptions for emergencies, education and training, etc. order of decline: SSI, food stamps, TANF, Medicaid Expand some or all benefits for pre-1996 entrants Expand some or all benefits for post-1996 entrants

food stamps restoration; about $.4 billion per year TANF; no federal cost, but unfunded mandate Medicaid; about $2 billion per year SSI; about $1-1.5 billion per year (without Medicaid) Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 100 This is the end of the presentation. If you are viewing this in Internet Explorer, click here to return to the WR&B PowerPoint Presentation webpage. Prepared by The Brookings Welfare Reform & Beyond Initiative, Spring 2002 101

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