Statement of Michael E. Fishman, Senior Vice President and Practice Director,
 Lewin Group, Falls Church, Virginia

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

Hearing on Implementation of Welfare Reform Work Requirements and Time Limits

March 7, 2002

Mr. Chairman and Distinguished Members of the Committee:

It is an honor to testify before the Committee on Ways and Means, Subcommittee on Human Resources on the important topic of child-only cases under the Temporary Assistance to Needy Families Program. 

In 1998, the U.S. Department of Health and Human Services (HHS) contracted with The Lewin Group to obtain more information about the characteristics and trends of the child-only population. The report, “Understanding the AFDC/TANF Child-Only Caseload: Policies, Composition, and Characteristics in Three States” published in February 2000, describes how federal and state policies affect child-only caseloads, discusses the national TANF and child-only caseload trends, and examines the characteristics of child-only cases. For a more in-depth review, the report also focused on three states—California, Florida, and Missouri—interviewing state and county officials and staff, conducting case file reviews in one county in each state, and analyzing administrative data. My testimony today draws primarily from that report.  My co-author, Mary Farrell, provided assistance to me in preparing this testimony and is here with me today. 

We have not had an opportunity to update the information we collected several years ago on state policies and practices nor have we looked recently at local caseload characteristics. In preparing this testimony we have reviewed more recent national data and incorporated that into our findings.  I include state and local information from our report in my written testimony because I believe it helps exemplify the importance of state demographics and policy choices on the size and nature of a state’s child-only caseload. However, I will focus my remarks on the national picture.

Under the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, most families receiving Temporary Assistance to Needy Families (TANF) are subject to work requirements and time limits on benefit receipt. However, one portion of the TANF caseload, cases where only a child or children are receiving assistance, are generally exempt from these federal requirements. These “child-only” cases are not currently growing in absolute numbers but are becoming an increasing proportion of the overall TANF caseload. In 1998, child-only cases made up 23 percent of the TANF caseload nationally, ranging from 10 percent to 47 percent of state caseloads. By 1999, their percentage of the TANF caseload had grown to 29%. This has led to increasing interest in understanding the characteristics of child-only cases and the program services they receive.

A variety of circumstances result in child-only cases. In some cases, the child is not living with a parent, but with a relative, who chooses not to be included in the assistance unit or whose income and assets preclude him or her from receiving cash assistance. In other situations, the child is living with a parent, but the parent is a Supplemental Security Income (SSI) recipient, a non-qualified alien, a qualified alien who entered the country after August 1996, a sanctioned adult, or otherwise excluded.[1]

I.  TANF POLICIES

State TANF policies affect the number and composition of child-only cases; five policies in particular are worth noting:

• Sanction policy. Under federal TANF, states must sanction families for refusing to comply with work requirements or not cooperating with child support, although states have substantial leeway in deciding what constitutes noncompliance, the severity of the penalty, and the appeals process which restores benefits.[2] These policies may include removing the parent’s benefits from the TANF case (which converts the case to child-only), reducing the overall benefit, but keeping the adult in the assistance unit, or closing the TANF case.

• Alien policy. PRWORA distinguishes between “qualified” aliens, a category which includes permanent residents, refugees, asylees, and certain others granted conditional entry, and “non-qualified” aliens, which includes both undocumented aliens and those in PRUCOL (permanently residing under color of law) status, among others.[3] In general, the federal block grant does not fund TANF benefits for most qualified aliens who entered the country after August 1996 for five years after entering the country or unqualified aliens. However, in both cases, the children may receive assistance if they are United States citizens (often because they were born in the United States).

• Treatment of SSI. Individuals who are aged, blind, or disabled and who have little or no income and resources are eligible for SSI benefits. In almost all states, the SSI income is excluded when calculating TANF benefits and adult SSI recipients may not receive TANF assistance for themselves, but can apply for their children.

• Non-parental caregivers.Unlike parents who are caring for their children, in most states, non-parental caregivers may choose to apply for cash assistance for children under their care and themselves or for the children only. Non-parental caregivers are most often caregivers related to the children, although some states allow non-relative caregivers who have legal custody or guardianship to receive cash assistance.

• Time limit policy. The federal block grant can be used to provide assistance to families that include an adult or teen parent head-of-household (or spouse) for up to five cumulative years. Some states have indicated that they plan to apply time limits to the parents only, which transforms the case to a child-only case at the time limit. States may also impose a time limit that is shorter than five years.

