The subcommittee met, pursuant to call, at 2:10 p.m., in Room B‑318, Rayburn House Office Building, Hon. Geoff Davis [chairman of the subcommittee] presiding.

[The advisory of the hearing follows:]

Chairman Davis.  Good afternoon.  I would like to welcome everybody here.  I would also thank our panelists and also our guests in the audience for their patience.  Votes have made us a little bit tardy in the beginning, but we are looking forward to having this discussion with all of you, have a chance to hopefully share afterwards, and appreciate you coming in. 

Today we will be reviewing ideas for reauthorizing the Temporary Assistance for Needy Families program.  Since it replaced the New Deal‑era AFDC program in 1996, TANF has been successful at cutting welfare caseloads by 57 percent through last year.  Even more importantly, by promoting work among single parents who are the most common welfare recipients, it has helped reduce child poverty in female‑headed families by 10 percent, even with the deep recession. 

But despite such progress, TANF can and should be strengthened to help more low‑income families support themselves in the years ahead.  Unfortunately, the administration has called for only a straight one‑year extension of current law, which expires at the end of September 2011.  Given that position it seems unlikely that significant changes to TANF will happen this year.  In fact, I expect the House will consider a straight short‑term extension of TANF later this month.  But today’s hearing will let us start to focus on key problems that a straight extension would leave unfixed, and help us chart a path toward fixing those issues in the coming year.  As with any program, we learn and develop as time and years go on and we encounter new things and identify processes that can be addressed or be improved, and that is what this focus is. 

Key concerns involve the fact that not enough adults on welfare are working or preparing for work today.  For example, according to recently-released data from the Department of Health and Human Services, in Fiscal Year 2009 only about two in ten families on welfare included an adult who met a welfare‑to‑work requirement.  The reasons are complicated, including because a rising number of welfare payments do not include an adult benefit, called “child‑only” payments.  But as a testimony of the nonpartisan Government Accountability Office discusses, many States are also using an obscure accounting technique known as “excess MOE credits” to weaken work requirements and avoid engaging adults in work or training, as they should.  Instead of the State helping more adults prepare for and begin work, they scour their books to uncover more spending they can credit to the TANF program and thereby reduce the number of people they have to engage in work activities.  This compounds underlying concerns that too few current recipients are actually engaging in constructive activities to prepare for work and life off of welfare.  And that does a disservice to all poor families who want and need help to become self‑reliant. 

Other concerns involve outright abuse of taxpayer trust, such as when adults on welfare spend taxpayer funds on liquor, gambling, tattoos, or even visits to strip clubs.  As recent exposés have revealed, too many welfare recipients have accessed taxpayer funds at cash machines and casinos, liquor stores, strip clubs, and even on cruise ships.  Some States, including California, have already taken action to plug this so‑called “strip club loophole.”  Senators Hatch and Baucus, our colleagues on the Senate Finance Committee, have proposed we do the same on the Federal level.  We should consider that as well. 

A number of States have either enacted or are considering measures that try to ensure parents on welfare are not using drugs which stand in the way of their getting off benefits and into work.  Our colleague, Mr. Reed, raised this issue at our last hearing and it is one attracting a lot of attention.  In a world where many employers require drug testing to ensure workers are clean and sober, neither taxpayers nor welfare recipients are helped if we have a lower standard for those collecting welfare benefits designed to help them enter work. 

Finally, in addition to work and personal responsibility, another key driver of welfare dependence involves family formation, especially whether children are raised in married, two‑parent households, in which they are most likely to thrive and avoid poverty.  In 2009 the poverty rate for married families with children was 8.3 percent, while the poverty rate for households headed by unmarried mothers was 45.3 percent, almost five and a half times as high.  Yet current welfare rules create marriage penalties by expecting a greater share of married parents to be working and for more hours.  States have responded by in effect opting out of such requirements altogether.  It is time to ask whether the underlying rules should be reformed in favor of treating all families the same.  This is one of several questions we should ask about how we remove marriage penalties and encourage stronger families in the next round of reform. 

