COMMITTEE ON WAYS AND MEANS BILL THOMAS, California, Chairman
PHILIP M. CRANE, Illinois E. CLAY SHAW, Jr., Florida NANCY L. JOHNSON, Connecticut AMO HOUGHTON, New York WALLY HERGER, California JIM MCCRERY, Louisiana DAVE CAMP, Michigan JIM RAMSTAD, Minnesota JIM NUSSLE, Iowa SAM JOHNSON, Texas JENNIFER DUNN, Washington MAC COLLINS, Georgia ROB PORTMAN, Ohio PHIL ENGLISH, Pennsylvania WES WATKINS, Oklahoma J. D. HAYWORTH, Arizona JERRY WELLER, Illinois KENNY C. HULSHOF, Missouri SCOTT MCINNIS, Colorado RON LEWIS, Kentucky MARK FOLEY, Florida KEVIN BRADY, Texas PAUL RYAN, Wisconsin	CHARLES B. RANGEL, New York FORTNEY PETE STARK, California ROBERT T. MATSUI, California WILLIAM J. COYNE, Pennsylvania SANDER M. LEVIN, Michigan BENJAMIN L. CARDIN, Maryland JIM MCDERMOTT, Washington GERALD D. KLECZKA, Wisconsin JOHN LEWIS, Georgia RICHARD E. NEAL, Massachusetts MICHAEL R. MCNULTY, New York WILLIAM J. JEFFERSON, Louisiana JOHN S. TANNER, Tennessee XAVIER BECERRA, California KAREN L. THURMAN, Florida LLOYD DOGGETT, Texas EARL POMEROY, North Dakota
Allison Giles, Chief of Staff Janice Mays, Minority Chief Counsel  SUBCOMMITTEE ON HUMAN RESOURCES WALLY HERGER, California, Chairman
NANCY L. JOHNSON, Connecticut WES WATKINS, Oklahoma SCOTT MCINNIS, Colorado JIM MCCRERY, Louisiana DAVE CAMP, Michigan PHIL ENGLISH, Pennsylvania RON LEWIS, Kentucky	BENJAMIN L. CARDIN, Maryland FORTNEY PETE STARK, California SANDER M. LEVIN, Michigan JIM MCDERMOTT, Washington LLOYD DOGGETT, Texas
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records of the Committee on Ways and Means are also published in electronic form. The printed hearing record remains the official version. Because electronic submissions are used to prepare both printed and electronic versions of the hearing record, the process of converting between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process is further refined.

Advisory of February 27, 2002, announcing the hearing

WITNESSES

U.S. General Accounting Office, Cynthia M. Fagnoni, Managing Director, Education, Workforce, and Income Security Issues; accompanied by Gale Harris and Katrina Ryan

Goodwill Industries International, Inc., and Goodwill Industries of the Chesapeake, Marge Thomas

Lewin Group, Michael E. Fishman

Montgomery County Department of Job and Family Services, Dannetta Graves

Wilkerson, Fatima, Baltimore, MD

Wisconsin Department of Workforce Development, Hon. Jennifer Reinert

SUBMISSIONS FOR THE RECORD

Abrahamson, Leslie, Westmont, IL, statement

IMPLEMENTATION OF WELFARE REFORM WORK
REQUIREMENTS AND TIME LIMITS

Thursday, March 7, 2002

House of Representatives,
Committee on Ways and Means,
Subcommittee on Human Resources,
Washington, DC.

The Subcommittee met, pursuant to notice, at 9:42 a.m., in room B-318 Rayburn House Office Building, Hon. Wally Herger [Chairman of the Subcommittee] presiding.

[The advisory announcing the hearing follows:]

Chairman HERGER. Good morning. This hearing of the Ways and Means Human Resources Subcommittee will come to order. Today's hearing will provide an important backdrop as we consider key features of the nation's welfare reform program, namely work requirements and time limits on benefits.

Welfare reform has been a tremendous success in reducing welfare caseload and moving millions of families out of poverty through increased work. We know that nearly 3 million children have been lifted from poverty since 1996, with the black child poverty rate now at a record low. Employment by mothers most likely to go on welfare rose by 40 percent between 1995 and 2000, and welfare caseloads have fallen by 9 million, from 14 million recipients in 1994 to just 5 million today. These changes are without precedent.

The 1996 law has made phenomenal progress, but there is still work to do.

I know many people will be surprised to learn that we do not require every welfare recipient to work or at least prepare for work today. In the year 2000, only 34 percent of the national caseload was engaged in any of a broad range of work activities, including education and training, for at least 30 hours per week. In some States, that figure is as low as 6 percent. According to the U.S. Department of Health and Human Services' (HHSs) most recent annual report, an astonishing 57.6 percent of families on welfare are doing nothing to prepare for work while receiving benefits. That is just not good enough.

I congratulate the President for proposing changes that will reinforce the pro-work message for many more individuals on welfare. Work is the only real path out of poverty, and only through helping more people work will we get the rest of the job done.

As we press on with further reforms, there are a number of issues we need to understand about how work requirements and time limit policies are working in practice. One set of issues involves what are called child-only cases. Work requirements and time limits do not apply to these cases, which represent more than one-third of the current caseload and the share is rising.

Other issues stem from separate State-funded Temporary Assistance for Needy Families (TANF) programs that exclude some participants from Federal work requirements on time limits. I asked the U.S. General Accounting Office (GAO) last year to provide us with some information about how these separate State programs affect the work participation targets and time limits. They will share their findings with us today.

A final set of issues involves the time limits included in the 1996 law. The 1996 law expected families to receive no more than 5 years of Federal cash benefits with up to 20 percent of the caseload exempted for hardship. The need for this change was clear. Prior to 1996, the average lifetime of then-current welfare recipients was an incredible 13 years. Welfare had become a trap, plain and simple.

Today, we will review how time limits have worked in practice. We will find that the vast majority of parents left welfare prior to their clock expiring. For these families, the time limit worked as intended to motivate both recipients and case workers to address family needs quickly and help recipients find and keep jobs. In a significant number of other cases, including child-only cases and those receiving assistance under separate State programs, families effectively have been exempted from the time limits altogether.

Joining us today to provide perspective on how work requirements and time limits are applied in practice are distinguished researchers from the public and private sectors, along with State and local program leaders. We also are joined by Marge Thomas of Goodwill Industries and one of Goodwill's success stories, Ms. Fatima Wilkerson, to describe how parents with special challenges can succeed in the workplace. We look forward to hearing from all of our witnesses.

Without objection, each Member will have the opportunity to submit their written statement and have it included in the record at this point.

[The opening statement of Chairman Herger follows:]

Chairman HERGER. Mr. Cardin, the Ranking Member is on his way, and we will allow him to make a statement when he arrives. Again, without further objection, all the written testimony will be made a part of the record.

To start the hearing today, we have Cynthia Fagnoni, Managing Director of Education, Workforce, and Income Security Issues, the U.S. General Accounting Office. Ms. Fagnoni?

STATEMENT OF CYNTHIA M. FAGNONI, MANAGING DIRECTOR, EDUCATION, WORKFORCE, AND INCOME SECURITY ISSUES, U.S. GENERAL ACCOUNTING OFFICE; ACCOMPANIED BY GALE HARRIS AND KATRINA RYAN

Ms. FAGNONI. Good morning. Mr. Chairman, I have with me today two of my colleagues, Gale Harris and Katrina Ryan, who have worked very hard on this testimony that I am going to give today.

Mr. Chairman and Members of the Subcommittee, my colleagues and I are pleased to be here today to talk about what we have learned from States' implementation of work requirements and time limits for welfare families. When the Congress created the Temporary Assistance for Needy Families grant, the TANF, in 1996, it included work requirements and time limits designed to focus welfare offices and welfare recipients on finding jobs and moving off the welfare rolls.

To help accomplish this, the law requires that States meet Federal mandated participation rates for the percentage of welfare recipients in work activities or work or face financial penalties. In addition, States must enforce a 60-month lifetime limit on families with adults that receive welfare. To receive its Federal TANF funds, each State must meet a maintenance of effort requirement by spending a specified amount of its own funds on welfare and related programs.

Today, I want to highlight key findings from our review of all 50 States and discussions with 12 of those States.

First, it is important to understand, as you have mentioned, that a significant share of welfare cases are comprised of children only with no adult receiving welfare. Because no adult in these families receives cash assistance funded by TANF or State dollars, work requirements and time limits do not apply.

In late 2001, nationwide, about 700,000, or one-third of the 2.1 million cash assistance cases funded by Federal or State dollars were child-only cases. In some States, the primary reason for child-only cases was a non-citizen parent not eligible for aid. For example, a large percentage of child-only cases in Texas had a non-citizen parent. In several other States, child-only cases were primarily families where the caregiver was someone other than the parent.

The second issue I will discuss today is the flexibility States have in implementing the Federal work requirements. When welfare reform mandated Federal work participation rates, it also included a caseload reduction credit provision. This provision specifies that each State's mandated participation rate is to be reduced if its welfare caseload declines.

Because of the dramatic declines in welfare caseloads that has occurred since 1996, States have generally faced greatly reduced mandated participation rates for their TANF programs. For example, in fiscal year 2000, caseload reduction credits reduced mandated participation rates to zero in 31 States instead of the mandated rate of 40 percent.

Some State officials told us that because of the work participation rates being so low due to caseload reduction credits, States have more flexibility in the types of activities or services they can provide, for example, substance abuse treatment or mental health services, while still meeting their Federal work participation rates.

We found in our previous work that some States included recipients in a range of work participation activities that extended beyond those that meet Federal work participation requirements, particularly to meet the needs of recipients considered hard to employ. We also found in our previous report on TANF recipients with mental and physical impairments that States and counties often exempted individuals they considered hard to employ from work requirements.

Twenty-six States also provided cash assistance to certain needy families through State-funded programs, in which case Federal work requirements do not apply. States told us they used this option because of concerns that some families would not be able to participate for the number of hours or in the types of activities required to meet federally mandated rates. We also found, however, that when States provided cash assistance to which Federal work requirements did not apply, they imposed their own. This indicates that States are not providing aid through these State programs to circumvent work requirements but to minimize the risk of Federal financial penalties.

The third issue I will discuss is time limits. Nationwide, States excluded 11 percent of the 1.4 million welfare families with an adult from a Federal or State time limit. States generally targeted these time limit exclusions on families considered hard to employ and on working families not earning enough to leave the welfare rolls. For example, 22 States have policies in place to exclude working families from time limits. Maryland and Illinois told us they stop the clock for working families by funding them with State dollars rather than Federal TANF funds.

I would like to end by highlighting some issues related to States' implementation experiences. Even though we are 5 years into welfare reform, States still have limited experience with time limits. At the time we conducted our survey this fall, 22 States had not had TANF in place long enough for families to reach either the Federal or State time limit. Even in those States in which families have started to reach their time limits, many families have not reached their time limit because they have cycled on and off welfare. As a result, only 15 States have begun to use the Federal 20 percent hardship exemption and all these States are applying it to less than 6 percent of their caseload.