In addition, many states are creating alternative programs for relative caregivers, offering higher payments than TANF, which may result in a shift of cases from TANF into the alternative programs. Depending on state financing choices, these cases may or may not be counted as TANF child-only cases. [4]

II.  Summary of the Key Findings

A.  Nationally, Over Time

In 1994, when the national AFDC caseload peaked, 5.0 million families were receiving cash assistance; in 1999, 2.7 million families were on the welfare rolls, a 46 percent decline. The child-only caseload did not follow this trend; the number of child-only families receiving AFDC/TANF assistance increased steadily throughout the 1990s, declining somewhat after 1997. As a result, the TANF caseload consists of a growing proportion of child-only cases. This is illustrated in Exhibit A.

Exhibit A
AFDC/TANF Child-Only Cases, 1985-1999
(Number and Percentage of Total AFDC/TANF Families)

These child-only cases can be categorized into parental cases, in which the child is living with the parent who is ineligible, and non-parental cases, in which the child is living with a non-parental caregiver who is generally a relative. The parental cases can be further categorized into cases in which the parent is ineligible because he or she is an SSI recipient, an alien, or has been sanctioned.[5]

As Exhibit B shows, the largest growth in child-only cases occurred prior to the passage of PRWORA in 1996. Within the child-only caseload, both parental and non-parental caregiver cases increased, although the parental cases increased at a greater rate than non-parental cases from the late 1980s to early 1990s. Specifically, non-parental cases grew from approximately 206,000 to 321,000 between 1988 and 1994, a 56 percent increase, while parental child-only cases grew from about 162,000 to 501,000, an increase of 209 percent, during the same period.

Exhibit B
Number of AFDC/TANF Child-Only Cases
by Type of Child-Only Case
(in thousands)

Source: AFDC QC Data. Department of Health and Human Services, Administration for Children and Families, Office of Planning, Research, and Evaluation.

There are several explanations offered for the growth in child-only cases during this period:

• An increase in sanctions for non-compliance with program requirements. The Family Support Act (FSA) of 1988 required non-exempt AFDC recipients to participate in job search, work experience, or education and training activities or be sanctioned. States sanctioned cases by removing the parent from the assistance unit, converting regular AFDC cases to child-only cases.

• An increase in the number of individuals eligible for SSI. Congress enacted a series of legislation reforms in the mid-eighties and early-nineties that significantly expanded the scope of the SSI program. The biggest change was the enactment of the 1984 Disability Reform Act that significantly expanded eligibility, particularly for those with mental impairments.

• An increase in the number of non-qualified aliens. The Immigration Reform and Control Act of 1986 (IRCA) allowed formerly illegal immigrants to attain legal status, although it barred them from receiving AFDC for the first five years after their legalization. It is possible that the new legal status of the parents increased the likelihood that they would seek benefits for their citizen children. In addition, IRCA instituted employer sanctions for knowingly hiring illegal aliens, perhaps putting more non-qualified aliens in need of cash assistance for their families. Finally, illegal aliens living in the U.S. began growing by about 200,000 to 300,000 each year starting in 1989, after IRCA initially reduced the number of non-qualified aliens. [6]

• An increase in non-parental caregivers. Current Population Survey data show an increase of kinship care between 1983 and 1993.[7] This growth in relative caregivers may have increased the number of TANF children living with relatives and receiving assistance on child-only cases.

B.  Child-Only Policy and Practices in Three States

Our study examined in more detail the policies and practices in California, Florida, and Missouri.  These states were selected, in part, because they offer a range of policies that could influence the size and composition of child-only cases.

• All three states sanctioned cases for failure to meet work requirements, although the penalty for noncompliance varies; the policy changes directly affect child-only caseloads.

California removed the adult from the assistance unit, converting regular TANF cases to child-only cases, while Missouri kept the adult in the assistance unit, but reduced the overall benefit by 25 percent. Florida’s policy in effect the summer of 1999 closed the TANF case for the first incident of noncompliance and closed the TANF and food stamp case for second and third incidents. However, for the second and third sanctions, parents could apply for assistance for their children through a protective payee (a third party agreeing to accept the check on the children’s behalf) making the case child-only. [8]

• The time limits will affect child-only caseloads differently in each of the three states. 

Only in California will cases be automatically converted to child-only cases when adults begin reaching the time limit in January 2003. In Florida, where some welfare recipients have reached the time limit, cases become child-only when the state assesses that the children are at risk of entering foster care and assigns a protective payee. This had occurred in relatively few instances. In Missouri, cases will be closed at the time limit; welfare recipients will begin reaching the time limit in June 2002. Pertinent to all states, if time limits produce severe financial hardship, resulting in more children living with relatives, child-only caseloads could increase.