We have an excellent panel of witnesses with us today to discuss these issues and more, and we look forward to all of their testimony. 

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

Chairman Davis.  And now I would like to defer to my friend and colleague, the ranking member Mr. Doggett, to make his opening statement.

Mr. Doggett.  Thank you so much, Mr. Chairman.  As we take up this question of how to reauthorize the Temporary Assistance for Needy Families program I think we should focus on two goals:  helping able‑bodied recipients find the work that they need, while protecting the safety net for struggling families who are unable to do work because of disability, family crisis, or the fact that there is not a job available.  I believe much work needs to be done on both counts. 

We are caught up in the millions and the billions, quite appropriately.  But this is about looking into the face of one child who is left homeless on the streets because there is no protection, or is one of the four children in this country who wakes up not knowing whether there will be food at the end of the day for their family. 

We should be concerned about strip clubs or any abuse of this system and see that those who abuse these programs do not receive assistance, whether they are a pharmaceutical manufacturer or an individual welfare recipient.  But I think our concerns must be much broader.  We should be concerned about protection that is stripped from the many needy families across this country. 

Even though the number of eligible poor families has increased substantially with these hard economic times, the participation in TANF has not increased by a similar amount.  In 2009, only one of every five children in poverty across America received any direct Temporary Assistance for Needy Families assistance.  It is the lowest level of poor children receiving cash assistance since 1965. 

And in Texas, of course, matters are worse.  We only have about 1 out of every 20 poor children receiving assistance; and when assistance is received, a family of three could expect to get about $244 a month, or less than 20 percent of the generally accepted poverty line. 

TANF has become, I believe, more hole than safety net, protecting fewer and fewer families as more and more have fallen deeper into poverty.  We all want to see more families advance from TANF into full employment and the middle class, but so many are just struggling to stay in the situation that they have now and have lost their chance to participate in the middle class.  The goal is not achieved when caseloads decline due to a lack of access for poor families rather than a decline in the number of poor families.  With fewer poor children and their families receiving Temporary Assistance for Needy Families, now is not the time to do even less with significant spending reductions. 

I am pleased to hear the chairman indicate that we might move forward with an extension, even if temporary, and I am hopeful that that extension will include the TANF Supplemental Grant program that has already expired this summer.  That is what Texas and 16 other States rely upon.  They would see up to a 10 percent reduction in TANF funding without it. 

Over 15 years ago, as part of the 1996 reform of the welfare laws, a reform that I personally supported, TANF Supplemental Grant funds were set aside to help the States that were negatively affected by the Federal formula.  Ever since, Texas and a number of other States have depended on these monies in order to provide assistance that their families need, even at the relatively low levels that Texas funds. 

Without action on this issue, States will lose about $3 billion over the next ten years; $500 million of that will be in my State of Texas.  The loss of these grants would place at risk a range of vital services, including efforts to ensure that children are cared for in their own homes, child‑care assistance for working families and job training.  With funding for TANF having expired, or will expire at the end of this month, it seems unlikely that Congress will design comprehensive legislation to reauthorize it.  I do hope we can come together on a bipartisan temporary extension. 

Unless, Mr. Chairman, I direct all of my concerns at Republicans, which I have many, I must concede that the Administration has largely been missing in action on this issue which impacts the lives of so many of our most vulnerable neighbors.  And I would urge the Administration to provide more leadership on improving the TANF program as we approach the current authorization expiration at the end of the month.  Thank you.

Chairman Davis.  Thank you very much.  I look forward to working with you on this as we move forward.  It is going to be an interesting discussion over the intervening months, and hopefully we will come up with a good solution to that.

Chairman Davis.  Before we move on to our testimony, I would like to remind witnesses that we are limiting the opening statements, the oral statements, to 5 minutes.  However, without objection, all of the written testimony will be made part of the permanent record. 

On our panel this afternoon we will be hearing from a number of folks.  First, Gary Alexander, the Secretary of the Pennsylvania Department of Public Welfare.  He gets a persistence award today for coming, despite flooding in his own State, a lengthy commute, and driving rain.  And as such, he may need to leave us a little bit early to attend to some other matters, but we really appreciate you taking the time to come down here and share from your experience and the things that you have done in Pennsylvania. 