The State officials we spoke with thought the 20 percent extension was adequate now but were less sure about the future. For example, Michigan told us it will use the Federal 20 percent extension for all recipients following the rules of the program. If the number of families they want to exclude begins to exceed 20 percent, they plan to continue providing assistance with State funds.

In talking with States, we generally found that State officials were supportive of work requirements and time limits. They also said that flexibility in implementing work requirements and time limits was important in allowing them to meet the needs of their recipients, such as the hard to employ. This flexibility helps to ensure that States can adapt the Federal program to meet State and local needs while still emphasizing work and the transitional nature of assistance.

Mr. Chairman, this concludes my prepared statement. We would be happy to answer any questions you or other Members may have. Thank you.

[The prepared statement of Ms. Fagnoni follows:]

Chairman HERGER. Thank you very much, Ms. Fagnoni.

Maybe at this time, before going into questioning, the Ranking Member from Maryland would like to make an opening statement.

Mr. CARDIN. Thank you, Mr. Herger. Let me thank the Chairman. I apologize for being a little bit late. I had a morning meeting in Baltimore and sometimes the commute between Baltimore and Washington gets a little bit longer because of some of the road construction. If Congress would only appropriate the right amount of money for the roads, I could get here on time.

[Laughter.]

Mr. CARDIN. Mr. Chairman, over the last 6 years, the percentage of welfare recipients who are working has tripled. Furthermore, the percentage of never-married mothers who are working has climbed from less than 50 percent to almost 70 percent. Many of the women in this group have left welfare for work.

Now, obviously, this has been as a result of the TANF legislation passed 5 years ago. It has been as a result of a growing economy. We have also made work pay by increasing the earned income tax credit. All of this has contributed to the fact that we have more people working off of the welfare rolls. I find that noteworthy, despite the fact that I think most States would agree that the Federal work participation requirement did not really mean that much because of the credit that was available on people coming off of the welfare rolls.

I make that point, Mr. Chairman, because the States have acted responsibly without a Federal mandate on the work requirements, effectively. So I think we need to understand that the trust that we had in the States 5 years ago was well placed.

As we now look at the next step in welfare reform, I think we need to be somewhat cautious about being so prescriptive on the work requirements and taking away flexibility from the States that it makes it more difficult for the States to really carry out the intent of welfare reform.

So, yes, I believe very strongly in a work requirement and a work requirement that is meaningful. In fact, the legislation that I filed on behalf of my Democratic colleagues changed the credit from the caseload reduction to the employment so that we offer positive incentives for finding employment for people coming off the welfare rolls. But I just urge us not to be so prescriptive and restrictive to the States that they really cannot accomplish the purpose of welfare reform.

I am concerned that some of the requirements that are proposed by the President could, in fact, work just the reverse. It could encourage the States to go into work there rather than into private sector employment, and our objective is to get people into private sector employment, not into workfare jobs. I am concerned that by the work requirements that have been put into the President's proposal that we may actually be contrary to the trend we have seen over the last 5 years of finding private sector employment for the people coming off of welfare.

I think that is also true with the fact that the President's budget does not provide any additional funds for child care. If we are going to increase the work participation rules, then obviously we are going to have to put more attention on child care. If, in fact, there are no additional resources put on child care, to a certain degree, I think this becomes an unfunded mandate on the States and something this Committee needs to take a very careful look at.

So, Mr. Chairman, I look forward to the panel that we have. I look forward to our questioning of Ms. Fagnoni and her work with the panel that you have brought together so that we can come to a meaningful work requirement within the TANF reauthorization, one that affords the States the flexibilities that they need in order to make sure people not only come off the welfare rolls but have meaningful employment and can take care of their needs and do not have to live in poverty.

[The opening statement of Mr. Cardin follows:]

Chairman HERGER. I thank the Ranking Member for his comments. Now we will turn to questions, and the gentlelady from Connecticut, Mrs. Johnson, to inquire.

Mrs. JOHNSON. Thank you very much for your testimony, Ms. Fagnoni. You did move through a lot of very, very important information very rapidly, and I do not think any of us realize the extent to which the work requirements were not a problem to States because they were not being met.

After all the President's proposal does start out with the same 50 percent that is current law. While he phases in higher work requirements, in looking just at that 50 percent, what are the three or four key things, changes in the law that we would need to make in order to really require States to meet that 50 percent?

One that comes to mind from your testimony is that we would have to say that you cannot move these folks into State programs unless those State programs also have work requirements. Moving people into State programs that do not have work requirements seems to be a significant dodgeball move. Is that true or not? Could you give us any sense of proportionality in terms of these different actions that end up undermining the work requirements so that we can get a better picture of what we would have to do to make sure that the work requirement currently in the law does hold?

Ms. FAGNONI. Actually, what we have found is that while States use the flexibility given to them in part because of the caseload reduction credit, and they did use that flexibility to, in some cases, provide assistance to people through State funding, that in most cases, the individuals in these programs were still subject to State-imposed work requirements. I believe the figure is 90 percent.

The difference, though, is that in the State programs, States often will define work activities somewhat more broadly than what is allowed for under the Federal participation rate rules. So States might include things such as having somebody attend substance abuse treatment, something like that, somebody who needs that kind of help they feel to help move them into the workforce. Under the States' program, that might count as a work activity. So States have used the flexibility to impose their own types of work requirements on most of the people who are in the State programs.

Mrs. JOHNSON. Are you saying that 90 percent of the State programs do have work requirements?

Ms. RYAN. Ninety percent of the families served with separate State programs are subject to a State work requirement.

Mrs. JOHNSON. And do we count the people in State programs that work toward the Federal work requirement?

Ms. FAGNONI. Not in all cases, that is right, because again, the States may be defining this differently than the Federal definition.

Mrs. JOHNSON. Well, ignoring for a moment the fact that the definition may be different, because under the new law that may not be such a problem, it would be useful to know that if we included the people in State work programs, then are the States--how close are the States coming to meeting the current 50 percent requirement? The idea that they are meeting 5 percent is very disturbing. On the other hand, if 90 percent of the States have people in programs that have work requirements, and then we can get into the definitional issue later, but we need to know that.

Ms. FAGNONI. I do not think we have a specific number that it would raise the percentage to, but again, these percentages are what they are required to meet. It does not necessarily mean that they have only done that amount, even through the Federal rules.

In fact, we did a report a couple of years ago where we looked at the fact that about 42 percent of TANF recipients on the rolls were engaged in some kind of Federal type of work activity, work activity as defined under the Federal laws. So just because they have a very low actual percentage, they need to meet does not mean that States, even under the Federal definition, have only met that amount.

Mrs. JOHNSON. It would be very helpful in going forward if you could look at sort of that last report and this report and help us see, under Federal law, how many actually are working, meeting the work requirements, and then under those who have been moved into State programs--

Ms. FAGNONI. If we added those in.

Mrs. JOHNSON. Because otherwise, it sounds like they are just moving them out of sight, out of mind, and that they are not part of the same program, and most of the State programs are very similar, but because of some of the lack of flexibility in our program, they have dealt with them differently. I do not know whether you have any statistics that would indicate how many of the people in State work programs are spending what percentage of their time in drug treatment and so on.

Ms. FAGNONI. No, we do not have that specific information.

Mrs. JOHNSON. Thank you.

Chairman HERGER. I thank the gentlelady from Connecticut. Now the Ranking Member, Mr. Cardin, from Maryland.

Mr. CARDIN. Thank you, Mr. Chairman.

Reading over your report, I see that you say that officials in almost all States we spoke to expressed the desire to have more flexibility in counting education and training towards the Federal work participation rate. Can you elaborate any further on that? What were the reasons for this? Is this just the fact that they want more flexibility in dealing with a Federal requirement or did they find that helpful in trying to find permanent placements for people who are leaving the welfare rolls?

Ms. FAGNONI. I think one of the issues is there seems to be some confusion over what kinds of education might count. It is supposed to be education that leads to employment, so there is some confusion there, some restrictions on the amount of vocational education that can count. And I think what States tend to tell us is that they want the flexibility to be able to decide, and sometimes on a case-by-case basis, that somebody needs some somewhat different package of services that they think will move that person into the workforce. States would like to have that ability to do that.

Mr. CARDIN. That is totally consistent with what we have heard from the National Governors and what we have heard from our State legislators who have been here talking about the fact that one size does not fit all and that is the real advantage of the original TANF bill. But you are right. We have found that some States have interpreted Federal law on vocational education differently, and they have asked us for some help in giving them more flexibility in trying to meet their own individual needs.

One of my concerns is that, if I understand the President's proposal, there is a significant additional restriction on vocational education in that for the average person on welfare, they have to be in an employed position for 24 hours a week before they can get into vocational education. Did you have any conversations with the States as to how they would feel about such a proposal?

Ms. FAGNONI. At the time we were doing our work, specific proposals had not yet been introduced. Certainly, there were some general discussions about possible actions that might be taken, such as raising the Federal work participation rate, and basically what States told us with that was that some States at least said they think they could deal with a higher rate if they had some more potential flexibility in what might count toward that, as a work activity toward that new higher rate.

Mr. CARDIN. And I think that is consistent with what we are hearing, as you said, more flexibility. Some States are using more intensive vocational education for different types of people that could not fit into a 24-hour work week, is that not correct? Are they not using some--

Ms. RYAN. States did not specify that with us. They had just mentioned more flexibility in the area of vocational education and training, substance abuse treatment and mental health treatment, but we did not get into specifics.

Mr. CARDIN. More flexibility with the amount of time, with the 1-year restriction? More flexibility with the percentage of their caseload that could be in vocational education? More flexibility as to what is considered vocational education, or all of the above?

Ms. FAGNONI. I think it would probably be all of the above as it relates to the Federal requirement. You came back to the discussion with Mrs. Johnson. States with their own State funding are already using the flexibility that that provides to define work activities a little bit differently than the Federal definition.

Mr. CARDIN. That is very helpful. You also mentioned the fact that my State of Maryland is instituting wage supplements but feel that it is unfair that it counts toward the 5-year clock. So instead, what they are doing is using State funds only. Does that seem to be occurring more among the States, the use of State funds rather than using TANF funds in order to do things that are not permitted or that run counter to the intentions of the Federal TANF law?

Ms. FAGNONI. There are certainly States that are using State funds under the provisions of TANF to not meet Federal requirements but often placing their own types of requirements, including time limits. Some States have chosen, including Maryland, Illinois is another example, have chosen to use the State funding to allow them to, if you will, stop the clock for those who are receiving TANF but working. So they are, again, using that flexibility provided through the State funding. Some States have made that choice, others have not.

