e-Texas Recommendations

Texas should take full advantage of the flexibility that Congress has granted to the states in the new welfare reform law to provide employment-related services to all welfare recipients before they exhaust their five-year lifetime limit for federal assistance. Texas should restructure its welfare program to provide additional alternatives to the monthly cash grants eligible families receive, and to customize assistance and services according to individual needs. Texas should use existing resources to develop innovative strategies to end dependence on government benefits. To accomplish this task, the 2001 Legislature should take immediate action to resolve pressing issues and make necessary changes to the current program. The Legislature also should establish an interim interagency task force to recommend further changes to the 2003 Legislature.

Background

Temporary Assistance to Needy Families (TANF) is the federal welfare reform program that replaced the nation’s traditional welfare program in 1996.[1] Texas had its own welfare reform program already under way and received a waiver under federal law that will continue the Texas welfare program until March 2002. When the waiver expires, Texas must adopt the more stringent requirements of federal law, and Texas welfare recipients who have been on the rolls since October 1999 will have only two years and six months left on their federal time limit clock.

The TANF law allows states broad flexibility to spend their welfare funds on any of four purposes:

The waiver expiration gives the state an opportunity to develop a new program that would build on state reforms initiated before the federal law was enacted. The new program will need to resolve fundamental equity, effectiveness, and accountability problems as well as adverse unintended effects created under existing state policies. Texas needs to use the flexibility in the law to explore options to end the cycle of dependency on welfare, because research shows children on welfare are more likely to become dependent on welfare as adults than other children who are not on welfare.

Cycles of Welfare Dependency

Research indicates that daughters from welfare families are much more likely to participate in the welfare system themselves at a later date, and are more likely to have births in general and premarital births in particular.[2] The National Center for Policy Analysis found that while about half of people who are poor in any month remain poor for as long as two years, more than half of welfare recipients will remain in poverty for 10 or more years.[3] A 1998 University of Wisconsin-Madison study shows a clear intergenerational link to welfare that goes beyond the effects of intergenerational poverty alone.[4]

Such findings strongly indicate the need to find alternatives to welfare that increase income, opportunities, and independence for families. The research also indicates that a blanket policy of exemptions from work requirements that results in long stays on welfare may increase the likelihood that the children involved will become dependent on welfare as adults. The state can attempt to counter the negative effects of welfare dependency by assisting parents in avoiding welfare, increasing their earned and unearned income, and reducing barriers to their employment. Such efforts may not guarantee that the children of welfare recipients will not go on welfare as adults—since experts still debate the causes of intergenerational welfare dependency—but these options still offer the best hope of breaking the cycle.

The research may have the same implications for the state’s “payee” families, which are families whose parents or other relatives are not eligible for assistance or have exhausted their state time limits for receiving TANF and receive funds only on behalf of the children. Because the parents in these families do not receive assistance for themselves, the state does not subject them to work requirements or state time limits, and they can continue to receive welfare for their children until the children are grown, as long as they meet other eligibility requirements. The federal, five-year lifetime limit applies to the whole family but only for months when the adult in the family receives federal assistance. Because the adults in payee cases do not receive financial assistance for themselves, but only for the children, the five-year lifetime limit does not apply. Finding alternatives to welfare for these families may be critical to the future financial independence of the children in these families.

Texas’ current TANF program has underlying problems that prevent the state from ending welfare dependency. These problems involve caseload levels, federal and state time limits, work participation rates, exemptions from and sanctions for not complying with work requirements, and the uneven geographical distribution of “Choices,” the state’s program that assists TANF adults in looking for work. A new state plan could focus on ending dependence on government benefits by promoting job preparation, work, and two-parent homes.