• California and Missouri used state funds to provide assistance to qualified aliens who entered the country after August 1996; Florida did not.

As discussed above, federal TANF funds cannot be used to provide assistance to qualified aliens entering the country after the passage of PRWORA until they have resided in the country for five years. However, California and Missouri continued to provide assistance using state funds.

• With the exception of sanctioned cases in Florida and Missouri, child-only cases are not subject to time limits, nor are child-only caregivers required to work or participate in employment-related activities.

Child-only cases have not declined as rapidly as regular TANF cases, in part, because these cases are subject to fewer work requirements. Children are assisted until they reach age 18, assuming children have little income and resources. 

• As a condition of receiving TANF benefits, parents must assign child support rights to the state. In California, Florida, and Missouri, this applied to relative caregivers as well.

In all three states, relative caregivers must cooperate with the state by supplying information on each parent absent from the home, which is forwarded to the state child support agency. In addition, the states required that relative caregivers also assign child support benefits over to the state. The child support agency pursues the absent parent to establish a support order, if none is in place, or to enforce an existing order.

• The three states were creating alternative programs for relative caregivers that offer higher payments than their TANF programs with additional requirements for eligibility. Relative to foster care, these programs generally have less stringent licensing requirements.

Newly created relative caregiver programs in all three states offered higher payments than TANF, required legal guardianship or court supervision of the child, and required some level of background review, licensing, and/or training for the caregiver, although requirements are generally less stringent than foster care requirements. States were using some combination of TANF, maintenance-of-effort (MOE), and state and local funding to support these programs. [9]

Besides the creation of these alternative programs, no special plans were being made to serve the child-only cases within the scope of the regular TANF program in the counties visited. While these cases make up an increasing proportion of the TANF caseload, child-only cases are perceived as easier to work than regular cases.

C.  Child-Only Caseload in Three Counties

A case file data collection effort was conducted in three counties—Alameda County (Oakland), California, Duval County (Jacksonville), Florida, and Jackson County (Kansas City), Missouri—to document the characteristics of child-only cases. Data were collected from 761 child-only case files that were open in May 1999. The key findings include the following:

Non-parental caregiver cases comprise two-thirds of child-only cases in Jackson and Duval counties while most of the remaining cases are due to parental receipt of SSI; the Alameda County caseload is more evenly divided among non-parental caregiver, SSI, alien, and sanctioned cases (see Exhibit C).

Exhibit C
Composition of the Child-Only Caseload in Three Counties

Source: Lewin Case File Review, 1999.

Due to differences in demographics and state TANF policies, Alameda County’s child-only caseload is more diverse than Duval and Jackson county caseloads. Specifically, more aliens reside in Alameda than in Duval and Jackson and, unlike the other two counties, the vast majority of cases sanctioned result in child-only cases.

• Among the non-parental cases, the reasons children come to reside with non-parental caregivers vary widely. Major reasons include desertion, substance abuse, incarceration, child abuse, and neglect on the part of the parent.

Desertion was a common reason children came to reside with non-parental caregivers, accounting for between 26 and 41 percent of the cases in the three counties. Substance abuse by a parent led to a non-parental caregiver arrangement for over one-quarter of the cases in Duval. It is important to note that these reasons may be subjective and are generally not mutually exclusive as the child often came to reside with the caregiver for a combination of related reasons. In addition, the welfare offices differed in terms of how they categorized the circumstances surrounding these cases. 

• Caregivers of child-only cases are substantially older than adults on regular TANF cases; within the child-only caseload, non-parental caregivers are substantially older than parental caregivers.

The average age of a regular TANF payee is about 30 in Duval and Jackson counties, while child-only caregivers are approximately 44 years of age, on average.[10] Within the child-only caseload in Alameda, Duval, and Jackson counties, parental caregivers average 34 years of age and non-parental caregivers have an average age of 53.[11] This discrepancy is largely due to the fact that grandparents are caregivers of two-thirds of the non-parental caregiver cases. Also, it is not uncommon for great-grandparents to be caregivers. As a result, about 60 percent of non-parental caregivers are over the age of 50 and almost 10 percent are over age 70. Among parental child-only cases, SSI recipients tend to be older.

• Non-parental cases have higher total income than parental child-only cases. 