Mr. CARDIN. It is interesting, because all the studies that we have seen show that wage supplements are positive. It helps. It helps people leave welfare and be able to have permanent employment and take care of their families, et cetera, and the wage supplements are good. As you point out, States have not had a problem yet with the 20 percent exemptions generally on the 5-year clock but they are concerned in the future that they are going to have a problem with the 20 percent meeting the 5-year clock, and therefore they are reluctant to use the wage supplements towards the 5-year clock, and that is one of the reasons I think they are asking us to modify that rule.

Thank you, Mr. Chairman.

Chairman HERGER. Thank you, Mr. Cardin. Would the gentleman from Louisiana, Mr. McCrery, wish to inquire?

Mr. MCCRERY. Yes. Thank you, Mr. Chairman.

My colleague from Maryland has spoken in his opening statement about his confidence in the States to do the right thing when given flexibility. I look forward to working with them on the unemployment compensation situation to give them the same flexibility.

Mr. CARDIN. Absolutely. We will put it together.

Mr. MCCRERY. Ms. Fagnoni, again, tell us what percentage of the current TANF caseload is not subject to the work requirements.

Ms. FAGNONI. Well, there are two ways we have presented this in the testimony. One has to do with the child-only cases, which, because there is no adult in the case, they are exempt from both the work requirements and time limits and that is about a third of the total caseload.

The work requirements, what we have is that under the separate State programs, the fact that about 90 percent of families are still subject to some sort of State-imposed work requirement while they may not be subject to the Federal requirement. But again, the child-only cases are not subject to the work requirement at all.

Mr. MCCRERY. Do you have a percentage of the current caseload that is not subject to the Federal work requirement?

Ms. FAGNONI. No, we do not. We do not have that information other than for the child-only cases.

Mr. MCCRERY. Is it not a fact that of the current caseloads, an extremely low percentage of those left because of the caseload reduction credit that the States get are not subject to the work requirement?

Ms. FAGNONI. Well, as I pointed out a little bit earlier, what the caseload reduction does is specify the rate that the States would have to meet to be in compliance, so it is a minimum. It does not mean that that is all States are doing, and in fact, from a report we did a couple of years ago, about 42 percent of TANF recipients are engaged in some kind of work activity who are receiving TANF. So while the effective rate, the minimum is very low, States--and, of course, it varies across States--States are having participants, even with the Federal funds, participate in work activities.

Mr. MCCRERY. So what you are saying, I think, is that under the current Federal law, the States would not be required to have a large percentage of their caseload working, but, in fact, because of State work requirements, there is a higher percentage than is required by the Federal law.

Ms. FAGNONI. Or their own choices about how they are dealing with TANF recipients to ensure that they are moving into the workforce before they hit the 5-year time limit. Many of them are having them in work activities even under the Federal definition to prepare them for work. So the caseload reduction credit and how that affects their rate is not what is driving States as much as it is their own decisions about how to help people while they are on welfare.

The other thing that States have told us, just as an aside, is they do not always--actually, when they are looking at their Federal participation rate, they often are not sure how the caseload reduction credit is going to be applied, so in some cases, they just have not even thought about that. They were too worried that they might miscalculate and be out of compliance, so they have gone ahead and tried to meet Federal work requirements that they thought might apply to them. So they have actually found that reduction credit somewhat confusing.

Mr. MCCRERY. Mr. Chairman, we do not have with us today HHS, but they have a recent report that shows that a very high percentage of recipients are not doing anything to prepare for work while receiving their benefits. So I think we need to get some more testimony on this to clear it up and find out just where we are.

How many States do not have any work requirement?

Chairman HERGER. Excuse me. Secretary Thomas will be before us next week, so we will be able to inquire.

Mr. MCCRERY. Good. How many States have no work requirements for those in separate State programs?

Ms. RYAN. I think we have found that the majority of States have implemented State work requirements in those separate State programs.

Ms. FAGNONI. So that 10 percent are not.

Ms. RYAN. Of the families.

Ms. FAGNONI. Of the families would not be subject to a work requirement, again, of the families with an adult.

Mr. MCCRERY. Okay. Just one quick question, Mr. Chairman. As the States spend money on separate programs, and they do not use the Federal dollars for whatever reason, do those expenditures count against their maintenance of effort requirement?

Ms. FAGNONI. Yes, they do. Yes.

Mr. MCCRERY. Thank you.

Chairman HERGER. Thank you, Mr. McCrery. Now we will turn to the gentleman from Michigan, Mr. Levin, to inquire.

Mr. LEVIN. Thank you very much. This has turned out, Mr. Chairman, I think to be a useful hearing. I hope that all the Members will read and listen to what you say. I sense there is a polarization growing in this place about the next step of welfare reform that I do not understand.

Mr. Cardin pointed to a portion in your report where you talk about while State officials were generally supportive of TANF flexibility, officials in almost all the States we spoke with expressed the desire to have more flexibility in carrying education and training towards the Federal work participation rate. Those of us who supported, especially as we finally shaped it, welfare reform believe the States should have some flexibility, and the curious thing is now that some of those supporters seem to be saying the dictate should come from here and I do not really understand that.

Also, I did not see it in the written testimony, if you would read back, if you would, Ms. Fagnoni, what you said about States not using caseload reductions. I just got the first part of that. I think I got the first four words right, but I am not sure.

Ms. FAGNONI. What we said basically was that because of the caseload reduction credit, a number of States, their mandated participation rates were, in effect, much lower than one might think from just looking at the law, and for 31 States, the mandated participation rate was zero once one factored in the caseload reduction credit.

Mr. LEVIN. And then you said something about the States were not using--what did you say about that?

Ms. FAGNONI. Well, my point was--

Mr. LEVIN. Do you remember? Is it in your written testimony?

Ms. FAGNONI. Well, my point was that while this is the mandated participation rate, that does not mean that is what States have done in fact in terms of placing people in work activities, either with the Federal funds or with the State funds. What that specifies is what they are mandated to do to, at a minimum, to not have a financial penalty.

Mr. LEVIN. But I think you then went on to say that the States were not using caseload--

Ms. FAGNONI. Well, what I said was this is not something that is given to them in advance. It sort of depends on how the caseload declines and some States were worried that they might not be sure of what the mandated rate would turn out to be, so they tended to not place so much weight on what a caseload reduction credit might end up being because of that concern.

Mr. LEVIN. I think the main point here is that States are using the flexibility by and large to get people to work and that even those who are on cash assistance, and substantial numbers are in some kind of a work or work-related activity. Mr. McCrery talked about an HHS report. Do you know, does the HHS collect data on the work participation as defined by Federal law or--

Ms. FAGNONI. Yes.

Mr. LEVIN. So when you cite or talk about the HHS report, those data are, as I understand it, in terms of the Federal definition and not what the States may be doing within their own programs. Is that an accurate statement of HHS data?

Ms. HARRIS. Their data reporting changed dramatically. I think for fiscal year 2000, it is supposed to be the first year that they had some information on not just activities that count toward the Federal participation rate but a broader set of activities, and we have not seen that data yet and you might have that data. With the old data reporting system, it was more just geared toward those federally counted activities, and I think there is new data now on a broader set of activities.

Mr. LEVIN. And those data, in terms of State programs, is that a comprehensive report from the States? Would that cover all of the work or work-related activities as defined by the States?

Ms. HARRIS. I do not have the details of it.

Mr. LEVIN. You are not sure.

Ms. HARRIS. I believe that was the intent.

Mr. LEVIN. The reason is I think that we need to discuss what are the major challenges before us today as we look at welfare reform. There has been no discussion here today about the average wage of people who move off of welfare into work, which according to unemployment data is $2,050 a quarter, about $8,000 a year. I think before we get polarized over the issue of work requirements, we had better ask ourselves whether an objective of welfare reform is to help people move out of welfare into work and in a way that they will in a foreseeable future be earning enough so that they can feed and educate their children and actually snip the dependence that they once relied on. Thank you.

Chairman HERGER. I thank the gentleman from Michigan. Now I recognize another gentleman from Michigan to inquire, Mr. Camp.

Mr. CAMP. Thank you, Mr. Chairman, and thank you for holding this hearing.

Ms. Fagnoni, I have been listening carefully to your testimony, and I think it does get a little bit confusing between what the Federal requirements are and what States are actually doing. I am interested in kind of your assessment on what implication your testimony about exceptions to work requirements and time limits has for the President's proposal, which would require 24 hours a week of work as opposed to the current 30, and then 16 hours of any other activity, which many of us would view as strengthening the work requirement. Even though it means that we may be expecting more of parents receiving cash assistance, would a large portion of the caseload not be exposed to those increased requirements given the data as you have seen it?

Ms. FAGNONI. In some cases, it is difficult to exactly know what all the interactions might be between what is going on now and what a specific proposal might do, but certainly one would have to set aside the child-only cases which are--I mean, we cite the one-third, but it is a number that has been growing. So that portion of the caseload, because there is no adult receiving assistance, would be exempt. So that is one piece of the story.

Then there are some other pieces of the story related to, you know, some of the States' decisions to serve individuals, families with adults through their State funds, either because in some cases they were concerned. For example, two-parent families, they were concerned they might not be able to meet participation rates given what they thought were some of the problems that two-parent families faced, or where they felt that serving people with State funds might allow them to, again, expand the definition of work activities a little bit, or their choices in things like stopping the clock when people are working and receiving TANF.

So based on what States were telling us, and again, not linked to any specific proposal, but based on what at least some of them were telling us, they felt that they could handle somewhat higher work participation rate requirements if they were given perhaps some more flexibility with how those activities might be defined, but we did not get into specifics and did not have specific proposals in front of us to talk through with them.

Mr. CAMP. And part of that also, the two-parent families, would likely be enrolled in separate State programs and--

Ms. FAGNONI. That is what is being done quite a bit now, yes.

Mr. CAMP. In looking at this data, you mentioned that 11 percent of the caseload is not subject to time limits, but only 11 percent of that group is using the Federal hardship exemption. So am I understanding that about 1 percent of the caseload, total caseload, currently uses the Federal hardship exemption?

Ms. RYAN. Of the adult caseload, that is correct.

Mr. CAMP. The adult caseload.

Ms. RYAN. But, obviously, the time limits have not been in place, or some States, 5 years is just beginning to hit. So a lot of States have not even begun to use the Federal 20 percent extension.

Mr. CAMP. I see also that on page 22, Oregon and Arizona stand out as exempting a significant portion of their caseloads. How have these States been able to avoid imposing time limits almost of any kind?

Ms. RYAN. Through waivers. Oregon has a waiver in place that exempts anyone if they are participating in a self-sufficiency activity, so that is all underneath waivers that were implemented before the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) was passed.

Mr. CAMP. I also want to bring attention to a Congressional Budge Office (CBO) view on child care funds. In 1996, they estimated that if States continued to spend, they would be underfunded by about $13.1 billion, and, of course, that did not happen. We ended up having a surplus in TANF, contrary to CBO's predictions. I think part of the difficulty in projecting this is not really understanding what the caseload dynamic is going to be in the future. Do you have any way of telling us or predicting that?