We have back with us Kay Brown from Education Workforce and Income Security with the U.S. Government Accountability Office, who has been with us before to share very critical information as we are beginning to address a range of issues under jurisdiction of the committee. 

Doug Besharov, Professor at the School of Public Policy at the University of Maryland, who has worked for many years in this area and whom I have gotten to know through work with the subcommittee as well. 

Scott Wetzler, Vice Chairman and Professor at the Department of Psychiatry and Behavioral Sciences at the Montefiore Medical Center. 

And LaDonna Pavetti, Vice President for Family Income Support Policy for the Center on Budget and Policy Priorities. 

Thank you all again for being here.  Secretary Alexander, please proceed with your testimony.
 

STATEMENT OF GARY D. ALEXANDER, SECRETARY OF PUBLIC WELFARE, COMMONWEALTH OF PENNSYLVANIA

Mr. Alexander.  Thank you.  Chairman Davis ‑‑

Chairman Davis.  You are in Washington.  Things don’t always work very well here.

Mr. Alexander.  Not as lucrative as Pennsylvania. 

Chairman Davis and subcommittee members, thank you for the opportunity to speak today.  My name is Gary Alexander and I am currently the Secretary of Public Welfare for the Commonwealth of Pennsylvania.  This committee is well familiar with the fundamental changes in the social contract between the taxpayers and recipients of income and services under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.  For the first time, the stated objective of the program explicitly emphasized self‑reliance, but equally and importantly, expectations were imposed in exchange for temporary assistance.  With this central element in place, the legislation that once brought into alignment the interests of all parties ‑‑ recipients, taxpayers and government bodies ‑‑ recipients were motivated to move into jobs at the earliest opportunity because of time limits and TANF work obligations.  Taxpayers could see that those that they were temporarily supporting were making real efforts to earn their own income, and government agencies were no longer bought out from the consequences of rising caseloads, but instead had every reason to encourage family self‑sufficiency so that block grant funds could be saved or reprogrammed. 

This alignment of incentives, and not just the work program changes alone, was responsible for the 60 percent reduction in the national caseloads experienced soon thereafter 1996. 

When TANF was reauthorized in 2006, certain adjustments and updates were made, but the essential social bargain set forth in the original legislation remained intact.  I would encourage Congress to keep that alignment of incentives intact as we move forward. 

There is no reason that other benefit programs should not encourage self‑reliance incorporating a version of a work requirement.  Although not all benefit programs are under the jurisdiction of this committee, it is important for the Congress as a whole to consider the nature of the social welfare system as recipients experience it, and to consider the adaptations of the early TANF success to other related programs. 

Large assistance programs such as food stamps, Medicaid, housing assistance, and unemployment insurance should incorporate a universal work or preparation and obligation to work for all able‑bodied recipients. 

To be specific to Pennsylvania, Pennsylvania possesses a vast social welfare network that has become a way of life to many.  Generally, lifetime benefits are limited to 60 months on the TANF program, but there are many exceptions, as you know, to receive extended TANF. 

Pennsylvania has approximately 18 percent of its caseload on after 60 months.  With billions of dollars spent over the past decade, Pennsylvania only puts 5 percent of its clients in a 30‑hour per week job, yet it touts a work participation rate of approximately 50 percent.  Half of those leaving TANF for a job return to TANF within 1 year.  Pennsylvania and most States meet their work participation rate with everything but a real 30‑hour a week job.  The welfare state in Pennsylvania is growing by 13 percent year over year. 

We and you in Congress know that our current welfare system does not work for America.  As in all Federal programs, the rules of TANF are complicated, cumbersome, onerous and convoluted.  For TANF the current measures and outcomes, while important to the Federal establishment, fail to accurately measure work, and they allow States to inflate numbers and not be held responsible for performance.  Only a program that values and encourages work first, across all Federal programs, will increase accountability and empower individuals and families to self‑sufficiency and independence. 