Caseload Decline Has Ended

Although the number of Texas’ TANF families and recipients declined at about the national average since Congress enacted federal welfare reform, many states made more progress. The number of TANF families on welfare in Texas declined 54 percent from 1993 through 1999, slightly higher than the national average of 52 percent.[5]

The Texas caseload, however, has stopped shrinking. In August 2000, the total caseload increased higher than in any month since April 1990, and the caseload for two-parent families also rose from September 1999 to August 2000. The state projects that its TANF caseload will remain about the same for the next two years and then decline only marginally.[6]

Texas has made several policy changes to its original welfare reform plan that could be affecting the caseload. The only change likely to add cases was a small increase in the monthly cash grant in September 1999, which made slightly more families eligible for TANF.

A change in the eligibility process requiring applicants to attend a workforce orientation as a condition of receiving assistance could have reduced caseloads, as could the state’s use of a “data broker” to verify eligibility for programs by verifying the income and assets of TANF applicants. New programs introduced in the last few years to follow up with recipients who become employed also could reduce the numbers of individuals returning to TANF.

Two other recent policies could reduce caseloads further. First, in September 1999, Texas began disregarding the adult’s income (used to calculate eligibility) for the first four months after a parent becomes employed. This earned income deduction allows adults to keep additional money for the first four months after getting a job to help cover employment-related expenses. Although this policy reduces the decline in the caseload that would otherwise occur for the four months that the parent receives the extension, to the extent that this incentive to encourage parents to accept employment works, it would contribute to a net decline.

The second policy is the phase-out of the age-of-child exemption from work requirements, which began in January 2000. By March 2002, only parents with children under the age of one at the time they first begin receiving assistance will be exempt from work requirements. This phase-out may have more effect on caseload levels in the last year of the phase-out since the numbers of parents with an age-of-child exemption are significantly larger the younger the child. On the other hand, because the exemption ties to the age of the child at the time the parent first began receiving assistance, the size of the exempt portion of these groups has been diminishing with time. Without the phase-out, caseloads would likely be higher than current numbers indicate, but without additional policy changes, it is unlikely that caseloads will decline further.

Work Program Affected

Due to the large number of people whom the state exempts from work requirements, sanctions for failing to comply with various rules, or excuses for good cause, only about 12 percent to 13 percent of the state’s 83,000 TANF adults actively participate in Choices, the state’s TANF work program, in any month.[7]

Under current law and with recent caseload trends, projections suggest that until parents begin to exhaust federal lifetime limits without recourse, caseloads will decline only marginally in the future. If the state chooses to fund cases that exhaust their federal five-year lifetime limit with state resources, then caseloads will likely remain the same. At this point, only additional policy changes can ensure that caseloads continue to decline in future years due to increased employment instead of the expiration of time limits.

In October 1999, the federal five-year lifetime limit for TANF assistance began ticking for all Texas participants, including those who are not in the Choices work program. By the time that new legislation can take effect to assist these people in September 2001, all Texas TANF adults who have been on welfare since October 1999 will have lost nearly two years of their federal five-year lifetime limit.Once these families exhaust their federal time limit, they can no longer receive federal TANF assistance—even for their children.

In Texas, however, adults who have exhausted their state time limits, whether under sanction or not, can continue to receive benefits for their children until they are grown, because state time limits do not apply to the children. Once state time limits expire, these cases become “payee” cases and continue to receive benefits for the “children’s portion” of the grant. Since the adult does not receive federal financial assistance, the federal time limit does not apply, and the adult can continue to receive benefits for the children until they are grown. Because parents in payee cases do not receive assistance for the “adult portion” of the grant, they also are not subject to state or federal work requirements. As more cases continue to exhaust their state time limits, more of these families will become payee cases, thus reducing the Choices caseload, but not the dependency on welfare funds.

Additionally, under federal law, Texas cannot provide TANF federal assistance to legal immigrants until they have been in the United States for five years. Consequently, these families—like families headed by an illegal immigrant—can become payee cases when they have children who are United States citizens. These cases also have no work requirements or time limits because the adult technically does not receive state or federal financial assistance.

Work Exemptions Undermine Texas “Work First” Policy

Texas exempts or excuses nearly one-half of welfare adults from work requirements, which hurts recipients facing the federal lifetime limit, undermines the state’s “work first” philosophy, and affects the equity, effectiveness and accountability of the state’s TANF program.[8] Many people exempt from work requirements have a high school diploma or its equivalent or 18 months of recent work experience and could participate in work programs.[9] All of these adults are using up their federal five-year lifetime limit even though they are exempt from state time limits until they enter Choices.