Ms. FAGNONI. We do not have a way of predicting that. We can tell you that for the national data that are available through HHS, which lags somewhat, it is through September, I think it was about 28 States that were experiencing some relatively modest increase in their TANF caseloads. But the national caseload was still declining by a modest amount.

We actually have work currently underway for Mr. Cardin where we are collecting more up-to-date information on caseloads from 25 States and that will take us through December, which may give us a better idea of whether caseloads might be creeping up a little bit. But again, even that does not necessarily tell us what the future will look like, given economic conditions.

Mr. CAMP. But there is nothing to say that the additional 16 hours in any other activity, which might include training, might actually cause another dramatic drop in welfare caseloads. There is nothing to say that might not happen.

Ms. FAGNONI. Yes. I think it would be really difficult to predict because of a lot of interactions that might occur related to the availability of jobs and things like that. For much of welfare reform, there are a lot of jobs in the private sector that were pretty readily available for people.

Mr. CAMP. I see my time has expired. Thank you, Mr. Chairman.

Chairman HERGER. Thank you, Mr. Camp. Now the gentleman from Pennsylvania, Mr. English, is recognized.

Mr. ENGLISH. I thank you, Mr. Chairman, and Ms. Fagnoni, it is great to have you before us again.

Ms. FAGNONI. Thank you.

Mr. ENGLISH. Your testimony shows that 23 percent of child-only cases involve ineligible non-citizen parents receiving benefits for their eligible citizen children. What about in separate State programs? Do we know what proportion of the families being served are non-citizens?

Ms. FAGNONI. We do know that 13 States have chosen to provide assistance to immigrants who are ineligible for the Federal funding, to provide them with assistance, and in all 13 States, they do apply work requirements to these individuals.

Mr. ENGLISH. Do we know how many parents in child-only cases or separate State programs are actually illegal aliens?

Ms. FAGNONI. We have had a discussion about that. It is most likely that the child-only cases, the illegal alien is likely to show up there because that individual would not be eligible for assistance, either really probably through the Federal or State programs. I think what the States are doing is providing assistance to people who are here legally but who, because of the Federal requirements, are not eligible for TANF for some period of time.

Mr. ENGLISH. You also note in your testimony, on page 13, that States impose work requirements on non-citizens--

Ms. FAGNONI. Right.

Mr. ENGLISH. And that has been reiterated here, and that would be through a separate State program using only State funds. What about in cases where Federal assistance is provided to citizen children of non-citizen or illegal alien parents? Can there be any work requirements on these families receiving Federal assistance?

Ms. FAGNONI. If the individual is here legally, then I think that could be the group of people who are being served through the separate State programs. If somebody is here illegally, then they are not going to be eligible for assistance and, therefore, not having work requirements imposed on them. In fact, it is illegal for them to be here, and it is illegal for them to work here. It is an issue that has been problematic for policy makers for a number of years, where you have a mixed household where some of the people and often the children are actually citizens while their parents may be illegal aliens.

Mr. ENGLISH. Are there any recommendations out there for how we could close the loop and subject non-citizen families to work requirements or time limits?

Ms. FAGNONI. Certainly, where the immigrant is here legally, States have taken that approach in some cases by not just providing them assistance but by imposing the work requirement.

Mr. ENGLISH. Which States?

Ms. FAGNONI. There were 13 States.

Ms. RYAN. I know California and Maryland are a couple of them. I can get you the other ones.

Mr. CARDIN. Would the gentleman yield for one moment?

Mr. ENGLISH. Certainly.

Mr. CARDIN. It seems to me that, and I am looking at Texas where a large percentage of the child-only caseload is where the parent is an ineligible non-citizen, if we gave the States the flexibility under TANF to cover legal immigrants and then they cover these cases, would there then not be a work requirement on the parent?

Ms. FAGNONI. There would, although it is not likely unless there were a decision to also provide assistance to illegal aliens. What we do not know is what portion of that percentage represents illegal alien heads of households.

Mr. ENGLISH. Reclaiming my time, I guess this is reiterated in the last question, but have there been any proposals put forward that you are aware of that speak directly to this?

Ms. FAGNONI. I think it has been more problematic with the illegal alien population because the root problem really is they are not supposed to be here in the first place, and so there have really not been any proposals that have gone anywhere that really address that issue. I think with people who are here legally, if they receive some kind of assistance, then I think there could be work requirements imposed.

Mr. ENGLISH. Thank you, Mr. Chairman. I yield back the balance--

Mr. CARDIN. Would the gentleman yield? I think you have another 30 seconds. Would you yield?

Mr. ENGLISH. Yes.

Mr. CARDIN. I want to clarify one point, if you would.

Mr. ENGLISH. Sure.

Mr. CARDIN. That is, if we gave the States the rights to cover legal immigrants as a discretion and they then covered these child-only cases where there is a legal immigrant as a parent, would not then the Federal work requirement apply if the States so choose to cover that family?

Ms. FAGNONI. It would no longer be a child-only case. It would then be a case with an adult in it and then they would have to make the decision what kind of work requirements to impose, that is right.

Mr. ENGLISH. And in that case, we would be fundamentally changing our policy toward welfare for non-citizens?

Ms. FAGNONI. That is right.

Mr. ENGLISH. Thank you, and I yield back the balance of my time.

Chairman HERGER. I thank the gentleman from Pennsylvania. Now the gentleman from Kentucky, Mr. Lewis, is recognized to inquire.

Mr. LEWIS. Thank you, Mr. Chairman.

Ms. Fagnoni, on page 14 of your testimony, you illustrate that of the 11 percent of the caseload not subject to time limits, only 11.2 percent of that group has been categorized as a hardship exemption. Is it right that only 1 percent of the caseload is currently using this exemption?

Ms. FAGNONI. That is correct, and that is, we think, primarily because while this TANF program has been in place at the Federal level for 5 years, the time limits are just beginning to come into play, and so in a lot of cases, States really do not have a very good handle on what proportion of their caseload might end up reaching this 5-year time limit and what they might need in terms of some kind of hardship extension.

Mr. LEWIS. That is all, Mr. Chairman. Thank you.

Chairman HERGER. Thank you. Ms. Fagnoni, how is the number in separate State programs expected to change over time, especially as more families reach Federal time limits? I understand that New York and California, comprising about one-third of the national caseload, are among the States that provide State benefits after a family has received Federal benefits for 5 years, and in these and other States with such policies from the families' perspective, is there an effective 5-year limit on their welfare checks?

Ms. FAGNONI. You are correct that some States at this point have said they have made the decision to extend benefits to individuals who remain on welfare even after the 5 years. Some States have told us, though, including California, that they might need to reconsider how much they are able to support based on State budgetary considerations and concerns. So there are States that do intend or are starting to extend benefits through their State programs, even after people reach the 5-year time limit, that is correct.

Chairman HERGER. I want to thank our witnesses. Thank you very much, Ms. Fagnoni, for your good testimony.

Ms. FAGNONI. Thank you, Mr. Herger.

Chairman HERGER. I would like to call up our second panel. This morning, we will be hearing from Marge Thomas, Chief Executive Officer, Goodwill Industries of the Chesapeake, Baltimore, Maryland, accompanied by Fatima Wilkerson, Baltimore, Maryland; the Honorable Jennifer Reinert, Secretary, Wisconsin Department of Workforce Development, Madison, Wisconsin; Dannetta Graves, Director, Montgomery County Department of Job and Family Services, Dayton, Ohio; Mark Greenberg, Senior Staff Attorney, Center for Law and Social Policy; Michael Fishman, Lewin Group, Falls Church, Virginia; Douglas Besharov, Professor, University of Maryland School of Public Affairs, College Park, Maryland, and Resident Scholar, Public Policy Research, American Enterprise Institute.

We will begin this panel with testimony from Marge Thomas, Chief Executive Officer of Goodwill Industries of the Chesapeake, Baltimore, Maryland, who is accompanied by Fatima Wilkerson of Baltimore, Maryland. A key focus of their testimony will be serving TANF recipients with barriers to employment.

At this time, I would like to insert into the record a recent study by the Urban Institute that shows that despite what seems to be commonly accepted belief that the welfare caseloads have gotten harder and harder to serve as the easiest cases have left for work, the caseload is generally the same as it was a few years ago. On page 30 of the report, the author notes that, "Contrary to conventional wisdom, our results did not indicate that adults on TANF in 1999 were significantly more disadvantaged than those on welfare in 1997."

[The material follows:]

The majority of adults on TANF reported significant barriers to employment. However, contrary to conventional wisdom, our results did not indicate that adults on TANF in 1999 were significantly more disadvantaged than those on welfare in 1997. While the data suggested somewhat poorer health status for the 1999 cohort of TANF recipients compared with the 1997 cohort, the differences were not statistically significant. Education levels and caregiving responsibilities also did not differ significantly. Of course, our results reflect a time period when TANF was just getting underway (1997) and one after TANF policy had evolved further (1999). While caseloads were dropping rapidly during our two periods of observation, it may be that adults on TANF in 1997 and 1999 were more disadvantaged than those on welfare prior to 1997.

The clearest difference between the two cohorts of TANF recipients was increased work activity, especially paid work, among 1999 TANF recipients. While still at a relatively low level, paid work among those with multiple barriers to employment increased fourfold (from 5 percent in 1997 to 20 percent in 1999). These results clearly indicate the influence of a very strong economy coupled with states' strong "work first" programs that try to move recipients into paid jobs as quickly as possible.

Welfare cycling continued to characterize the TANF population. Some left but came back on, and new entrants comprised the same percentage of TANF adults in 1999 as in 1997. Our results highlight the continuing needs of a group of disadvantaged single mothers with low education levels and high levels of mental and physical health problems. The fact that one-third of new entrants were caring for an infant (compared with 1 in 5 cyclers and about 1 in 16 stayers)

[The study is being retained in the Committee files.]

Chairman HERGER. With that, I turn to Ms. Thomas for your testimony. Ms. Thomas?

Ms. THOMAS. Thank you. Good morning, Chairman Herger, other Members of the Human Resources Subcommittee. I am Marge Thomas. I am the President of Goodwill Industries of the Chesapeake, which is located in Baltimore, Maryland. I am also representing today Goodwill Industries International. I chair the Public Policy Committee for the Board of Directors for Goodwill Industries, International, so I am also wearing that hat today.

Goodwill Industries International currently consists of 177 Goodwills who are operating throughout the United States. We are celebrating 100-year anniversary this year as a movement. Since 1902, we have had the experience of working with people who have multiple barriers to employment. I come to you speaking on behalf of all 177 members.

In the year 2000, Goodwill Industries served 150,000 TANF recipients. We have served over 450,000 since 1996. Getting a little bit closer to home and talking specifically about our own Goodwill, Goodwill Industries of the Chesapeake operates in the Baltimore metropolitan area and the entire Eastern Shore. We have experience working with people with a variety of barriers, from folks who are crab pickers in the summertime and do not have jobs in the winter to individuals who are living in the inner city of Baltimore.

