Statement of the Honorable Lynda G. Fox, Secretary,
Maryland Department of Human Resources

Testimony Before the Subcommittee on Human Resources
of the House Committee on Ways and Means

Field Hearing in Baltimore, Maryland, on Welfare Reform

February 14, 2000

Introduction

Good morning, my name is Lynda Fox. I am the Secretary of the Maryland Department of Human Resources. It is a privilege to be here today to discuss my views on the successes and challenges of welfare reform in Maryland. I would like to thank Chairman Johnson and the Committee for this opportunity. I would also like to thank our Congressman, Ben Cardin, for all of his hard work in getting as broad a possible range of views into the development of the original welfare reform legislation and in taking a leadership role in the development, where appropriate, of mid-course corrections to the Congressional vision of welfare reform. In Maryland, we think the Temporary Assistance to Needy Families program has had a dramatic and positive impact not only on welfare but the entire human services delivery system. In Maryland and across the nation, we are making great strides in assisting families to become independent of welfare and to enter the workforce. At the same time, we are safeguarding children, people with disabilities and other vulnerable populations by providing needed services.

It is also a privilege to appear before you today as part of a panel that vividly demonstrates that, in Maryland, welfare reform is a team effort. Senator Madden and Delegate Rosenberg have provided a clear policy direction for Maryland's welfare reform efforts. Dr. Born has provided them and us with the facts and research necessary to make reasoned policy choices. Secretary Puddester has provided the budgetary guidance that is necessary to make our efforts successful. Because of the cooperation and foresight of Governor Parris Glendening and the Maryland General Assembly, Maryland is a leader in welfare reform - welfare reform that is firmly based on our research and the research of others and that takes maximum advantage of the fiscal flexibility you have given us to determine how to best serve low income families in Maryland. In the brief time that we have together, I would like to share with you some of our successes, point out some of the challenges that still lie ahead and enlist your support in facing those challenges.

Our Successes

One measure, but only one, of our success is that of a caseload decline. We have built on the strengths of our customers and helped move them to independence. Since January 1995, we have helped 150,547 Marylanders become independent of welfare. As of the January 2000, our cash assistance caseload has gone from 227,887 customers to 77,340 customers, a decline of 66.1%. Based on work done by the Regional Economic Studies Institute at Towson University, this decline in Maryland can be attributed largely to the implementation of our Family Investment Program. Towson Universty has been forecasting the state's welfare caseloads since 1992. They have projected the caseload in the current economic environment both with and without welfare reform. Their forecast estimates that without welfare reform, but with a booming economy, the caseload would have declined about 9%, rather than the 66.1% we have achieved. They have concluded that the dramatic difference in the rate of decline is at least partially due to the strong economy; but even more importantly, is a result of the sound policy decisions that have been made in Maryland.

Maryland's caseload decline also mirrors a national trend in that the population remaining on cash assistance is disproportionately located in urban areas. While the state caseload has declined 66.1%, the caseload in Baltimore City has declined 55.3%. As a result of this difference in decline rates, Baltimore City now has 61.1% of the state's caseload.

The more important question is not just how many people have left welfare caseloads but how well do they fare after they leave. I will leave it to Dr. Born to describe the details of her research work on this basic and important question. I think that we in Maryland have answered the basic questions that were asked at the beginning of the current welfare reform effort. We have found that people who leave welfare generally find work, preserve their families and do not return to the rolls.

Another of our successes is that we have been able to understand more clearly and take advantage more fully of the true flexibility the Congress has given us and which we now see, years later, reflected in the final federal regulations. I will leave it Secretary Puddester to discuss more fully how we are taking advantage of this flexibility. Be assured that in Maryland we are using this flexibility to fund a host of activities that we think faithfully implement the purposes of the federal welfare reform law and serve low-income Maryland families who receive cash assistance, have received cash assistance or are but one paycheck away from receiving cash assistance. We have used in this flexibility on activities such as the following:

• Child Care Expansion. We have transferred $92 million from the TANF block grant to the child care block grant in order to meet growing child care needs and to fund program expansions that will serve additional children.
• The Maryland After School Opportunity Fund program. We will use $10 million in TANF funds to launch this program in July 2000. This program will provide funds to a myriad of after-school programs designed to enhance the motivation, performance and self-esteem of youth and thus meet the goals of the federal welfare reform legislation.
• Expansion of Our Family Support Center Network. These centers were developed to establish preventive supports for families during the early formative years and to encourage the formation and maintenance of two-parent families. These centers are community-based programs that provide services to assist mothers and or fathers with children age birth through three, particularly in high-risk communities, to raise healthy families and build productive futures.
• Expansion of the Healthy Families Program. This program provides home visitation and on-site services to families such as parenting education, family planning and employment services. This program's goals include the prevention of subsequent out-of-wedlock pregnancies as well as child abuse and neglect.
• Expansion of Our Job Skills Enhancement Pilot Project. This program provides of participants with training to enhance existing skills, gain additional or alternative skills or to learn interpersonal communication and other related skills to retain their jobs and increase their potential for advancement beyond entry-level positions.