How do we solve this dilemma?  One, create a performance‑driven system across the board where contractors are paid for job placement and retention only.  Simplify the rules and create simple performance measures for States, like work attainment and retention and healthy lifestyles; retain the current block grant, but do not penalize States for saving money; and ensure that States measure real job placement and retool the work participation rate to reflect real employment and do not allow States to pad participation rates by shifting caseloads into State‑only programs. 

Thank you.

Chairman Davis.  Thank you very much. 

[The statement of Mr. Alexander follows:]

Chairman Davis.  Ms. Brown, you may proceed with your statement. 

STATEMENT OF KAY E. BROWN, DIRECTOR, EDUCATION, WORKFORCE, AND INCOME SECURITY

Ms. Brown.  Chairman Davis, Ranking Member Doggett, and members of the subcommittee, thank you for inviting me here today to discuss our work on the TANF program, a key program intended to assist women and children living in poverty. 

I will cover two issues:  first, changes in the welfare caseload and spending; and second, State actions to meet work participation requirements. 

First, regarding caseload and spending changes.  Following welfare reform, the number of families receiving TANF cash assistance dropped by almost 50 percent as States focused on moving parents quickly into jobs.  This was followed by a slight uptick since the beginning of the recession.  By 2008, about half of these cases still receiving cash assistance were what we called child‑only cases.  In these households only the child receives benefits because he or she is living with a parent or caregiver who is not eligible to receive cash assistance.  The parent may receive supplemental security income, may be an immigrant, or may have been sanctioned for noncompliance with program requirements, or the child may be living with a nonparent caregiver, often a relative.  These adults in the child‑only cases are generally not subject to work requirements. 

As the number of families receiving cash assistance declined, so did TANF‑related State spending for cash assistance from about 73 percent of all TANF expenditures in fiscal year 1997 to 30 percent in 2009.  Instead, States shifted spending to meet other purposes consistent with the program goals, such as child care and child welfare.  However, States primarily report to HHS on families receiving cash assistance, the traditional welfare caseload, and not on these other forms of assistance.  As a result, we don’t have a complete picture of the families that may be benefiting from TANF funds and the services that they receive. 

My second point is about how States have met their work participation requirements.  Because of the program’s focus on job preparation and employment, States’ performance is measured in large part by their success in ensuring at least 50 percent of their work‑eligible cash assistance families are working or engaged in other specified work activities; yet our work shows that approximately one‑third of TANF families participated in these work activities for the required number of hours each year from 2001 to 2009. 

States have been able to engage less than 50 percent of participants in work without incurring penalties by taking advantage of allowable program flexibilities.  For example, States can receive a credit that reduces their required participation rate by the same percentage as their caseload decline.  In 2009, 38 of the 45 States that met their required work participation rate did so in part because of caseload declines. 

Many States also took advantage of a provision that factors in State spending.  States are required to spend a certain amount of their funds every year to receive their federal TANF block grant.  In recent years when States have spent above the required amount, they were permitted to correspondingly increase their caseload reduction credits.  In 2009 32 States claimed this excess spending, and 17 States would not have otherwise met their participation rates. 

And finally, States made policy changes that helped ensure they met their participation rates.  Some States made changes to ensure that families complying with work requirements continued to receive cash assistance.  States also opted to provide cash assistance to some families completely outside of their TANF program, particularly those families that have the most difficulty meeting the TANF work requirements.  These families were not counted in the State’s work participation calculation. 

In conclusion, although a central feature of the TANF block grant is the flexibility it provides to the States to design and implement their own programs, the lack of information on how noncash assistance funds are used and who benefits, combined with the limited usefulness of the work participation rate as the key performance measure, hinder our ability to fully understand how the program has been implemented and whether it is reaching its goals. 

This concludes my prepared statement.  I am happy to answer any questions.

Chairman Davis.  Thank you very much. 

[The statement of Ms. Brown follows:]

Chairman Davis.  Professor Besharov, if you could give your testimony.
 

