ACTION

FROM THE COMMITTEE ON WAYS AND MEANS

FOR IMMEDIATE RELEASE, Contact: (202) 225-3625
May 3, 2002
No. FC 23-A

Thomas Announces Committee Action
H.R. 4090, the “Personal Responsibility, Work,
and Family Promotion Act of 2002” and H.R. 4626, the “Encouraging Work and Supporting Marriage Act of 2002”

Congressman Bill Thomas (R-CA), Chairman of the Committee on Ways and Means, today announced that on Thursday, May 2, 2002, the Committee ordered favorably reported, H.R. 4090, the “Personal Responsibility, Work, and Family Promotion Act of 2002,” as amended, by a recorded vote of 23-16.  The Committee also ordered favorably reported  H.R. 4626, the “Encouraging Work and Supporting Marriage Act of 2002,” as amended, by a voice vote.

DESCRIPTION OF H.R. 4090 AS APPROVED:

The legislation would extend and make improvements to the Temporary Assistance for Needy Families (TANF) programand related programs under the Committee’s jurisdiction.  The TANF program, first authorized by the landmark Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193), currently provides cash assistance to more than 2 million low-income families through a program of temporary cash benefits, work supports, and other purposes.  The program expires on September 30, 2002.

On April 18, 2002, the Subcommittee on Human Resources approved H.R. 4090, which would provide $16.6 billion in annual TANF block grants to the States and territories, as well as $2.7 billion in annual child care funding, and up to $300 million for the President’s Promoting Healthy Marriages initiative.  H.R. 4090 would gradually increase the work requirements so that by 2007, States are expected to engage 70 percent of adult TANF recipients in at least 24 hours of direct work per week (including unsubsidized and subsidized employment, community service and other specific activities).  States may define other activities for an additional 16 hours per week for individuals to fully count toward the States’ work participation rate.  The bill also would increase States’ ability to transfer TANF funds to the Child Care and Development and Social Services Block Grants; would provide authority for a $20 million per year Fatherhood initiative; would provide incentives for States to pass through certain child support collections to families on or leaving welfare; and would authorize new “Superwaiver” authority to encourage innovative demonstration projects by States that would align and improve programs serving low-income families.  Finally, the bill would allow States to receive a credit toward the work participation requirement for caseload declines the States achieve after 1996.

Significant modifications reflected in H.R. 4090, as approved by the full Committee on Ways and Means, would:

(1)            Add “reducing poverty through promoting job preparation, work and marriage” as program purpose;

(2)            Expand from 3 to 4 months the length of time in any 24-month period that education leading to work may be counted towards State work rate requirements for individuals engaged in education or training activities directly linked to an available job in the local area;

(3)            Allow States to count participation in activities as defined by the State towards the work rate requirements in any 3 months, rather than only in 3 consecutive months, out of any 24-month period;

(4)            Assist 17 States that achieved caseload declines of more than 60 percent between fiscal years 1995 and 2001 in meeting rising work rate requirements by providing a new “superachiever” credit.  Given their large past caseload declines, these States would receive a percentage reduction in future work requirements based on the percentage decline above 60 percent (Colorado is eligible for a 12 percent credit against future rates, Florida 15 percent, Georgia 4 percent, Idaho 20 percent, Illinois 14 percent, Louisiana 9 percent, Maryland 5 percent, Michigan 4 percent, Mississippi 10 percent, New Jersey 2 percent, North Carolina 6 percent, Ohio 3 percent, Oklahoma 9 percent, South Carolina 5 percent, West Virginia 2 percent, Wisconsin 16 percent, and Wyoming 20 percent).  The credit would take into consideration the difficulty these States would have in further reducing caseloads, which would otherwise reduce the rising work rate requirements.  The superachiever credit in any year may not reduce work rates to less than 50 percent in any year.  For a number of “superachiever” States, this would maintain the effective work rate requirement at the current 50 percent level for several or all of the next five fiscal years.  All States – including those receiving superachiever credits – would be able to receive additional credits under the recalibrated net caseload reduction credit provision also included in the legislation.

Example: Wisconsin experienced a 76 percent caseload decline in the 1995-2001 period, earning a “superachiever” credit of 16 percent (76 percent decline minus 60 percent threshold equals 16 percent credit).  As State work rates rise under the legislation from 50 percent in fiscal year 2003 to 55 percent in 2004, 60 percent in 2005, and 65 percent in 2006, this credit would maintain Wisconsin’s work rate requirement at the current 50 percent level.  In fiscal year 2007 when the rate rises to 70 percent, Wisconsin’s effective work rate requirement would be 54 percent (70 percent work rate minus 16 percent credit equals 54 percent effective work rate).

(5)            Provide an exception to the “full check sanction” provision for States with Constitutional requirements to provide assistance to needy families;

(6)            Allow for the continuation of all current waiver programs until expiration;

(7)            Provide $10 million over fiscal years 2003 through 2007 for demonstration projects coordinating the provision of child welfare and TANF services to tribal families, and allowing tribal organizations to access employment achievement bonus funds; and

(8)            Require that superwaiver applications of the TANF and Social Services Block Grant programs not denied within 90 days be deemed approved.

DESCRIPTION OF H.R. 4626 AS APPROVED:

Accelerate Marriage Penalty Relief.  President  Bush’s 2001 tax reduction eliminates the marriage penalty in the standard deduction by gradually increasing the standard deduction for married couples filing jointly beginning in 2005.  H.R. 4626 would begin increasing the standard deduction in 2003.

Simplify Work Opportunity and Welfare to Work Tax Credits.  H.R. 4626 would combine the Work Opportunity Tax Credit (WOTC) and the Welfare to Work Tax Credit (WWTC) and conform most of their rules.  The table below summarizes the proposal.

Eliminate the Household Income Test for Ex-Felons under WOTC.  Under present law, employers can claim the WOTC for hiring ex-felons who meet a household income test which requires States to document the income of all members in the ex-felon’s household.  The test represents a significant impediment to hiring ex-felons – a group that tends to be economically disadvantaged because of their status.  H.R. 4626 would eliminate the household income test for this group.

Increase Age Limit for Food Stamp Recipients.  Under present law, employers can claim the WOTC for hiring certain food stamp recipients between the ages of 18 and 25.  H.R. 4626 would increase the food stamp recipient age limit to 30.  This change would qualify more low-income men, including absentee fathers, under the WOTC.  Currently, about 80 percent of the individuals hired under the WOTC program are women. 

Expand Incentives for Vocational Rehabilitation Referrals.  Under present law, employers can claim the WOTC for hiring an individual with a disability who receives rehabilitative services under a State-approved or Veteran rehabilitation plan.  The Ticket to Work and Work Incentives Improvement Act of 1999 (P.L. 106-170) creates private employment networks as an alternative to the State-approved agencies.  H.R. 4626 would allow employers to claim the WOTC for hiring individuals who are referred by a private employer network.