We operate 17 stores and 21 donation centers, which provide a great deal of employment to individuals, some of whom could not work if it were not for Goodwill Industries. We also operate nine custodial and mailroom contracts, primarily with the Federal and State governments. Those programs are used specifically for people with multiple or severe disabilities. In those programs, we also have been able to employ some individuals coming off of TANF who are not disabled in the support positions.

In addition to all of that, we operate 15 career centers located throughout our territory. This past year, we served over 4,000 people in a variety of different training programs. We placed 1,140 into competitive employment outside of Goodwill.

We operate a temporary employment agency. I was interested in reading in some of the studies that have been referred to during the proceedings today that a number of people who have been on TANF are actually accessing jobs through temporary employment. That is precisely why we started a temporary agency. Many of our recipients were not able to go directly into regular full-time employment because they lacked any work experience. By starting our temporary agency, we were able to put them out into temporary jobs. Many of the employers would then hire them into permanent positions as a result of their temporary work. This past year, we placed 399 people into temporary jobs, and of that, 75 were hired into full-time employment.

We target a variety of populations. We have a significant problem with high school dropouts in the City of Baltimore, so we certainly are serving that population. We work, obviously, with people who are preparing to leave welfare or who have left welfare. We also are operating programs with ex-offenders who have been released or are still incarcerated. That population also comprises a large number of people in the City of Baltimore.

We are finding more frequently that TANF recipients coming to us have been incarcerated or had experience with the judicial system. This creates yet another barrier to their employment. Additionally, we are working with a lot of people who have been involved in substance abuse. That is probably one of the largest number of individuals we serve as we move further and further along in the reduction of welfare.

What it takes a person to leave and stay off of welfare obviously gets significantly complicated as we add on all these different barriers. In our 100-year history, we have worked with people with disabilities. Again, that adds still another barrier if these individuals coming off of welfare have disabilities or have children with disabilities.

We operate a variety of programs. I want to highlight just a couple of things that we have found are absolutely critical in not just getting people off of welfare and but them off. Primarily this has to do with services after they are in jobs. Folks who are entering the job market are almost always entering at low wages. In order to help them to move up in the job market, we must do follow-up work. I would strongly encourage funding for post-employment support be part of whatever is considered for TANF reauthorization.

Finally, putting on my hat for Goodwill Industries International, we have been holding a series of forums across the country called Consensus to Build the 21st Century. We will soon have results available from all of these communities. Issues raised include the difficulty of working with multiple funding streams and the variety of requirements resulting from legislation to serve people in need. More coordination is critical. We will be happy to share more information from our consensus meetings as it becomes available.

I would like now to introduce somebody who I think you all need to hear far more than you need to meet any of the rest of us. That is Fatima Wilkerson and Fatima will tell you her story and how she successfully did use the TANF legislation to gain employment and a new life.

[The prepared statement of Ms. Thomas follows:]

Ms. WILKERSON. Good morning. Good morning, Chairman and Members of the Subcommittee. My name is Fatima Wilkerson, and I currently receive support services through Goodwill Industries through the Work Matters program.

When I was 16, I became pregnant with my first child, and I was faced with a multitude of barriers before he was even born. I was a high school dropout. I had no work experience or job skills training and my son's father was shot in the head and partially paralyzed and so I had to single-handedly support my son.

When I was 17, I became employed working the night shift as a housekeeper, from 11:00 at night to 7:30 in the morning. Even though I had became employed, I was faced with new barriers in finding child care and finding transportation. I also had the burden of taking care of my two younger brothers, 12 and 6, because both my mother and father were incarcerated. It became too much for me, and I ended up eventually quitting my job.

I began to receive benefits from the Department of Social Services (DSS) when I was 18. I was put into a GED, General Education Development, training course, where I eventually received my high school diploma. Receiving my high school diploma was a very strong point in my life. It made me realize that I could achieve goals, but I had no idea, no direction of what those goals were, and how I would attribute them to me.

Being referred to Goodwill due to the Office of Employment and Development was a changing point in my life. I was given the support and assistance I needed to overcome my barriers. I received assistance in transportation and with finding day care, and I received assistance in maintaining a stable household after constant problems with my landlord. I was given work experience and skills training through subsidized employment from Goodwill, and I was awarded the Better Opportunities Through Online Education scholarship from Goodwill, which allowed me to attend the University of Maryland University College.

Goodwill is responsible for finding my current employer, the MCS Group, and I was referred by Goodwill to the East Harbor Village, which helped me open an individual development account which will put me on the path to home ownership.

Goodwill helped me to assess where I was in life and connect it to where I eventually want to be. Goodwill never sheltered me from my problems. Instead, Goodwill and its staff provided me with the support and assistance I needed to face those problems without being sidetracked from my aspirations of independence.

Moving from welfare to work was a very hard transition. I was faced with problems during my subsidized employment from DSS, being cut totally off of my cash benefits and still having to face paying rent and maintaining my child and paying gas and electric and just buying food and maintaining a household. My transition from welfare to work is still in progress. However, I am more than convinced that the services that I received at Goodwill thus far have brought me to the level of independence that I have achieved today, and if the Subcommittee would contribute a little bit more time and effort and money, then I know that I will be able to move forward and become even more independent from the system and be more of a success.

Thank you for your time.

[The prepared statement of Ms. Wilkerson follows:]

Chairman HERGER. Thank you, Ms. Wilkerson. You did an outstanding job. I know everybody joins me and all the Members here in congratulating you and commending you on a job very well done--

Ms. WILKERSON. Thank you.

Chairman HERGER. And for being the role model that you have become, as well. So thank you very much.

[Applause.]

Chairman HERGER. With that, we do have a vote on the floor, and we will recess and return immediately following the vote.

[Recess.]

Chairman HERGER. The hearing will reconvene. Ms. Reinert, I apologize for the interruption, but with that, we will open it up to your testimony. Thank you for being with us.

Ms. REINERT. Thank you. Chairman Herger, Ranking Member Cardin, and Members of the Subcommittee, thank you for inviting me here today to give Wisconsin's perspective on how TANF reauthorization can move the nation forward in our welfare reform efforts.

I would venture to say that everyone in this room and the State legislators and governors of all 50 States share the same set of goals, a reduced need for government assistance, full employment, and healthy, self-sufficient families. The 1996 Personal Responsibility and Work Opportunities Reconciliation Act gave us the tools to work toward those shared goals, and we have seen remarkable success as a result.

The lessons learned in the past 5½ years of administering the TANF programs have added tremendously to our base of knowledge. Some of our strategies for achieving desired outcomes have changed as a result. But the basic program elements are still there.

The success of Wisconsin's TANF program, called Wisconsin Works, or W-2, stems from its work focus philosophy, its wide range of work training opportunities and work support, and its flexibility, all targeted at empowering parents to achieve personal responsibility for the welfare of their families.

President Bush's reauthorization proposal retains the welfare-to-work philosophy so fundamental to our reform efforts and leaves the funding levels and distribution formula unchanged. These are critical to helping States move to the next level of welfare reform. His proposal also introduces new program elements that will serve to enhance States' efforts. For example, a program integration waiver brings new opportunities for States to break down the silos separating our work programs for the betterment of our service delivery system as a whole, and the philosophy of full engagement is one of the cornerstones of the W-2 program, which has been in place since implementation.

Raising the bar on work participation will make a significant difference. States must, however, retain the ability to decide what activities are most appropriate on a case-by-case basis.

Given the time constraints, I am going to highlight five key elements of W-2 that we believe have contributed to the program's success. First, community partnerships. Wisconsin's geographic diversity, ranging from small rural communities to urban industrialized cities, calls for unique approaches that match the need of participants with the local employment conditions. To accomplish this, partnerships have developed amongst W-2 providers, community-based organizations, and employers, enabling communities to develop innovative solutions and communicate on a much broader scale.

Many of our W-2 participants have multiple problems in their lives and require a network of supporting guidance from outside sources, and this need for support carries over into the workplace. In response, employers are providing mentoring relationships, specialized training, release time for education that helps parents to balance the needs of their family and work. Business brings invaluable resources to the program. Their participation is critical to program success and sustaining a healthy community.

The second element is outcome-driven performance standards for local W-2 providers. A set of 15 performance standards deal with such measures as successful attachment to the workforce, educational activities attainment, and increased earnings. Our performance standards impact on W-2 agencies' contract dollars and future eligibility to be granted a W-2 contract. The competitive process to select the best and most enthusiastic providers and then to hold them accountable is essential to W-2 and performance standards are what drives this process.

The third element is retention and advancement. The initial focus of W-2 was helping people get jobs. The focus is also now on helping participants keep their jobs and advance in their jobs. Training, education, skill development, all enhance employment stability and advance to higher-wage jobs.

The fourth element is integration of workforce programs. In the past, the focus was on referring to W-2 participants as former Aid to Families with Dependent Children (AFDC) recipients. That is being reframed. We are looking now at Wisconsin workers versus former welfare recipients. We have merged two major divisions within the Department of Workforce Development, enabling us to look at all of our workforce programs as a spectrum of services with a goal of promoting upward mobility and lifelong learning for all of Wisconsin's workforce.

The fifth, the last and the most important, is full engagement. We engage everyone in work-related activities from day one with no exceptions. Time limits, work participation, and work requirements are important components to keep both participants and case managers fully engaged.

In conclusion, TANF reauthorization is an opportunity for Congress to further strengthen families through work. PRWORA's success thus far is based on flexibility provided by Congress, not in spite of it, and State and local innovations are driving factors. It is difficult for researchers to study and quantify our success because of the multiplicity of strategies across States has created a program that looks a lot like a patchwork quilt, but we owe it to our children and families to stay on this path where meeting individual needs are at the very center of every individual decision. Thank you.

[The prepared statement of Ms. Reinert follows:]

Chairman HERGER. Thank you very much, Ms. Reinert, and particularly for the great example that your State has set in this area.

Now, we have the great pleasure of turning to our next witness, Ms. Dannetta Graves, Director, Montgomery County Department of Job and Family Services, Dayton, Ohio. Ms. Graves?

Ms. GRAVES. Thank you. To the honorable Members of the Human Resources Subcommittee of the House Committee on Ways and Means and Representative Wally Herger, Chairman, I am here today to briefly discuss from a local perspective the implemented program strategies and the necessary flexibility and resources for the effective administration of work requirements and time limits under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.

Ohio welfare reform legislation, in response to PRWORA, not only challenged counties to implement programs and strategies that would assist families to reach and maintain their maximum level of economic self-sufficiency, but also limited their receipt of TANF cash assistance to 36 months. The family is ineligible for 24 consecutive months before eligibility for cash assistance can be reconsidered for an additional 24 months.