STATEMENT OF DOUGLAS J. BESHAROV, PROFESSOR, SCHOOL OF PUBLIC POLICY, UNIVERSITY OF MARYLAND

Mr. Besharov.  Chairman Davis, Ranking Member Doggett, and other members of the subcommittee, it is a pleasure to be here to testify on this very important topic.  I teach at the University of Maryland, and I teach courses on program evaluation and poverty alleviation.  More importantly, I think, for today’s session, I also lead a project called Learning from Abroad where we look at programs in other countries, especially other OECD countries.  And essentially my message to you today is going to be that we can no longer say the Europeans are not very serious about labor force participation and that we are so good at it. 

In my testimony is a figure that shows that the percentage of Europeans working is now about the same as the U.S.  Two things have happened.  U.S. labor force participation has gone down.  It was going down before the recession.  I think this is a long‑term problem that ought to be addressed by the committee. 

Secondly, the Europeans have, I think, gotten much better at enforcing participation requirements in their programs, whether it is unemployment programs, disability programs, or social assistance, and I think those are lessons for us as well. 

When I first met Chairman Davis, he said, I knew a professor would have some charts, so in my testimony are some charts.  I notice that the testimony as we gave it to you does not have page numbers, but figure 1 picks up on, I think, part of what is the main interest of the committee.  And that is, we have seen since 2009 a major increase in unemployment, one of the largest increases and most sustained periods of unemployment in our history, at least since we have been counting this, and yet TANF has hardly gone up.  TANF participation, the caseload is about 14 percent up, cumulatively, in those years. 

As the prior two speakers mentioned, there are a lot of things that States can do to distort recipiency rates so that we don’t get exactly an accurate number, but there is rough agreement that the TANF numbers haven’t risen that much.  If you look at figure 1, you can begin to see some of the reasons.  Number one, the Congress has been extremely generous about unemployment benefits.  From a time when about 30 or 35 percent of the unemployed received benefits, we have been running at about 70 percent of the unemployed receiving benefits.  They won’t go on TANF.  If you look at this chart, also you will see that SNAP or food stamp benefits have really increased.  And a surprising part of this is disability payments. 

If you look at figure 2 in my testimony, you will see the relationship between unemployment and SSDI applications.

Now, I could not find a chart, and I couldn’t create a chart that quickly that had the approved applications, but I can tell you that they reflect these numbers.  Which is to say that a substantial number of the people who are unemployed, especially in their fifties, are turning to the disability programs and going on disability, which is another reason why the TANF caseloads are not rising and another reason why I think, as Secretary Alexander said, many of us are coming to the conclusion that, as we move beyond this recession, that something be done to consolidate the pro‑work provisions of all of these programs.  Because in a post‑welfare reform, and, I hope, a post‑recession environment, if we don’t fix disability, if we don’t fix unemployment, we will continue to fall behind even the Europeans on labor force participation. 

Is this doable and is it doable in a time of a recession?  Figure 4 is I think a demonstration of that.  This is how the Dutch, when they saw that their disability caseload was increasing many times faster than their population ‑‑ in 1980 they had three times as many people as we did as a percentage of the population on disability — reformed their system.  And now the percentage of Americans on disability and the percentage of the Dutch on disability are the same.  These reforms that are possible. 

There are many recommendations made from the Democratic side and the Republican side by academics all over this country and actually all over western Europe about what to do. 

In my testimony I summarize the major changes that have been made.  Tightened eligibility rules, a mandate which includes, for example, physical examinations. 

Whoops, I am out of time.  I have the list there.  I hope the committee will consider this kind of consolidation of programs.  This is the time to worry about labor force participation, not after the recession and unemployment pass.

Chairman Davis.  Thank you, Professor. 

[The statement of Mr. Besharov follows:]

Chairman Davis.  Dr. Wetzler.

STATEMENT OF SCOTT WETZLER, VICE CHAIRMAN AND PROFESSOR, DEPARTMENT OF PSYCHIATRY AND BEHAVIORAL SCIENCES, MONTEFIORE MEDICAL CENTER, ALBERT EINSTEIN COLLEGE OF MEDICINE

Mr. Wetzler.  Chairman Davis, Ranking Member Doggett, and members of the committee, thank you for having me.  I want to talk to you about the specialized issue of substance abuse as it relates to welfare reform. 