Non-parental caregivers have higher total income, defined as income from cash assistance, food stamps, and other sources, including earnings, SSI, and pensions. This is true despite the fact that in all counties, non-parental caregivers are less likely to receive food stamps and in Duval and Jackson counties, they are less likely to receive SSI. As compared to parental caregivers, non-parental caregivers receive a larger portion of their income from sources other than TANF or food stamps. 

It should be noted that this discussion reflects only income that is reported on the TANF and food stamp applications. While income information was requested and often entered on the application, this information was not required of non-parental caregivers who were not receiving food stamps, although was required on food stamp applications. Therefore, this is an underestimate of non-parental caregivers’ total income.

III.  Implications for  Work Requirements and Time Limits

It is important for the Committee to understand that a significant and growing proportion of the TANF caseload is not generally subject to work requirements or time limits. For child-only cases where the parent resides in the household, the adult may have been removed from the grant due to sanctions or time limits and the child or children may continue to receive assistance. The adult may also be ineligible for assistance due to receipt of SSI or due to their alien status.

A significant proportion of child-only cases is composed on non-parental caregivers, usually relatives, who seek assistance only for the needs of the child or children in their care. In this circumstance, neither their income nor their needs are considered in determining the child’s eligibility or benefit level. These caregivers are not generally subject to work requirements nor is the assistance they receive on behalf of the children in their care subject to time limits.

States have significant discretion in establishing policies that affect both the number and nature of child-only cases in their states. These decisions are often embedded in the broader context of decisions states make about the overall goals, philosophy and approach of their TANF program. In fact, our study revealed that states do not generally think about their “child-only” caseload as a whole, but rather focus on the type of child-only case. Given the diversity of circumstances that create child-only cases, it is probably wise for national policy makers to follow suit.

It is important to keep in mind that this study was conducted in 1999, and is based on AFDC quality control data available through 1997. Since then, states have made substantial changes to their TANF programs in response to the 1996 welfare reform legislation. For example, more states are implementing sanction policies that reduce the grant size, but keep the adults in the assistance unit, or close the case completely. Thus, we might see a reduction in the number of cases that are child-only due to sanction status. In addition, as mentioned above, PRWORA banned the use of the federal block grant for most qualified aliens who entered the country after August 1996. We might see an increase in the share of cases that are child-only due to alien status because the adults are not allowed to receive assistance, but their children are, if born in the United States. At the time of our study, few families had reached time limits and we did not observe the conversion of adult-headed cases to child-only cases. Finally, there has been substantial growth in the number of special kinship care programs, which may also be having an effect on the size and composition of the TANF child-only caseload.

I would like to close by emphasizing again that while it is convenient to discuss the TANF child-only caseload as a single class of cases, these cases are composed of families in a diverse set of circumstances. As the Committee considers future policy options with regard to child-only cases, they would be wise to focus on specific types of child-only cases and seek the most up-to-date information on their participation in TANF.

[1] For example, adults are ineligible if they have a drug felony conviction.

[2] Kaplan, J. (1999). The Use of Sanctions Under TANF.Welfare Information Network. Washington, DC.

[3] Kramer, F. (1997). Welfare Reform and Immigrants: Recent Developments and a Review of Key State Decisions. Welfare Information Network. Washington, DC.

 [4] These alternative state programs, which are discussed for three states below, may also be alternatives to foster care for relative caregivers.  Foster care often requires licensing, home studies, and supervision by child welfare agencies, although payments may be higher.

[5] A parent may not be on the assistance unit for other reasons, although these are less common. For example, adults may be ineligible if they have a drug felony conviction.

[6] Fix, M. and J. Passel (1994). Immigration and Immigrants Setting the Record Straight. Urban Institute. Washington, DC.

[7] Harden, A. W., and R. L. Clark (1997).  Informal and Formal Kinship Care.  Report prepared for HHS, ASPE, Washington, DC.

[8] In December 1999, Florida changed their sanction policy, closing the food stamp case for the first incident if the adult does not receive a food stamp exemption. Other members of the household may apply for food stamps after one month.  For second and third sanctions, if the adult does not receive a food stamp exemption, the case is closed, although the other members may apply for food stamps after three months and six months, respectively.  As was the case under the previous policy, protective payees may be assigned after the second and third sanctions.

[9] MOE dollars are expenditures states must make from their own funds as a condition of receiving the TANF block grant.

[10] These figures are calculated using county administrative data from Duval County and Jackson County.

[11] Calculated from Lewin case file data for Alameda, Duval, and Jackson counties.