DC Mayor Proposes Cuts In TANF Benefits

July 23, 2009

I’d just finished reading about the punitive aspects of TANF (Temporary Assistance for Needy Families) when Mayor Fenty released his proposals for closing the District of Columbia’s budget gap. And, sure enough, TANF recipients take a hit.

First off, the Mayor wants to take away the small benefits increase the City Council recently approved. This would leave a TANF family of three with a maximum of $428 per month–the same benefit it’s had since 2008. As I’ve written before, that’s less than 10% of what the family needs to live in D.C.

Second, the Mayor wants to initiate full family sanctions, i.e., total cut-offs of cash assistance when the parent fails to comply with work activity requirements. Or, if not full family sanctions, then something pretty close.

Now this could make sense in some cases if the cut-off affected only the parent. But, of course, it doesn’t. It denies support to the children too.

More importantly, the Mayor’s budget apparently assumes significant increases in sanctions. It proposes a $100 per month bonus for recipients who comply with their work activity requirements. Yet proposed funding for TANF is now $6.2 million less than what the City Council recently approved.

So how can program administrators avoid a cost overrun except by imposing severe sanctions on a significant number of recipients?

At the Council’s initial hearing on the proposals, the City Administrator said that the administration expects no savings from sanctions. Rather, it expects the sanctions to increase compliance and thus enable the District to cover more benefits with federal funds.

That may be the expectation, but I doubt it’s how a heightened emphasis on sanctions will work. More likely, the new policy, combined with the budget cut, will create incentives to find recipients in noncompliance, minimize efforts to resolve problems and get sanctions in place as quickly as possible.

The Administrator also said that the city would not eliminate benefits for families. Yet the proposals themselves say that “customers will have another 6 months to move to full participation” after a second-tier 50% benefit reduction has been imposed. So it seems pretty clear that those who don’t move will face full family sanctions–or such drastic benefits reductions that they might as well be total.

In 2002, the Urban Institute did an intensive study of the District’s TANF caseload. It found that many families under sanctions face “serious challenges” that “might hinder their ability to comply with work requirements or even to understand the system’s requirements.”

Shouldn’t we make very sure these families get the help they need before we cut their lifeline? And where are the reform proposals for that?


TANF Cuts Holes In the Safety Net

July 22, 2009

Back in 1996, then-President Clinton and the Republican Congress agreed to “end welfare as we know it.” And, indeed, they did.

The old welfare program–Aid to Families with Dependent Children–guaranteed benefits to all families whose resources were below state-determined eligibility levels. The replacement–Temporary Assistance for Needy Families–set a maximum lifetime participation of five years and generally linked receipt of benefits to participation in work-related activities.

States receive their federal TANF funds in a block grant. Within certain limits, they can establish their own eligibility standards, set their own benefit levels and otherwise administer the program as they see fit.

A recent report by Legal Momentum documents the results:

  • Since 1996, the number of welfare recipients has decreased by almost two-thirds, mainly due to less participation by poor single women with children.
  • The percentage of poor children receiving welfare dropped by 62% in 1995 to 24% in 2007.
  • In 2004, more than 1.7 million single-mother families had annual incomes–benefits and earnings combined–of less than $3,000.

The last figure here points to a serious problem with benefit levels. According to the Center on Budget and Policy Priorities, 2008 benefits were less than 50% of the federal poverty line in all but one state and less than 25% of the FPL in 20 states.

Both the Legal Momentum report and a 2006 review of TANF by CBPP identify a range of problems underlying the low participation rates. They include:

  • The lifetime limit, which applies even to beneficiaries who are trying to find jobs or have serious barriers to employment, e.g., mental and physical health problems. (States can waive this limit for 20% of cases, but beyond that have to foot the whole bill.)
  • Incentives to reduce caseloads. These include a caseload reduction credit that allows states to avoid penalties for failing to meet their work participation quotas and the fact that states are allowed to use unspent TANF funds for other programs.
  • Various practices that control the caseload, e.g., intake procedures that deter participation, case closures unrelated to loss of eligibility.
  • Full family sanctions, which terminate assistance to an entire family when the adult(s) don’t comply with work activity requirements.

And then there’s the whole matter of work-related activities. Current rules require that half a state’s TANF recipients be actively engaged in preparing for work, looking for work or actually working for at least 30 hours per month. (Hours can be lower for a single parent with a very young child. Both the quota and hours are higher for two-parent families.)

But what counts as work preparation is highly restrictive. For example:

  • “Job search and readiness” activities are limited to six weeks per year. Substance abuse and mental health treatment and rehabilitative services count as activities of this sort.
  • Enrollment in vocational training is limited to 12 months and can’t include participation in a program leading to a four-year or advanced degree.
  • Only 30% of recipients can be participating in vocational training at any time–unless, of course, they’re doing it in addition to their officially-sanctioned work-related activities.
  • Study time for permissible training doesn’t count as a work-related activity.
  • Participation in adult education and/or ESL courses counts only if related to a specific occupation or job. Homework time for these courses doesn’t count unless supervised.

No wonder that TANF “graduates” generally don’t achieve ongoing employment at wages sufficient to lift them out of poverty. The figures are, to my mind, truly damning. For example:

  • A fairly recent three-city study found that only 26% of “caregivers” who left TANF were working and that their wages averaged $7.44 per hour.
  • According to a soon-to-be-published study by the DC Fiscal Policy Institute and So Others Might Eat, only 45% of D.C. TANF recipients who got a job were still working six months later and at an average wage of $9.00 per hour.