As you know, the law stipulates that people are allowed to be exempted from the work participation requirements for 4 consecutive weeks up to 6 weeks per year to engage in intensive substance abuse treatment.  And as a result, I actually run a program in the Bronx, New York, which really has some of the highest rates of substance abuse and poverty in the Nation, where we do evaluate welfare recipients in terms of their substance abuse disorders to determine whether they are employable or not, and refer them for various sorts of substance abuse treatment that is appropriate to the level of care that is needed. 

What we found over the years of running this program, we have evaluated more than 20,000 people, is that the vast majority of people with substance abuse are in fact able to participate in a work program and don’t even require the exemption at all.  About 70 percent of the people at the initial evaluation are eligible for work, and another 20 percent of people after a brief period of intensive treatment are able to work. 

So the real main message I would like to leave you with, as I have said in my written testimony, is that just because somebody has a substance abuse disorder doesn’t mean that they can’t work. 

Now, having said that, I think it is important to emphasize the importance of treatment for these folks.  And what we do is we refer them for treatment and work at the same time, simultaneously.  So we take if not a rigid work‑first approach, certainly a work‑early approach.  Because the treatment referral is a mandated appointment, in a sense we are putting pressure on people, a kind of coercive pressure on them to do something which they might not otherwise do voluntarily.  But one of the things I would like you to know also is that treatment under that sort of circumstance, coercive treatment, is as effective as people who went through treatment voluntarily..  and it actually helps to increase people’s motivation and attendance in treatment. 

In New York we have in addition, a case management program where we try to help people attend treatment.  And this I guess is part of the flexibility that was discussed before of how the funds can be spent.  In New York it is called customized assistance.  And these folks have lots of different problems that make it difficult for them to work, make it difficult for them to attend treatment.  They have housing issues, psychiatric problems, medical problems, legal issues.  Obviously, they also have lack of job skills.  And the comprehensive case management program really develops a customized assistance program to help them attend treatment, and we have been very successful in getting people to attend as a result of that. 

The other point that I want to make with you is that actually as the caseloads have dropped so much in New York, I would say only one out of eight people with substance abuse disorders is on cash assistance.  And in fact, I think that this issue is a much bigger problem, as referenced before, for the people on Medicaid‑only population. 

There is a famous case in New York of one man who was on Medicaid who was in in‑patient substance abuse detoxification for 270 days in one year, and the next year he was in in‑patient detox for 272 days.  This was a man who never followed up with outpatient treatment and he was free to enter the hospital as much as he wanted and there weren’t any leverage that was brought to bear on him. 

One thing I would suggest is that in thinking about the responsibilities attached to various sets of benefits, we think about Medicaid just like we do about the temporary assistance.  Thank you very much.

Chairman Davis.  Thank you, Dr. Wetzler. 

[The statement of Mr. Wetzler follows:]

Chairman Davis.  Dr. Pavetti.
 

STATEMENT OF LADONNA PAVETTI, VICE PRESIDENT, FAMILY INCOME SUPPORT POLICY, CENTER ON BUDGET AND POLICY PRIORITIES

Ms. Pavetti.  Chairman Davis, Ranking Member Doggett, and subcommittee members, thank you for inviting me, for giving me this opportunity to testify today. 

In my capacity as a researcher I have observed firsthand how States have implemented TANF work requirements over the last 15 years.  What started as an income maintenance program with a very tiny work program attached to it is now a program that is almost entirely focused on work.  The cash assistance the program provides is minimal, accounting for only about a quarter of all State and federal dollars. 

While this shift to a work program has been remarkable, it has not served all poor families well.  And with a weak economy we now face an entirely new set of challenges.  As we prepare for TANF’s reauthorization, we need to remember that TANF was created with a balanced approach in mind, to both create an expectation of work, and to provide a safety net when work isn’t available.  So both aspects are important and we need to focus on both of those. 

In order to make improvements in both of these areas I make three key recommendations.  One is that we need to redefine TANF’s work requirements to better reflect the characteristics of the caseload.  Second, we need to redefine how performance is measured.  And third, we need to provide adequate funding to States so that they can do the job that they have been asked to do. 