These up-front exemptions prevent the market from determining job readiness in accordance with the state’s work first philosophy. Some employers may be able to accommodate special circumstances or barriers that exempt individuals have, but as long as they are exempt, no one will ever know.

In addition, the state exempts nearly 50 parents from work requirements each month because they are members of Volunteers in Service to America (VISTA).[10] These persons opted to join VISTA and receive a “living allowance” of $700 per month, plus child-care services and health insurance, instead of entering paid employment.[11] By exempting the VISTA “living allowance” from the definition of income in determining TANF eligibility, the state treats working parents unfairly, since most of their income is counted. In some cases, the VISTA living allowance may be more than the earned income of another family found ineligible due to income. VISTA volunteers are financially eligible for TANF in Texas only under a Texas pre-welfare reform policy.[12]

People exempt from work requirements or otherwise not required to participate can volunteer for Choices, but only about 8 percent of exempt adults do so.[13] The federal five-year lifetime limit ticks for all of them, however, and the state’s volunteer policy means that these people do not receive services that they need to become independent. The policy that exempts nearly half of the state’s welfare population from work activities also exempts the state from providing services to them.

Besides VISTA volunteers, a few exempt parents already participate in a work activity. The state exempts parents who are 16 to 18 and attending school or individuals employed for 30 or more hours per week. The state also exempts parents if they are:

Although people exempt from work requirements have certain characteristics that indicate a barrier to employment, some can work. Every day, people work outside the home while pregnant, caring for young children, being over age 60, or caring for a person with disabilities. Homebound individuals find ways to make a living through self-employment or telecommuting. Parents of a child with disabilities may be able to work at home or while the child is at school. Still others may not be able to work today, but could be pursuing an education or training, possibly through distance learning, that could lead to employment later.

Federal Rules, Equity, and Other Issues

When the state’s waiver expires, Texas will have to enforce the federal requirement that TANF parents meet work requirements within 24 months of first receiving TANF or lose federal assistance. For exempt parents who do not have to meet the state’s work requirements, the state would have to discontinue their assistance or pay the full share from state maintenance-of-effort (MOE) funds. The state will have to appropriate additional General Revenue if it exhausts all MOE funds. MOE funds account for about one-third of TANF federal and state funds combined.

The state’s exemption policies also raise equity issues because many of these people could meet work requirements, whereas those who do not have an exemption—but may have other barriers—must participate or suffer sanctioning. People with exemptions receive Choices services only if they volunteer, which makes them subject to state time limits.

The exemption process undermines the state’s work first policy, which is the cornerstone of its welfare reform efforts. Texas Department of Human Services (DHS) workers decide up front who receives an exemption from work requirements, thereby preventing Choices case managers in local workforce centers from assisting a parent to develop an employment plan—unless the parent volunteers for Choices. The state also exempts some people from the initial Work First orientation at the local workforce center that other applicants must attend before receiving TANF. Consequently, these people miss an opportunity to consider other options identified in the orientation.

Another problem is the uneven geographical distribution of Choices services across the state, which may leave some rural recipients unserved. Some people never receive notice of an opening in the Choices program in their area because they live in a county that does not provide a full array of Choices services and case management. More than 150 counties with about 17 percent of the state’s TANF adults do not have workforce centers with full service Choices programs, and the commute to one in a full-service county could be difficult for some people.[14] This situation raises equity issues, because parents living in counties with limited services never have to seek work or training or worry about a sanction even though they might have mandatory work requirements if they lived in a full-service county.

On the other hand, they may not have easy access to services; even so, when the state’s TANF waiver expires, exempt parents in counties with minimum Choices services will become part of the calculation to determine the rate of TANF participation in Choices. Because most of them do not participate in work programs, this federal measure of effectiveness will decline.