The flexibility provided by Congress in PRWORA allowed Ohio's legislature to give counties two programs under which TANF assistance to families is provided, Ohio Works First, the cash assistance program, and the Prevention, Retention, and Contingency program. While Ohio's work requirements, self-sufficiency contracts between recipients and the county department, sanctions for those who fail without good cause to fulfill their obligation, and their time limits played a role in our reform of the welfare system, it was the PRC program that allowed us to achieve the level of success we continue to enjoy, despite the current economic slowdown.

Montgomery County in July of 1992 had 41,450 individuals, nearly 15,000 families, receiving cash assistance at an average cost of $4.58 million per month. Today, this number is 11,448 individuals, which is 5,128 families, and $1.67 million per month.

This reduction is a direct result of Montgomery County's heavy emphasis on work and work preparation, investment in our nationally recognized job center, which has some 48 partner agencies in it, a PRC program that focuses on providing people with the help they need to stay off public assistance, and our ability to involve the community and faith-based organizations, along with public agencies throughout the PRC-funded contracts to provide a myriad of programs to adults and youth. Many of these programs and services are targeted in Montgomery County's poorest neighborhoods and academic-deficient school districts.

The programs are designed to achieve the following: Improve a families' opportunity to obtain and retain employment, promote youth academic success and career exploration and development, connect families to resources that enhance career advancement and earnings potential, reduce out-of-wedlock pregnancies, promote family formation, provide mentoring for families and youth, reduce substance abuse, increase general education attainment and knowledge of community resources, promote payment and receipt of child support, promote the opportunities for home ownership, reduce school dropout rates, and reduce family violence.

Montgomery County in July of 1999 was faced with 1,370 families reaching the 36-month time limit in the first 3 months beginning October 1 of 2000. The need was clear. We had to implement a strategy that would significantly reduce the number of families who would face time limits and provide follow-up activities to those who actually did. In Ohio, each county had to establish the hardship criteria for extension of cash benefits.

The agency established the outreach unit, which provides intensive treatment to all families who have reached receipt of 20 months of cash assistance. This treatment includes home visits and assessments of the family situation to determine the barriers to self-sufficiency and provide access to the resources to address or relieve them. The intense treatment provided greater insight to the dynamics that prevent the realization of productive potential and growth. It also directed our efforts to seek other, more permanent resources, such as Supplemental Security Income (SSI) and Social Security disability, as well as other interventions to improve the family's stability and chances of achieving self-sufficiency.

This strategy resulted in only 170 families that actually faced time limits in the first 3 months beginning in October of 2000. The family situations discovered from the intensive efforts of the outreach unit, along with community forums with various stakeholders, established the hardship criteria. Once the criteria was applied, only 37 families had to face cash assistance termination in the first 3 months of the time limit. Also attached to my testimony, is information on these statistics so you can see where we are today.

TANF reauthorization proposed by the President, in general, has strong support from those of us who are responsible for its local administration. However, increasing required work hours from 30 to 40 hours per week will dramatically increase the cost of child care. Adopting the work first philosophy means you must provide quality child care at the level necessary to achieve your goal. Limiting a State's ability to transfer TANF funding to the social service block grant from 10 percent to 4.25 percent will severely impact some of our more innovative and effective programs to move families out of poverty.

Maintaining an enhanced TANF flexibility will be an ongoing theme from all who come before you. It is that flexibility that allows us to assist families that are on cash assistance as well as those who recently left the rolls and those poor families who do not receive or have not received cash assistance.

Remember, welfare reform is not just getting an adult member of the family a job. That is just the beginning. It is making sure that the children receive quality child care, after-school academic and cultural enrichment services, and career preparation. It is the availability of retention and advancement services to ensure employment now and in the future. Finally, it is the involvement of our community and faith-based organizations to enhance the efforts of our public agencies to improve the quality of life in our communities.

[The prepared statement of Ms. Graves follows:]

Chairman HERGER. Thank you very much, Ms. Graves. Now, we will hear from Mr. Mark Greenberg, Senior Staff Attorney, Center for Law and Social Policy. Mr. Greenberg?

STATEMENT OF MARK H. GREENBERG, SENIOR STAFF ATTORNEY, CENTER FOR LAW AND SOCIAL POLICY

Mr. GREENBERG. Thank you. Mr. Herger and Members of the Committee, I appreciate being asked to testify today and appreciate your continuing interest in welfare reform.

As we look ahead to reauthorization of the 1996 law, I think it is important to step back and acknowledge what an extraordinary shift there has been in the basic direction and orientation of State programs in recent years. This shift began well before the 1996 law, but was clearly accelerated by the 1996 law. It has had the effect of fundamentally reorienting State welfare programs as programs that see their goals as helping to link families with employment. There are sometimes controversies about how States go about doing it and the best ways to do it, but I think there has been a broad-based shift across the country toward this basic orientation.

A number of features of the 1996 law, not just the participation rates, contributed to this reorientation. The fixed funding contributed, both by telling States they had a limited amount of funding to use and at the same time that when their caseloads went down, that they would be able to redirect it to an array of other activities, including a whole set of activities to support low-income working families.

The time limits likely contributed to the reorientation. The provisions of the law that involved engagement and work within a 2-year period contributed. The increased funding for child care contributed. The increased availability of health care outside the welfare system contributed. In short, a whole set of things contributed to a fundamental reorientation of how States saw what they were trying to do.

Over the last number of years, we have seen an unprecedented caseload decline and we know from a lot of research that most of the families that have left assistance have entered into employment. At the same time, we know that often that employment is not stable, often that employment is low-wage, without basic benefits.

As States and others now focus on the next directions for welfare reform, a lot of the conversation involves the families still receiving assistance, and there is a very strong sense that many of those families have multiple barriers to employment. While these barriers may not prevent work, the do call for different strategies.

I am aware of the Urban Institute research and the GAO research on this topic, and I can only tell you that if you talk to State and local administrators, they will readily describe to you the extent of multiple barriers that they are now seeing and trying to figure out now to address.

At the same time, there is enormous interest in trying to address the issue of how to help people find better jobs. Part of it is a conversation about what should happen while families are receiving assistance. Part of it is focused on what should happen to provide supports after families receive assistance. And there is a conversation about how to try to ensure that those families who do enter work are able to meet their health care needs and their child care needs and make ends meet.

I have been struck over the course of the morning at the extent of focus on things like child-only cases and separate State programs. I can tell you that I know of no State in the country that is interested in trying to find ways to structure programs where people who are able to work can avoid work obligations. That is not the focus of the State efforts.

There was clearly a significant number of States that did move two-parent families into separate State programs. They did so because they looked at the Federal participation requirements, they saw a 90 percent rate, and they recognized that if they helped two-parent families in their TANF programs, they would face serious risk of Federal penalties. That is why they did it. But politically, fiscally, conceptually, they have no interest in running programs where people are provided indefinite assistance without being expected to work.

I do think that there is a serious data issue in trying to have a better picture of the extent of engagement in work-related activities. From Federal participation data, we have good information about the numbers of families who are engaged in activities enough to count towards Federal participation rates. We do not have good information about what families are doing that does not count toward participation rates, because States are free to report that information on a voluntary basis but are not required to report it. A number of States clearly do not. We can state with confidence that at least 40 percent are engaged in activities. We know that the numbers are surely higher than that, but we do not have good information as to what those are.

As you look ahead to reauthorization, it surely makes sense to get rid of a caseload reduction credit, because it simply rewards caseload reduction without regard to employment. It makes sense to put the focus on employment, and to have a measure of people leaving due to employment.

It makes sense to broaden the countable activities to give States broader flexibility. I think it makes sense to provide additional funding to States so they expand the use of subsidized work programs, not on an indiscriminate basis, but for targeted use for families with serious employment barriers. And, it makes sense for States to have the flexibility to provide ongoing help to low-income working families without having to face Federal time limits restricting the ability to help those who go to work.

I hope that these themes can be explored in the continuing discussion of reauthorization. Thank you.

[The prepared statement of Mr. Greenberg follows:]

Chairman HERGER. Thank you very much, Mr. Greenberg. Now, we will hear from Mr. Michael Fishman, Lewin Group, Falls Church, Virginia. Mr. Fishman?

Mr. FISHMAN. Thank you, Mr. Chairman and distinguished Members of the Committee. It is a pleasure to be here today. I was asked to come today because in 1998, the Department of Health and Human Services funded the Lewin Group to gather information about the child-only population within both the prior AFDC program and the then-new TANF program and our study at that time was the first to look comprehensively at the trends in the growth of this segment of the welfare caseload and it was for the composition of the child-only caseload.

As you know, under the 1996 welfare reform law, child-only cases where only a child or children are receiving assistance and not the adult are generally exempt from work requirements and time limits. I guess there are four points I would like to try to make in the brief time I have today.

First, as we have heard, while overall welfare caseloads have dropped dramatically since 1994, the child-only caseload has remained fairly steady in number during that period, and as a result, they make up an increasing proportion of the TANF caseload, 31 percent in the year 2000 from the Federal data we have, and that number ranges anywhere from 14 to 69 percent across different States, and that is up from in the neighborhood of 10 percent in 1989, so there has clearly been growth, and most of the growth in the actual number took place in the late 1980s or early 1990s.

Second, the child-only population is not an homogenous population. Cases become child-only under a variety of circumstances. These circumstances may be subject to State policy choices. Under several sets of circumstances, children become child-only cases because their parents who live with them do not qualify for TANF assistance, and this represents almost two-thirds of the child-only cases that we had information on in 1997.

There are three primary ways that these cases come to be. States may remove the adult from the grant if they do not meet work requirements or cooperate with child support enforcement and they come into a sanction status. This is the case we found in California at the time of our study. If the adult is removed, it becomes a child-only case. States could also chose, however, with sanction policy to reduce the grant or remove the family from the grant entirely, in which case you would not have a child-only case. Sanction cases represented a little under 10 percent of the child-only cases in 1997.

Children who are U.S. citizens may become child-only cases if their parents are not legal aliens or are legal but not qualified for TANF, and that represented about 15 percent of the child-only cases in 1997.

And then finally, if parents are in the household, if the parents themselves are receiving SSI, then the children can still qualify for assistance as child-only cases, and that represented about 25 percent of the child-only caseload in 1997.

It is also possible for time limits to create child-only cases, but at the time that we did our study, we did not see any evidence of that.

Children may also qualify as child-only cases if they reside with a non-parental caregiver, usually a relative. A little more than a third of the cases that we looked at in 1997 fell into this category. In the cases we examined, about two-thirds of the non-parental caregivers were grandparents, most of whom were over 50 years of age and many of whom were older than that, and the assistance they received helped to offset the costs of caring for their child but not themselves. They themselves were not included in the assistance unit.

So we have a heterogeneous population that become child-only cases for a variety of reasons.

We also found that States did not think of child-only cases as a class. As we talked to State officials, we did not hear people saying, well, we have established this policy for child-only cases. The policies that they had in their States that created or affected child-only cases either emanated from their overall goals and policies that they had related to welfare reform or they created specific policies that affected specific classes of cases, be they special programs for kinship and relative caregivers, but they did not sit there and say, how do we do something with our child-only population as a whole?