Now, what I would like to do is tell you how I arrived at those recommendations.  First, the TANF caseload today is very different than it was 15 years ago, and it really does demand a different approach to work requirements.  We have evidence that many who receive TANF today face significant barriers to employment, it doesn’t mean that there shouldn’t be expectations and they shouldn’t be encouraged to work, but it does mean that the assistance they need is quite different than when we started TANF. 

We know little about how to serve people with a lot of barriers, and it will take time and targeted resources to identify the most cost‑effective approaches. 

As people have noted, we have minimal data available to actually assess what TANF has accomplished and how that has changed over time.  As Chairman Davis noted, only about 24 percent of TANF recipients are meeting their TANF work participation rate standard.  And while that number may seem low, it really tells us very little about whether TANF is succeeding or failing as a work program. 

From the work I and other researchers have done, we know that when families apply for assistance they are quickly referred to a mandatory work activity.  Individuals that don’t comply are sanctioned for noncompliance, which in almost every State means that they lose their cash assistance after a few months.  The assumption that States have failed to impose a work mandate or that they have stopped focusing on work, either because of changes in the DRA or because the economy weak, is simply not an accurate reflection of reality. 

The question we should be asking is if States have imposed stricter mandates, why are so few meeting the work requirements?  I believe that many of those answers can actually be found in the data that you have from HHS on work engagement.  First, about a quarter are participating, but they don’t meet the standard, so they are actually doing something, they are trying, but they are not quite at the level where they count. 

Second is about half have no hours of participation, but most of those can be explained and are understandable and, I would say, even appropriate.  The largest share is exempt from participation by the State, mostly because their family or the individual herself or a family member is disabled.  And only 8 percent have no hours because the State has actually failed to engage them in work activities. 

When evaluating how well States are doing we should ask ourselves what is it that we want States to do that they are not doing.  Will stricter mandates result in better outcomes or just a greater abandonment of the most vulnerable families?  Or is it time to give States more flexibility so they can take risks, be innovative, and discover what works best for families who are left on the caseload? 

The reality is the TANF participation rate is an inadequate measure of whether or not a State has implemented an effective work program.  As Mr. Alexander noted in his testimony, TANF’s success should be judged on how well States do at getting recipients into jobs that last.  The work participation rate measures process, it doesn’t measure outcomes.  A State that moves recipients off TANF into jobs quickly could easily fare far worse than a State that keeps people on the rolls.  We can do better, and we can start simply by giving States the option to measure outcomes instead of process. 

The last thing I would like to say is I think that a work‑based system can’t be held as a success when it doesn’t provide assistance to vulnerable families when the economy fails.  TANF has responded only modestly to the recession.  And what we know from looking at the evidence is that TANF did well at getting people into the labor market when the economy was strong, and a strong economy has to be a part of everything that we do or we will fail. 

I think that the other thing that is important is we don’t have evidence that people have failed and don’t want to take jobs.  In fact, we have the opposite.  So I think that we need to think about how we can again make sure that the labor market is strong and that the resources are there to actually help TANF recipients and others to actually take advantage of those. 

And finally, the last thing I want to say is that we really do need to make sure the resources are there.  Mr. Doggett mentioned about the supplemental grants.  And that really means that for 17 States they really don’t have the same amount of resources that they had when TANF started, and they are being asked to do more with less.  And then the other thing is that we also have a contingency fund.

Chairman Davis.  Excuse me.  Your time has expired.

Ms. Pavetti.  Okay.  I am sorry.  I missed that.  I was watching that go.  I didn’t notice they kept going up.  Sorry.

Chairman Davis.  No problem.  It just continues in the other direction.  But I appreciate your thoughts and comments. 

[The statement of Ms. Pavetti follows:]

Chairman Davis.  And we will proceed now to questions.  I would like to start now with Secretary Alexander.  In 1996, welfare reform implemented a newer approach to helping low‑income families.  And in exchange for benefits, recipients were expected to work or prepare for work.  While it was not the only policy to encourage work among low‑income families, welfare reform played a substantial role in increasing employment and earnings of single mothers and also reducing child poverty. 