The federal performance measure for the state’s TANF program, the work activity “participation rate,” compares the number of families meeting work requirements with the total number of families receiving assistance. Once Texas’ federal waiver expires, the state must include most adults in the calculation who are currently exempted or excused from participating.[15] Although the state will likely meet the required standard for all families—which includes both single and two-parent families—the rate will decline sharply, reducing the state’s federal measure of effectiveness relative to other states. The standard for two-parent families will be far more difficult to meet. As long as the state maintains nearly 50 percent of its caseload in exempt status or in a situation where they do not have to comply with work requirements, the rate will suffer.

Sanction Policies Have Problems

The state’s sanction policies for not complying with work requirements have inherent problems involving equity, effectiveness, and accountability. They also undermine work efforts and tend to be controversial. The policies have five main problems:

• They undermine the TANF Responsibility Agreement that applicants sign agreeing to work as a condition of receiving welfare.

• They have minimal effect in accomplishing their goal of getting people to participate in work.

• They cap total sanctions and penalties so that many adults never feel the effects of the sanction if they already have sanctions in other areas.

• They allow adults who exhaust their state time limits while under sanction to receive benefits for their children until they are grown, yet do not have any work requirements after their state time limits expire.

• They are inconsistent with other state policies concerning noncompliance with TANF eligibility requirements.

Texas sanction policies enacted to enforce the TANF Responsibility Agreement actually undermine the agreement by sending the wrong message. More than 100 people refuse to sign the Responsibility Agreement each year and so do not receive any benefits for their families.[16] On the other hand, parents who sign the agreement but do not comply can keep most of their assistance. Thus, the state penalizes honest individuals who refuse to sign the agreement and rewards those who sign under false pretenses by continuing benefits for their children until they are grown as long as the parent continues to meet other eligibility requirements.

Secondly, Texas, in effect, does not sanction people for noncompliance with work requirements who already have incurred certain sanctions for other infractions of the agreement. Texas’ sanction policies remove the adult portion of the TANF grant for parental noncompliance with work requirements; this amounts to $78 per month for one adult and $125 per month for two adults. The parent continues to receive financial benefits for the children’s portion of the grant.

The state also reduces the grant by $78 for parents who do not comply with child support enforcement and by $25 per month each—capped at $75 per month—for a number of other infractions, including noncompliance involving their children’s school attendance, immunizations, and Texas Health Steps, which ensures regular medical and dental checkups for their children. The maximum amount the state may deduct from the grant, however, is $78 for a single-parent family and $125 for a two-parent family.[17] Consequently, parents may not pay any real penalty for not complying with work requirements if already sanctioned for noncompliance with child support enforcement or several of the smaller penalties. This policy substantially reduces both the effectiveness and the equity of the sanction for many families.

Sanction policies also reward noncompliance. Parents under sanction who exhaust their state time limits can continue to receive a monthly grant for their children until they are grown, just as parents do who exhaust their time limits while cooperating with work requirements. This policy sends the message that cooperating with work requirements is largely unnecessary. Since the federal five-year lifetime limit only applies when the adult receives federal financial assistance, removing the adult portion of the grant for noncompliance with work requirements means that the federal time limits may not apply to adults under sanction in Texas, yet the federal clock definitely ticks for a family with an adult who cooperates.

Sanction policies weaken the work program. A substantial number of TANF parents choose not to comply with work requirements and remain under sanction for months. The state sanctions more than 11,000 parents who have mandatory work requirements each month— nearly one-half for more than three months.[18] Because people under sanction more than three months in the previous twelve months factor into the state’s federal work activity participation rates, this situation reduces the measured effectiveness of the Texas TANF program. Most importantly, giving assistance to people under sanction takes resources from others whose federal clock is definitely ticking and who would cooperate if services were available to them.

The state’s sanction policies are inconsistent and raise equity issues. DHS workers give a “full family” denial to any family whose parent misses an appointment.[19] If a parent misses an appointment with a Choices case manager, however, the case manager can only refer the parent to DHS for a $78 per month sanction. This double standard sends the message that it is okay to ignore the workforce agency but not the agency that dispenses the monthly check. Additionally, DHS workers impose a $25 sanction fee for TANF adults who are not in the Choices program and voluntarily quit their job or refuse income while Choices case managers can only process a $78 sanction if a parent refuses a job or quits without good cause.