And fourth, the information that we have, and hopefully we will have better information, I see GAO has new information for us today about the composition of child-only cases, largely predated welfare reform and there is reason to believe that this composition could have shifted over the last several years, but we do not have access to that information right now and did not at the time of our study.

So in conclusion, as you think about future policy related to welfare reform, I would recommend that the Committee get the most recent information you can on the composition of child-only cases and focus policy considerations on specific subgroups within the child-only caseload rather than focusing on the overall size and proportion that the caseload makes up of the TANF population. Thank you very much.

[The prepared statement of Mr. Fishman follows:]

Chairman HERGER. Thank you very much, Mr. Fishman. Now, we will hear from Douglas Besharov, Professor, School of Public Affairs, University of Maryland, College Park Maryland. Mr. Besharov?

Mr. BESHAROV. Mr. Herger and Members of the Committee, thank you very much for having me here. This has been quite a hearing in that, in the debate or the discussion about welfare reform, it sometimes feels as if there is a fog here. I think the general public thinks that welfare reform was about mandatory work for welfare recipients. In my testimony, I cite some polls about this and that is what most of the rhetoric about welfare reform is about.

In my prepared testimony, on page 11, is Table 1-A, which was prepared with the help of my colleague, Marie Cohn. It lays out the numbers, which are common to all the testimony and these are Federal numbers, of all TANF adult recipients, so I am leaving out the child-only cases. Sixty percent of them are not in countable activities, countable by the definition of TANF. Forty percent are. That is the number that tends to get used. Forty percent are doing work-related activities.

That is true, but more than half of that number, about 65 percent, are families that are on welfare and working pursuant to an earnings disregard. Now, that is work. I believe in it, and there are some very good things about it. The government calls that an unsubsidized job. I call that a subsidized job because they are still on welfare.

None of the proposals that we have before us addresses that very complicated factor, and I will come back to it in a minute.

If you look at this table, about 4 percent of the national caseload is involved in mandatory work. I did not say 40, I did not say 14, I said 4, and about two-thirds of that number are represented in this room, which is to say Ohio, Wisconsin, and New York, because I see Jason Tenner in the room. If you take those three locations, and New Jersey, out of this number, you have hardly anyone in this nation in mandatory work under TANF. I will say that again. You have hardly anyone in mandatory work under TANF.

Now, this table leaves out the other thing that you have heard about today, and that is not deliberate, it is that there is no data on the subject, and that is the work-related activities that are funded with State-only funds. There are State programs that provide work-related activities. You heard only part of what those activities are. Yes, some of them are training, some of them are education, but some of them include taking care of your own child. Some States give people 2 days' credit of work for going to sign up their kids for Head Start. There are some problems at the State level as well as the national level.

We were asked here to talk about what we think should happen to the welfare bill, and specifically about time limits and work requirements. Let me start by saying I have a tremendous problem in answering that question because, to me, TANF is the Abe Lincoln of Federal legislation. I will say that again. It is the Abe Lincoln of Federal legislation, which is to say every individual part of TANF is ugly as can be. The nose stinks. The caseload reduction credit stinks. The absence of a rainy day fund stinks. The fact the block grant does not vary this way and that, every part of it stinks.

You can take a look and say, Abe needs a nose job, he needs his chin fixed, or he could wear a beard the way I do--he did--and so forth. But the fact is, put together, this ugly combination of provisions has given the States the flexibility to do the things you have heard about today and you see in these studies.

The problem in addressing any specific provision is it is part of a whole. So I might not like the caseload reduction credit, but I look at the two fixes that have been proposed. One fix, from my friends on the right, says only count recipients who have left welfare for work. Well, over 40 percent of the people who leave welfare do not leave for work. They leave for marriage, cohabition, co-residency, SSI, or other sources of support. Now, we will not talk about SSI. Maybe we should not count them. But I thought we should be happy when people leave welfare because they get married, and I am not talking here about a Federal program to encourage it. These are people who have left, and to deny a State credit for that is, I think, the wrong idea.

Now, the Administration has done the same thing on the caseload reduction credit, which is to say it has got this 3-month rule. The problem with that is it does not reflect entry effects. You have heard that AFDC's reduction is largely because when people come in, they are encouraged to get a job. Neither Mark's proposal, the class proposal, and I think the Democratic proposal, nor the Administration's proposal, fits this need.

I could go through all this, but my little red light is on. All I say is, remember Abe Lincoln. Give him a beard but do not change the face.

[Laughter.]

[The prepared statement of Mr. Besharov follows:]

Chairman HERGER. Thank you very much, Mr. Besharov. Now, we will turn to questioning, and the gentleman from Kentucky, Mr. Lewis, to inquire.

Mr. LEWIS. Thank you, Mr. Chairman.

Ms. Graves, I understand you learned an interesting lesson when you tried to help your 10 hardest cases find employment before exhausting their benefits. Can you describe this for us?

Ms. GRAVES. What we found when we were out in the district was that these cases who refused to go to work at all had other incomes, and not necessarily legal incomes, coming in the household, or they had someone else who was taking care of the family. So the need or the urgency to go get a job was not there for them.

In only one situation did we find that it was a domestic violence situation that kept the individual from seeking work, and that was because she was afraid to leave the house. Now, for that--and only because we continued to investigate and continued to investigate what was going on did we find out that domestic violence was the problem. But the other nine all had other activities going on.

Mr. LEWIS. I see. In your testimony, you mentioned your program's principle is to reduce out-of-wedlock pregnancies and promote family formation. What specifically have you done to achieve those?

Ms. GRAVES. We have two programs, one with Project Impact and one with the Interdenominational Ministerial Alliance. Those are two faith-based organizations. We do not specifically contract with them for family formation, but their programs, one is Family Works, the other one is Family-to-Family, the mentoring that they did, they finally figured it out that to help that family become stable was to involve the fathers in the family, and from that, because they introduced the faith-based part to it, they got them in church and involved in many activities that led to those families forming and becoming mates.

But I tell you one problem with the family formation, the reason why we do not push it so hard is, number one, some of those are not healthy formative situations, and number two, not all of the children have the same father. Which father are we trying to form with them?

[Laughter.]

Mr. LEWIS. Yes. Thank you.

Ms. GRAVES. Thank you.

Chairman HERGER. Thank you, Mr. Lewis. The gentleman from Michigan, Mr. Levin, to inquire.

Mr. LEVIN. I am not sure Mr. Lewis got the answer you wanted.

[Laughter.]

Mr. LEWIS. Well, we are looking for the truth.

Mr. LEVIN. I misspoke--the answer you expected. I did not mean that in any other way.

But I think that that is the utility of this hearing, and I hope that a transcript can be made available soon, because when Mr. Greenberg was testifying, I saw a number of you shaking your heads in agreement, on certain points, anyway. It is interesting, there is more common ground than there is disagreement, up to a point.

Mr. Besharov, I will tell you what most people in the district I represent think welfare reform means, and I represent a suburban district, I will not describe it otherwise perhaps because it is not easy to describe, but welfare reform has always been an issue of real importance.

I think when I ask them, what do they think welfare reform is all about, they would say, moving people off of welfare into work. That is what they mean, not those on welfare working. It is people who are receiving assistance moving off of assistance, and that is why they, in Michigan, under Governor Engler, there has been major income disregard. People who have moved off of welfare are in very substantial numbers still receiving some assistance. The same is true in Wisconsin and in many other States.

And so I think we need to talk through this very issue, what we mean, where our focus is. If our focus is on making sure people who are receiving assistance are working rather than getting people moving from welfare into work and eventually earning enough so there is no income disregard, there is a difference there.

In some States, they may not get cash assistance. They receive services. I guess that is maybe true in Wisconsin. Is there any cash assistance at all to people who have moved off of welfare to work?

Ms. REINERT. No.

Mr. LEVIN. There is none. In Michigan, it is very substantial. I think that is an argument for flexibility, and I noticed, to the Secretary of the Department in Wisconsin, you said that raising the bar on work participation will make a significant difference as long as States can retain the ability to decide what activities are most appropriate on a case-by-case basis. I think you have to read that that the Administration's proposal does not do that.

Ms. REINERT. I would disagree with you on that. I believe that the work participation bar is absolutely necessary in terms of accountability.

Mr. LEVIN. I am not disagreeing with that, but as long as States retain the ability to decide what activities are most appropriate on a case-by-case basis, do you think the Administration proposal does that?

Ms. REINERT. I guess I am talking about a broader flexibility in terms of utilizing the 20 percent exclusion, too. We are looking for flexibility within the State to treat people as individuals. But I am in full support of the plan relative to work participation and work requirements.

Mr. LEVIN. But it changes the flexibility of the States as to what the mix is. Everybody acknowledges that the flexibility of the States as to the mix of activities. There is no other way to read that. I know you are from Wisconsin, but--

[Laughter.]

Mr. LEVIN. I mean, it changes the flexibility, does it not? Do not answer that. I do not want to put you on the spot. But it does.

[Laughter.]

Mr. LEVIN. I mean, in terms of vocational education, if it goes from a year to 3 months, it changes it. The 24-16 changes it, does it not, Ms. Graves?

Ms. GRAVES. Yes. Every time you prescribe something, you limit flexibility. It has to be on a case-by-case basis. For some families, 16 hours would be fine, but for others, it may be that we get them in a drug counseling program for 4 hours a week, but we may have education for 10 hours. Being able to count what that family needs to do to become stable and in a work situation is what is important, not prescribing that you do 16 hours of education and 24 hours of work. We know work has to be in there, but let the case determine. Let the State determine what that needs to be.

Mr. LEVIN. Will you come on Tuesday?

[Laughter.]

Mr. LEVIN. You are working at the grassroots, as some of the others are. I just urge that we pay attention to this. I think if we do not, we are saying, and I will finish with this, that we like flexibility as long as the States agree with us. If they do not, then we believe in inflexibility, and I do not think you can have it both ways. There have to be some standards, but I think we need to ask ourselves what they should be, and also going back to you, Mr. Besharov, I think we need to have a good discussion as to the meaning of welfare reform. To me, the objective is to get off of welfare.

Chairman HERGER. The gentleman's time has expired.

Mr. LEVIN. I know, but there is nobody else here, so I thought I would--

[Laughter.]

Mr. LEVIN. Mr. Cardin, if I might indicate, is not here only because he is debating this bill on the floor, and I am now going to go and do that and give you the rest of the time, Mr. Chairman.

Chairman HERGER. I thank the gentleman.

I do want to point out, my understanding is 16 hours of those 40 hours are flexible that the President has put into that program, so it would be flexible from the State.

Secretary Reinert, if I could inquire of you, you have noted that Wisconsin provides extensions of the time limit for certain individuals with special circumstances. Is that an extension from the 60-month time limit, and are you anywhere close to reaching the 20 percent cap on hardship exemptions?