Bottom line is that TANF should provide a safety net for poor families and a pathway out of poverty. And it doesn’t do either nearly as well as it should.

Legal Momentum has produced an agenda for reforming TANF when it’s reauthorized next year. I expect we’ll see others. But what we need first and foremost is a wholesale rejection of the “welfare mother” stereotypes that got us this mean program to begin with.


Safety Net Fraying For Poorest Families

July 8, 2009

A new report from the Center on Budget and Policy Priorities presents a half-full, half-empty picture of our nation’s safety net programs.

On the half-full side, the report finds that, in 2005, the safety net, as a whole:

  • Reduced the number of Americans living in poverty by 44%–or nearly 31 million.
  • Increased the average disposable income of those who remained poor from 29% to 64% of the poverty line.
  • Lifted 76% of very poor children–7.3 million–to above half the poverty line.

But this safety net includes programs that aren’t for low-income people only–notably, Social Security, unemployment insurance and the child tax credit.

Looking only at means-tested benefits, i.e., those we ordinary think of as parts of the safety net, CBPP finds that, in 2005, they lifted 14 million Americans above the poverty line.

The half-empty side is that safety net programs have become much less effective at shielding children from deep poverty, i.e., living in households with incomes below half the poverty line. For example, in 1995:

  • Aid to Families with Dependent Children lifted 76% of children above half the poverty line. The 2005 figure for TANF, which replaced AFDC, was just 21%.
  • Food stamps lifted 61% of children above half the poverty line. By 2005, the figure had dropped to 42%.

If the means-tested benefits had been as effective as they were in 1995, 1.2 million fewer children–more than half the total–wouldn’t have been below half the poverty line.

And half the poverty line is poor indeed. In 2005, it was just $10,698 for a family of four, according to the measure CBPP used. (This measure adopts changes to the official poverty measure that were recommended by the National Academy of Sciences and are, once again, pending in Congress.)

The single largest factor in fraying the safety net was the replacement of AFDC with TANF, combined with state-level TANF rules and practices that have significantly reduced participation rates. In the early 1990s, about 80% of families eligible for cash assistance through AFDC were receiving it. In 2005, TANF cash assistance was going to just 40%.

Meanwhile, parts of the safety net for childless adults were eliminated or cut back. At the federal level, the same law that established TANF barred out-of-work childless adults from receiving food stamps for more than three months in any 36-month period. By then, state-level general assistance programs, which were once their last resort, had all but disappeared.

Much has happened since 2005. The unemployment rate in June of that year was 5%. It’s now at 9.5%. Twenty-nine states and the District of Columbia have slashed key safety net programs, and the budget-balancing isn’t over.

The economic recovery package includes a number of measures that boost safety net supports, but they’ll expire by the end of 2010–at least a year (probably more) before the unemployment rate turns around. So the first order of business is to extend these measures–or, better yet, strengthen and make them permanent.

But even when the recession ends, we’re still going to have a safety net that fails to protect the poorest families. So the programs that comprise it should be revisited. The Food Research and Action Center has ideas for food stamps and other nutrition assistance. TANF is due for reauthorization next year and is clearly another prime candidate.


Benefits Will Jump Start Economic Recovery

January 29, 2009

The Coalition on Human Needs has done us all a great service. It has issued a summary of the provisions in the House economic recovery package that will benefit low-income people and others at immediate risk of hardship. Anyone who’s tried to read the legislation–or even the Appropriations Committee’s summary–knows how useful this is.

CHN also identifies shortcomings in the package, including the short shrift given to affordable housing. No funding for additional housing vouchers, despite the rising tide of homelessness. No funding to support the construction of new affordable housing, despite the job creation potential. To me, these are glaring gaps.

However, CHN’s most important message is that the provisions targeted to low-income people and laid-off workers will do more than alleviate hardship. Combined with proposed increases for K-12 education programs, they will save or create nearly two million jobs.

This is because they will quickly put money into the hands of people who will spend it to meet their needs. Mark Zandi, chief economist for Moody’s Economy.com has translated this obvious truth into dollars and cents. He says, for example, that a $1.00 increase in food stamps will generate an estimated $1.73 in near-term economic growth.

The Economic Policy Institute has crunched the numbers another way. Its analysis for CHN shows that the food stamp provisions in the House package will save or create about 185,000 jobs. Think grocery store clerks, drivers for distribution companies, workers in food processing plants, etc.

Experts, including Zandi and the Congressional Budget Office, say that tax cuts are a less effective economic stimulus. CBO is particularly unenthusiastic about reductions in the corporate tax rate. As it says, businesses will not spend more money on labor or produce more just because they have more after-tax income. They need increased consumer demand. And that’s what the proposed food stamps increase and other measures targeted to low-income people will deliver.

Nevertheless, Congressional Republicans want less spending and more tax relief in the economic recovery package. And on the House side, they clearly won’t budge. Not a single Republican voted in favor of the package the House passed yesterday.

Now, there’s a reasonable argument to be made for paring down the spending part to focus it more on jump starting the economy and perhaps also for expanding the tax part. But substituting tax relief for the major measures CHN endorses should be a non-starter. Fortunately, it looks as if it will be.


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