A progressive or “full family” sanction has been unpopular with some policy makers and advocates because they see it as penalizing the children’s portion of the grant in addition to the adult portion. Others argue that the state entered into the TANF Responsibility Agreement with the parent as an eligibility requirement for the entire family.

Wyoming has a better approach. Instead of agreeing to a “promise of performance” with subsequent sanctions for noncompliance, Wyoming has a policy of “pay-after-performance,” which requires TANF parents to cooperate with work activities and the other provisions of a responsibility agreement to receive their monthly grant. Parents must complete work or other approved activities according to their work plan from the 15^th of the month through the 14^th of the following month to receive their grant for the next month. The state places families whose parents fail to cooperate without good cause on a $1 grant, which keeps them in the system, but means that they do not receive a grant the following month. Once parents comply for a full month, they can receive a full grant again. If they do not cooperate after two months, the state closes the case, the parent must reapply to receive assistance again, and then must participate in work activities for one month before receiving a grant.

Other TANF applicants who Wyoming officials certify can receive some emergency assistance if needed before their first “pay-after-performance” grant. The use of the $1 grant instead of immediately closing the case reduces administrative costs that would result from individuals reapplying after missing only one month’s assistance. Wyoming has not experienced any increase in protective services caseloads since implementing the policy in 1997.[20]

New TANF Program Needed

These pressing issues require an entirely new approach. Tweaking and tinkering with the current program in Texas to avoid problems with federal participation rates or time limits will not resolve the fundamental equity, effectiveness and accountability issues inherent in the state’s current TANF program. Under the flexible federal law, Texas can design a new program. The recommended design would enable all parents seeking help to conserve their lifetime limit for federal assistance, enter employment more quickly and within the 24-month federal time limit, and pursue activities leading to higher paying jobs and a more stable financial future for their children. It would also support the personal dignity and increase the self-responsibility of people seeking assistance. Most importantly, it would reduce dependency on welfare, so that children in families receiving help have employed parents, enjoy higher family incomes, and hopefully a better chance at a financially independent future.

As long as states spend funds to further one of the four purposes of the federal law, they have broad flexibility in using that funding, and federal guidance encourages them to do so. Wisconsin, for example, offers a TANF-funded, short-term, no-interest loan program that the state uses to assist eligible parents with short-term needs to gain or maintain employment. The loan may include assistance with needs such as car repairs or purchase, back rent to prevent eviction, employment-related clothing or tools, or relocation assistance, which a monthly grant cannot address.[21] Such a program can help keep people from ever becoming welfare recipients.

Federal regulations allow states to use TANF funds for help in meeting an eligible family’s employment needs—including short-term, non-recurring needs, such as rent, child care, or other employment services—to assist the parent in weathering a short-term period of unemployment, without putting the family on welfare or in the federal “assistance” participation rate calculation. The definition of “assistance” excludes non-recurrent, short-term benefits, as long as the state provides the benefits to meet a specific episode of need, does not intend the benefits to meet recurrent or ongoing needs, and does not allow benefits to exceed four months.

The federal definition of “assistance” also does not include subsidized employment with TANF funds or child-care services for employed parents.[22] Families funded through these mechanisms do not count in the TANF caseload or the state’s participation rate calculation. Moreover, these families qualify for an earned income tax credit, which does not count against their TANF or food stamp benefits.