The Challenges That Remain

Caseloads have declined. This is not the end of the story of welfare reform but rather the beginning of a new chapter. Those that remain tend to live in urban areas where there is a problem with the supply of jobs and also tend to have a greater number of barriers to independence. We also have to ensure that those who have left do not come back, unless absolutely necessary. Finally, we are faced with the issue of true welfare prevention not just diversion. In our diversion activities, we want to insure that people do not stay in our welfare offices very long. In our prevention activities, we want to ensure that they do not have to come to us for cash assistance in the first place. We faced the initial issues of welfare reform and are now facing new and more difficult issues. Among these are:

• Job Retention and Job Skills Enhancement. Is important that those who leave welfare for a job keep that job and move on to a better job. With assistance from planning grants and input from advocates and members of the General Assembly we are devising a number of programs to ensure that those who leave welfare for a job keep that job and use it as a stepping stone for career.
• Prevention Activities. The final federal regulations have more clearly articulated the flexibility in the federal welfare reform law. Maryland has enthusiastically grasped that flexibility to design and enhance programs that are preventive in nature. This continues a long tradition in Maryland of focusing on different kinds of preventive activities. For example, one of Maryland's very first of welfare reform activities was called the Primary Prevention Initiative that focused on child immunizations and school attendance as being preventive of welfare dependency. We are building on this tradition of prevention by funding after-school programs, family preservation programs, family support centers, dropout prevention programs, out of wedlock pregnancy prevention programs, young fathers programs and other community-based initiatives.
• Realigning the Major Welfare Reform Goals of the Department. At the beginning of our welfare reform effort, we developed, in concert with the Maryland General Assembly, a Reinvestment Strategy. Our major goals were caseload reduction and customer satisfaction with an overall objective of creating caseloads savings and reinvesting those savings back into programs that would help those with greater barriers to independence. The General Assembly gave the Department unprecedented fiscal flexibility to carry forward caseload savings into the future. Now, we are faced more squarely with the issues of job retention, earnings gain, diversion and prevention. Consequently, we are more clearly articulating a goal of the support of low-wage working families. The policy shift to welfare as a temporary support has accentuated the fact that other governmental means tested programs are supports to employment and eventual family independence. Taking the lead from David Ellwood, we view independence as a multi-legged stool with governmental means tested programs and private efforts working together to move the family eventually to independence. The programs we are providing and/or marketing to our customers include:

• Child Support. We have included a Child Support First component to our program and are building a Child Support Last component to ensure that those exiting from the welfare rolls have the child support money to which they and their children are entitled.

• Child Care. As our welfare caseload projections go down, our child care projections increase as more people move to work and need this support.

• Medical Assistance. We have developed manual review mechanisms and are shortly going to turn on new computer programs to fully implement the provisions of Section 1931 of the federal welfare reform law regarding Medical Assistance. We are committed to insuring that all medical assistance applicants who are eligible are correctly determined to be eligible, regardless of their cash assistance status.

• Food Stamps. This program has taken on increased importance as part of the social safety net as cash assistance caseloads have declined. As I will discuss later, this program unfortunately does not have the flexibility that exists in TANF

• Earned Income Tax Credits. We continue to aggressively market both the federal EITC and Maryland's own refundable EITC.

How You Can Help Us Meet the Challenges

To meet the challenges I have described, the states cannot go it alone. Most certainly, they (along with Maryland) will not be able meet those challenges with reduced federal support. Consequently, I offer the following suggestions as being some of the more fruitful ways in which the federal state partnership in welfare reform can continue to grow along an exciting, devolved and research driven path.