Ms. REINERT. We are nowhere near reaching that cap. The 20 percent gives us more than enough room. We have--our cap would be 3,600 cases, and we have 75 active extensions at this point in time. So we believe we have a tremendous amount of flexibility within that 20 percent, and perhaps that is the issue of flexibility that I was trying to address there, that there is flexibility in the overall program to meet individual needs and not do a cookie cutter approach.

Chairman HERGER. Thank you. I would have to agree with Ms. Graves and virtually everyone we talked to. This flexibility is very important with perhaps some guidelines in there, but I believe everyone I talked to agrees with that.

Another question. I also note, Ms. Reinert, your point on page 10 of your testimony about the need to help communities with pockets of high unemployment attract new businesses and retrain workers, and I totally agree. Some have proposed going beyond that to say that we should exempt individuals who live in disadvantaged areas from work requirements and time limits. That may sound compassionate at first, but I am afraid it could effectively seal off such communities from the pro-work message and all the energy that has helped transform welfare in so many communities in America in recent years, and I would welcome your thoughts on this. Are there areas of Wisconsin where you feel that people simply cannot find or at least prepare for work?

Ms. REINERT. Our strong position has been all along that we are not going to leave anyone behind. It does not matter where they live geographically, what the economic situation is, what their personal situation is. We believe that everyone can be engaged in activities that can move them toward self-sufficiency. So I am not sure if that thoroughly answers your question, but it is a strong philosophical base that W-2 has.

Chairman HERGER. I believe it does, and I think the point there is not that we cannot--the bottom line is, we do not want to leave anyone behind.

Ms. REINERT. Exactly.

Chairman HERGER. And perhaps in the area where they are most in need in these communities is perhaps where they need the most help not leaving them behind.

Ms. REINERT. And that goes to the community partnership, looking at what are the economic needs in the area and the employers and matching the training to meet those needs.

Chairman HERGER. Finally, do you know of any area in your State where you would find that you would want to exclude?

Ms. REINERT. No.

Chairman HERGER. I thank you for that. With that, I want to thank each of our witnesses--

Mr. LEWIS. Mr. Chairman?

Chairman HERGER. Mr. Lewis?

Mr. LEWIS. Could I ask one more question of the panel?

Chairman HERGER. Yes.

Mr. LEWIS. Thank you. I appreciate it.

Chairman HERGER. Since you are the last one--

Mr. LEWIS. I am the only one.

[Laughter.]

Mr. LEWIS. I recently met with a group of people, senior citizens, that are taking care of their grandchildren, and I understand there are about 6 million in the country today. I think in the State of Kentucky, there are about 60,000. How are the States dealing with these children? I mean, most of these grandparents that I talked to were, of course, on fixed income, retired. They are barely able to take care of themselves, but they want to keep that family together as much as possible. How are the States dealing in making sure those kids are provided for with those basic necessities, education, health care, and so forth? How are you dealing with that? And do you have enough flexibility to deal with that?

Ms. GRAVES. Flexibility is one of the problems, but resources. In the State of Ohio, they have what they call Kinship Navigator, that we have taken some of the dollars from TANF and put in Title XX to actually help those people. It is not so much the medical but what do you do with a child that is in juvenile court and you are a grandparent? It is knowing what resources, where they go to get this, where they go to get that. That is where the Kinship Navigator comes in and that is where States have fallen off.

I hear them talking about illegal aliens and all that. In our county, the number one, the highest percentage of cases are with grandparents because of the drug culture, because of criminal activity and these people are incarcerated. And the grandparent, who knows nothing about the new school system, who knows nothing about where to go to get help, that is where the shortfall comes.

But if you take away our ability to fund those activities by reducing down to 4 percent on Title XX, then we cannot offer those kinds of services to people who sorely need them.

Mr. LEWIS. And if those grandparents cannot take care of those kids, then those kids end up in foster homes.

Ms. GRAVES. You put them in the most expensive system out there, child welfare. Now, you have got a choice.

[Laughter.]

Mr. LEWIS. And if we are looking at holding the family unit together, it seems to me we are much better holding them there with their grandparents, and the grandparents want to. It is just a matter of they cannot go back to work. It is beyond their ability to do that. Thank you. I appreciate it.

Ms. GRAVES. Thank you.

Mr. LEWIS. Does anyone else have anything to say about it? Thank you.

Chairman HERGER. Again, I want to thank the gentleman from Kentucky for your question.

I would like to include in the record a written statement from Ronald H. Field, Vice President for Public Policy, Volunteers of America.

[The statement of Mr. Field follows:]

Statement of Ronald H. Field, Vice President for Public Policy, Volunteers of America, Alexandria, Virginia

Mr. Chairman, Members of the Committee, Volunteers of America, a national, spiritually-based housing and human service non-profit, thanks the subcommittee for the opportunity to submit comments concerning welfare work requirements and time limits.  Through our job placement and training programs, family transitional living programs, homeless shelters, emergency food and clothing assistance, and counseling and treatment services, we serve many low-income children and families.  As an organization that provides an array of programs and services to assist children and families who are in financial and emotional crisis, we are concerned that stringent time limits and work requirements are not the most effective way to help people transition out of poverty and become economically independent.  States need more, not less, flexibility to determine the definition of work, the extent of work requirements, and the appropriate time limit for receiving benefits.  States need this flexibility in order to be able to provide recipients adequate and appropriate services to help them be successful in the workplace.

Recommendation #1

The effectiveness of work requirements hinges upon the definition of work.  Volunteers of America recommends that the definition of work include a full course of education or training, counseling and treatment for substance abuse, mental health, and domestic violence issues, or physical disability.  Expanding the definition of work to include these aspects will allow people to address the issues that are keeping them in poverty, and then enter the workforce, succeed, and become economically independent.

Through Volunteers of America’s experience in providing services to TANF recipients, we have found that education and support services are missing pieces of the puzzle for many.  Our FindWork program in Shreveport, Louisiana is a four-month program that combines job training and placement. Our staff have encountered first hand the struggles that low-skilled individuals face in finding adequate employment.  “We helped one client to learn the alphabet, and most clients read below a sixth grade level.  Such low skills make it almost impossible for job placement.  Employers are reluctant in hiring the participants due to lack of education,” states Dewanna Lovelace, the FindWork Program Coordinator.  Ms. Lovelace also sights manifestations of mental illness, substance abuse, and domestic violence as significant barriers to meaningful employment.  “In order to place people with these barriers in jobs, they need to receive services first.  Some employers that I work with feel that participants lack the support services that they would need to maintain the jobs.”

“Women who have multiple barriers to obtaining and holding employment will be the least likely to obtain economic self-sufficiency under the new welfare regime begun by the 1996 Personal Responsibility and Work Opportunity Act” is the conclusion of the Women’s Employment Study (WES) conducted by the University of Michigan.  The WES study found that of the TANF recipients studied, 31.4 percent had no high school diploma, 25.4 percent had experienced a major depressive episode, and 14.9 percent had experienced recent severe domestic violence.  The presence of these barriers will affect the likelihood of obtaining and retaining employment.  The current “rapid employment” approach cannot address these severe barriers.  Exhibiting one or more of these barriers does not mean that a recipient is unemployable, simply that they will need more time and support services to be effective in the workplace.

The ability to access real education and training opportunities is essential to placing recipients on true career paths rather than short-term, low-wage employment.  The W.K. Kellogg Foundation, in its Devolution Initiative, explores the current “work first” approach that is integral to TANF.  “Work first” rests upon the key principle that pre-employment education and training are not as effective as standard job searches in increasing employment and earnings for recipients with little or no work experience.  The implication of “work first” is that immediate job placement, regardless of the quality of the job, is the best way to advance in the work place.  Contrary to this approach, the Devolution Initiative has found that the factors that predict job advancement among adults leaving welfare for work include higher wages in the first job, having or acquiring higher basic skills, post-secondary education, and post-secondary training (including English as a second language).  All of these factors illustrate the importance of education and training to long-term job success. 

Robert A. Moffitt, of the Brookings Institution’s Welfare and Beyond project, identified that the employment rates of less educated welfare leavers are considerably below those of their more educated peers, and the poverty rate of those less educated recipients is higher.  For recipients to become permanent members of the workforce, States have to be given the flexibility to allow education and training to count as a full work activity.

Recommendation #2

Volunteers of America recommends that time limits not apply to families who are making an effort to comply with program requirements, but are still not self-supporting.  Program requirements must include an expanded definition of work, including expanded education and training, treatment and counseling for mental illness, substance abuse, domestic violence, and physical disability.  States need the flexibility to provide benefits until a recipient is able to work, and work income is high enough that a family is no longer in need of assistance.

Leo McFarland, CEO of Volunteers of America Greater Sacramento & Northern Nevada, has found time limits to be a barrier for recipients who take part in his programs.  Mr. McFarland states, “In a recent study of 700 TANF recipients in two California counties, more than half reported that, over the previous 12 months, they had experienced domestic abuse, had one or more mental health issue(s), and/or had abused alcohol or drugs.  In our programs for TANF eligible women, 100 percent of the women we serve battle substance abuse or mental health issues.  For these women in treatment, the current welfare reform policies adopted in 1996, with its time limitations, have placed a formidable barrier to their goals to provide a stable and productive family environment for themselves and their children.  Crucial to aiding this population is the need to provide system flexibility that would allow for the additional time necessary for substance abuse or mental health treatment.  Effective treatment for serious barriers requires a different amount of time for each person, and cannot be held to a time clock.” 

The TANF program must be flexible enough to be able to respond to regional and national economic changes.  During times of economic downturn that result in a scarcity of jobs, TANF must continue to provide assistance.  Rebecca M. Black, of the Brookings Institution, concludes in “Welfare and the Economy” that the financial burden of an economic crisis now lies with the States.  When a recession hits, and the need for incomes support rises, inevitably State’s budgets are also hard hit and have little flexibility to shoulder the increase.  States need to have the flexibility to allow people back into the program, even if they have used up their lifetime limit.  The contingency fund that provides additional dollars for states to access during times of economic downturn must be adequately funded, and have reasonable criteria for accessibility. 

Summary

Mr. Chairman, thank you very much for the opportunity to bring you our thoughts and experiences having to do with TANF work requirements and time limits.  We assure you and all members of the subcommittee that Volunteers of America is strongly committed to helping TANF recipients become productive members of society and economically independent.  We are confident that the TANF program can work effectively and efficiently to help families.

Chairman HERGER. I want to particularly thank each of you who has appeared before us as witnesses today. Your testimony and your answers have been very helpful to us as we move forward in reauthorizing TANF. I think that it has been made clear today that the current TANF program over the last 5 years has had a great deal of flexibility, both in time and in work, and again, I want to thank you for your testimony and would hope that you would continue working with us as we move forward for coming up with reauthorization this year.

Thank you very much, and this hearing stands adjourned.

[Whereupon, at 11:49 a.m., the hearing was adjourned.]
[Submissions for the record follow:]

Abrahamson, Leslie, Westmont, IL, statement