States can use TANF funds to pay an individual’s employer health insurance premiums, help with legal fees during SSI eligibility determination, reimburse people to relocate closer to employment, pay for computers or other equipment for homebound parents engaged in distance learning, other employment-related needs, or for incentives to obtain employment or finish school.[23]

A new TANF program would require coordinated assistance from the agencies involved and input from all other affected stakeholders. Until such a program is in effect, the state needs to take immediate measures to address some of the pressing issues identified in this and other reports. The Senate Human Services Committee, working with an interagency committee, has developed recommendations to address certain issues and state compliance with federal law in the post-waiver environment. Additionally, the Texas Workforce Commission is requesting increased funding for the next biennium to expand Choices and child-care services to serve additional TANF adults, especially people affected by the phase-out of the age-of-child exemption. The Texas Council on Workforce and Economic Competitiveness also will present its welfare-to-work report with recommendations to the Legislature this session.

By addressing the issues and recommendations in these reports, the Legislature can lay the groundwork for a new program that will take welfare reform to the next level.

Recommendations

The state denies about 16 percent of applications and about 26 percent of TANF cases each year for “failure-to-cooperate” reasons. This recommendation would make Texas’ work cooperation policy consistent with these other “failure to cooperate” benefit denial policies. This policy would also ensure that welfare funds go to recipients who sign the TANF Responsibility Agreement in good faith. While the policy allows good cause in the failure to maintain performance, it also ensures that adults make an effort to become independent of government assistance. Finally, this policy would free funding for additional child-care services or other needs for parents who are cooperating and seeking work and whose federal time limit clock is ticking.

Texas’ current policy allows only a $78 sanction for adults in Choices who refuse or voluntarily quit a job. TANF adults not in Choices who voluntarily quit a job are subject to a $25 sanction. Current policy denies TANF assistance to applicants where the adult has refused income from another source, such as SSI, to gain assistance. This recommendation would make Texas’ policy consistent concerning the refusal of potential sources of income to gain or sustain welfare benefits and other “failure to cooperate” benefits denial reasons.

C. State law should be amended to remove all exemptions from work requirements and workforce orientation and allow Choices case managers to screen participants for good cause, effective March 2002. Income of Volunteers in Service to America (VISTA) volunteers due to their volunteer status should count the same as earned income in TANF eligibility determination.

By March 2002, Texas will have completely phased out the age-of-child work exemption except for parents with a child under one year of age who was under age one at the time the parent first began receiving benefits. Beginning in March 2002, the state should remove all remaining work exemptions to allow screening by Choices case managers for any valid reasons for not complying with work requirements.

Federal law precludes the state from providing TANF assistance to people who have not engaged in work activities within 24 months of receiving assistance. After the waiver expires, the state will have to deny benefits to these families or will have to fund them with state funds only. The TANF Final Rule allows flexibility for states to define their work activities for the 24-month requirement. The state could define work activities for this requirement to include activities such as caring for a disabled person in the home, attending counseling sessions, or attending rehabilitation activities.

With all cases under mandatory work requirements, Choices case managers could screen parents for good cause and work with them to remove barriers to employment. To ensure the protection of individuals, the Legislature could establish a “good cause” policy in legislation or allow the Texas Workforce Commission to continue to establish it by agency rule, and allow case managers to determine good cause for unusual circumstances. The Department of Human Services could change the work status of recipients from exempt to mandatory during regular eligibility reviews over a six-month period to avoid additional administrative costs.

Finally, exempting VISTA volunteers’ $700 per month stipend from being counted as income during TANF eligibility determination is inconsistent with the state’s other eligibility policy involving earned income. The state should count the VISTA stipend as income in determining eligibility.

D. Texas should establish an interagency working group to recommend to the Legislature a new program to fulfill one of the federal TANF law’s purposes—to end dependence on government benefits.

The interagency working group should consist of representatives from the key stakeholders involved in this issue, including front-line staff. The following organizations should appoint a representative to the working group: the House of Representatives, Senate, Governor’s office, Legislative Budget Board, Comptroller of Public Accounts, Health and Human Services Commission, Texas Council on Workforce and Economic Competitiveness, Department of Human Services, Texas Workforce Commission, Department of Protective and Regulatory Services, Office of the Attorney General-Child Support Enforcement Division, and Local Workforce Development Boards.