• Maintain Current Levels of Support. We understand the Committee's concern that some states have accumulated significant TANF reserves. I think this accumulation reflected an initial prudence on the part of the states and an uncertain federal regulatory climate. Now that we more fully understand the flexibility inherent in the federal welfare reform law, I believe that Maryland and other states will reduce those balances by spending on appropriate activities for low-income families.
• Look Toward a Reauthorization of the TANF Program at Current Block Grant Levels. We have been led to understand that is it the opinion of many that upon reauthorization the TANF block grant to the states may be smaller. We would urge you to reject that kind of thinking. The federal welfare reform law was the result of the historic agreement between the states and the federal government regarding the risks of significant change in the area welfare reform. The states were willing to accept those risks and the burden of any unforeseen additional costs. The Congress needs to hold up its part of the bargain and continue funding at reauthorization at current levels. I would remind you and everyone listening that we have yet to see the repeal of the business cycle. We have yet to see how the progress we have made and the successes we have achieved will fare in a time of serious economic downturn.
• Continue the Principle of Maximum State Flexibility in the Design of Their Welfare Programs. Now that states have had some experience with welfare reform, you will see even greater experimentation and a greater drift away from welfare the way it was. There are some who are troubled by this, despite the results of studies such as we have done in Maryland concerning welfare leavers and other aspects of our program. I urge you to resist the recommendations those who would attempt to reestablish aspects of welfare as we knew it by placing controls on state flexibility and creativity and otherwise attempting to unravel the historic welfare reform agreement.
• Continue to Work toward Granting the States the Flexibility They Have in the TANF Program to Other Federally Funded Means Tested Programs, Particularly Food Stamps. I offer the following suggestions:

• Substantially reform the Food Stamp Program to simplify it and conform it to the goals of welfare reform while preserving its role as a significant part of the social safety net. There needs to be a radical simplification of this program's complex income, asset and deduction rules, which continue to mystify staff and customers. In themselves, they constitute a considerable barrier to participation in the program.

• If the above cannot be done or seems too big a step, the Congress should grant increased waiver authority to United States Department of Agriculture to allow state experiments in the Food Stamp Program. This would be similar to the waiver demonstration projects that gave states the experience and the information to craft successful welfare reform programs. States are the great laboratories of democracy. While we are well aware of the fact that this Committee does not have jurisdiction over the Food Stamp Program, we urge you to constantly work with your colleagues that have direct responsibility for that program to grant the state's a measure of the flexibility that was contained in the federal welfare reform law. As you know, the states have responded appropriately to that flexibility and would do the same with regard to the Food Stamp Program.

• Full federal participation in the pass-through and disregard in the calculation of the grant of any child support collected on behalf of families who receive TANF cash assistance. There is growing support in Maryland and across the nation for passing through and disregarding at least a portion of the child support collected on behalf of children receiving cash assistance. There are many good reasons to do this. Among these are the extra income it gives the family while they receive cash assistance, but more importantly the tie that this creates between the non-custodial parent and the children that will continue long after the family has left welfare. The problem with this strategy is that current law governing the distribution of child support collections requires that we give to the federal government half of what we collect for these families. Thus, we can pass through and disregard only the state share of the collection unless we choose the extra expense of paying the family the federal share.

We are supportive of any legislation that would have the federal government participate in the cost of passing through and disregarding child-support collections to current TANF cash assistance recipients. We would also suggest that this passed through and disregarded income be excluded from the income that is counted to determine the family's Food Stamp benefit. Otherwise, the family would be giving back to about one dollar from every three it got. Finally, we note that this passing through and disregarding of the child support collection will require significant computer programming for a state such as Maryland. Should the Congress mandate such a pass through, we suggest that the states be given ample time to properly adjust their automated systems to properly execute such a policy.

• Giving states assistance in our continuing program improvement and research efforts. We have demonstrated that Maryland's welfare reform effort is firmly based on continuing program improvement and using our research results. Our program will continue to develop and improve to better serve low-income Maryland families only to the extent that we can gather enough meaningful data to evaluate our programs and find out where people who have left our programs are or are working. There are several databases that have been constructed or are under construction that fall under the jurisdiction of your committee. Access to either of them would significantly assist Maryland in evaluating its program, seeking a federal High Performance Bonus in the area of TANF and improving the services we offer to our low-income families. We would request legislation to allow us and our researchers access and receive match information including identifiers for TANF purposes from both of the following databases:

• The Expanded Federal Parent Locator Service database, which holds employment information from all of the states as well as the federal government. Maryland is a small state surrounded by others with a large number of federal employees. Access to this database, properly restricted to preserve confidentiality and the proper use of the data, would be of significant help to us in designing future enhancements to our program and in targeting services.

• The database being created under the authority of Section 136(f)(2) of the Workforce Investment Act. While not as powerful as the above database, we would say that cross-state information is as valuable in designing and evaluating programs to implement TANF as to implement WIA.

Thank you for your attention. I will be happy to answer any questions you may have.