The group would seek input from other appropriate state or local agencies, advocacy organizations, welfare recipients, and other interested parties. The representative from the Texas Council on Workforce and Economic Competitiveness should report to the Council and share feedback with the workgroup since the Council includes representation from entities not directly represented on the working group. These entities include business and labor, community-based organizations, local education agencies, the Texas Education Agency, the Higher Education Coordinating Board, and the Department of Economic Development. The working group should coordinate closely with the Texas Rehabilitation Commission and the Commission for the Blind and Visually Impaired on workforce issues. The Comptroller’s office should convene the working group.

The agencies would provide research support consistent with their current responsibilities. The Comptroller’s office would be responsible for publishing the report. Specifically, the workgroup would review national studies and federal guidance concerning innovative ways to use TANF funds; review innovative and transformative programs and policies in other states; consider the impact of changes on families, caseloads, participation rates, time limits, automation, and funding; and identify the methodology for phasing in any changes without disrupting current program operations. The workgroup should complete their study by March 1, 2002 to enable legislative committees working in the interim to consider the report in preparation for the 2003 Legislature.

Fiscal Impact

This estimate applies solely to the recommendation for “pay-after-performance,” includes only the work requirement in the TANF Responsibility Agreement, and assumes current law. The fiscal impact analysis does not include savings related to other requirements in the TANF Responsibility Agreement or savings related to “pay-after-performance” that accrue after implementation of the recommendation to remove remaining exemptions. The fiscal impact assumes a level of funding for Choices that meets federal requirements, as is currently included in the Texas Workforce Commission baseline appropriation request.

The estimate assumes that 20 percent of individuals under sanction would comply with “pay-after-performance” work requirements and would generate additional assistance costs. The analysis assumes that eligibility determination savings from reduced eligibility reviews for the remaining 80 percent would offset most of the increased eligibility determination costs from the 10 percent of individuals who reapply.

The estimate assumes that costs associated with implementing the remaining recommendations would be negligible since the state could implement these policies within the current system. Data are unavailable to determine savings from the additional recommendations. Since caseload projections for years beyond fiscal 2003 are unavailable, the estimate assumes that savings in fiscal 2003 would continue at the same level for future years.

Savings and costs in the estimate may apply to TANF federal funds, state maintenance-of-effort (MOE) dollars required to receive TANF funds, or a combination of both. This estimate assumes that the savings would accrue to the General Revenue Fund (MOE Only), which the state must spend on allowable TANF MOE expenditures such as cash assistance, work activities, child care, administration, systems, transitional benefits, or separate state programs.

Fiscal Year	Savings (Costs) to the General Revenue Fund (MOE Only)*	Savings to Federal Funds	Cost to the General Revenue Fund (MOE Only)*	Cost to Federal Funds	Net Savings to the General Revenue Fund (MOE Only)*	Net Savings to Federal Funds
2002	$21,549,000	$0	($4,051,000)	$0	$17,498,000	$0
2003	$22,294,000	$0	($4,050,000)	$0	$18,244,000	$0
2004	$22,294,000	$0	($4,050,000)	$0	$18,244,000	$0
2005	$22,294,000	$0	($4,050,000)	$0	$18,244,000	$0
2006	$22,294,000	$0	($4,050,000)	$0	$18,244,000	$0

*The state must spend net savings to the General Revenue Fund on allowable TANF maintenance-of-effort (MOE) expenditures only.

[1] Temporary Assistance for Needy Families (TANF) replaced the Aid to Families with Dependent Children (AFDC) cash assistance program and is a part of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. (http://www.ssa.gov/OP_Home/ssact/title04/0400.htm). (Internet document.) Title IV of the Social Security Act, which pertains to TANF.

[2] US House Ways and Means Committee, “Intergenerational Transmission of AFDC Receipt,” 1996 Green Book, Section 8. Aid to Families with Dependent Children and Related Programs (Title IV-A) (Washington, DC, 1996) (http://frwebgate.access.gpo.gov/cgi-bin/useftp.cgi?IPaddress=162.140.64.21&filename=wm014_08.104&directory=/disk2/wais/data/104_green_book). (Internet document.)

[4] Center for Demography and Ecology, University of Wisconsin at Madison, “The Intergenerational Relationship of Welfare Participation,” by Molly A. Martin. (Madison, Wisconsin, 1998) (http://www.ssc.wisc.edu/cde/cdewp/98-09.pdf). (Internet document.)

[5] US Department of Health and Human Services, Administration for Children and Families, “Change in TANF Caseloads,” August 22, 2000 and (http://www.acf.dhhs.gov/news/stats/case-fam.htm). (Internet document.)

[6] Texas Health and Human Services Commission, The Caseload Forecasting Report For The Health & Human Service Agencies (2nd Quarter SFY 2000), “TANF (AFDC) Grants: Total” (Austin, Texas, 2000) (http://www.hhsc.state.tx.us/cons_bud/caseload/QCFR016.HTM). (Internet document.)

[7] Texas Department of Human Services, Management Information Focus Report September 2000 (Austin, Texas, October 2000), pp. 22-23. In September 2000, of the 83,015 adults (73,369 TANF Basic adults and 9,646 Two-Parent adults) eligible to participate in Choices employment services, the state clock ticked for 22,002, of which 11,704 had a work sanction. The remaining 10,298 are about 12 percent of the 83,015.

[8] Texas Department of Human Services, Management Information Focus Report September 2000 (Austin, Texas, October 2000), pp. 22-23.

[9] Texas Council on Workforce and Economic Competitiveness, “TANF Adults and Education Characteristics,” Austin, Texas, 1998. (Excel file.)

[10] Texas Council on Workforce and Economic Competitiveness, “All Exempt TANF Caretakers for September 1, 2000,” Austin, Texas, November 2000. Data are from the Texas Department of Human Services. (Excel file.)

[13] Texas Council on Workforce and Economic Competitiveness, “TANF Exempt Caretakers by Work Status, September 1999,” Austin, Texas, April 2000. (Computer printout.) Raw data are from the Texas Workforce Commission and the Texas Department of Human Services.

[14] Texas Department of Human Services, Management Information Focus Report September 2000 (Austin, Texas, October 2000), p. 22. (Of the 83,015 adults eligible to participate in employment services, 69,074, or 83.2 percent, live in Choice counties, and 13,941, or 16.8 percent, do not.)

[16] Texas Department of Human Services, Management Information Focus Report September 2000 (Austin, Texas, October 2000), p. 22.

[18] Texas Department of Human Services, Management Information Focus Report July 2000, p. 22-23 and Texas Council on Workforce and Economic Competitiveness, “Average Monthly Number of Cases by Length of Sanction for Refusing to Cooperate with Work Requirements January 1998 - December 1998,” Austin, Texas, April 2000. (Excel file.) (Raw data are from the Texas Department of Human Services.)

[20] Telephone interview with Ken Kaz, Wyoming Department of Family Services, Cheyenne, Wyoming, October 5, 2000.

[23] US Department of Health and Human Services, Administration for Children and Families, Office of Family Assistance, “Q & A Index: TANF Program Policy Questions,” (Washington, DC, November 1999) (http://www.acf.dhhs.gov/programs/ofa/polquest/usefunds.htm). (Internet document.)

Use the Opportunities Provided
by Federal Welfare Reform to End Dependence on Government Benefits

Summary

Background

Cycles of Welfare Dependency

Caseload Decline Has Ended

Work Program Affected

Work Exemptions Undermine Texas “Work First” Policy

Federal Rules, Equity, and Other Issues

Sanction Policies Have Problems

New TANF Program Needed

Recommendations

Fiscal Impact

Use the Opportunities Provided by Federal Welfare Reform to End Dependence on Government Benefits

Summary

Background

Cycles of Welfare Dependency

Caseload Decline Has Ended

Work Program Affected

Work Exemptions Undermine Texas “Work First” Policy

Federal Rules, Equity, and Other Issues

Sanction Policies Have Problems

New TANF Program Needed

Recommendations

Fiscal Impact

Use the Opportunities Provided
by Federal Welfare Reform to End Dependence on Government Benefits