Yet according to HHS data and the testimony we heard today, relatively few families face a work requirement as a result of receiving welfare, and even fewer actually meet work requirements.  What keeps States from engaging more welfare recipients in activities leading to self‑sufficiency and what can we do to ensure the TANF program doesn’t support this dependency but really focuses to work more effectively to end it? 

Mr. Alexander.  Well, first of all, we operate a vast welfare system that encompasses much more than just TANF.  And unfortunately, I think in our other programs like food stamps and Medicaid, there is scant ‑‑ there is a scant work requirement or no work requirement at all.  I think what we have learned from TANF from 1996 is that there was a focus on self‑reliance, personal responsibility, the focus on work, it was time‑limited, and that there was a focus on bringing families together in a healthy marriage.  And I think that if we are going to proceed in the future and end dependency, we are going to have to work harder at encompassing all of our programs across the welfare spectrum and bring all of these together. 

In all of these families that we touch, if they are on TANF they are on Medicaid; generally, they are on food stamps.  So we have separated families.  And we give them an EBT card, we put benefits on an EBT card, we separate things out.  We have to approach this holistically with these families, with a life coach to try and bring them to self‑reliance and personal responsibility. 

So I think we can learn from TANF, but we have to move on from TANF and really do much much more.  We have got to reach out to the business communities in a better way to engage them.  And I think it can be done, but I think that the current requirements, the current TANF requirements are not conducive, as all of the speakers have said, to really measuring personal responsibility and self‑reliance because we are not measuring real work participation.

Chairman Davis.  Thank you.  Professor Besharov, do you have any thoughts on this? 

Mr. Besharov.  Well, I think, first of all, having all the means‑tested programs work in concert is tremendously important, as I indicated in my testimony.  If there is no serious work requirement in food stamps, if it is relatively easy to go on disability and then have no work requirement, if the unemployment program doesn’t enforce work or job‑looking requirements, then we have only used one in four, or whatever, of the programs to encourage job‑related activities.  And I want to emphasize here that it doesn’t have to be just looking for jobs.  We have a population that also needs different forms of job training, transitional training, work preparation.  Much of that is going by the board in this period, in part because we haven’t mobilized all these other programs.  So it is not just job search, it is also job training that ought to be part of this program.

Chairman Davis.  Anybody else like to share? 

Ms. Pavetti.  I think that one thing that is important when we think about this is to distinguish the difference between whether people meet the work requirement and whether people are mandated to work.  Because I think in TANF most people are mandated to work.  They may not be meeting that requirement and I think that is important to consider about where we go. 

The other thing that I think is important is that in all of our programs, if you look at data from when people come into the program and a year later, the vast majority do work, so it is really a temporary situation; it is not that people are on for long periods of time without working.  Most people on food stamps or Medicaid work within a year.  So I think we need to really think about what the portion of the population for which work is not working.  A huge portion has to do with not being able to find jobs, not that they are not willing to take them when they are available.

Chairman Davis.  Would Dr. Wetzler or Ms. Brown like to comment? 

Ms. Brown.  As part of our recent work on program overlap and duplication that we have been doing across the government, we have also looked at the types of activities that not necessarily focus on means‑tested programs, but thinks like the WIA program and other employment and training programs.  That is another example of where resources could be combined and perhaps reach a broader range of needs.

Chairman Davis.  It would seem that the lack of data standardization and data matching across the States that we have talked to ‑‑ several of us have had discussions on this in prior meetings ‑‑ is going to be one key component to eliminating improper payments or dealing with some of the challenges that we have, I think, that would streamline and significantly reduce costs.  And I appreciate your answers. 

And I now would like to recognize the ranking member, Mr. Doggett from Texas, for 5 minutes.

Mr. Doggett.  Thank you very much.  And thank you for all of your testimony. 

Dr. Pavetti, you discussed the TANF Supplemental Grant program.  It is really a misnomer because these are not supplemental grants, but they are a crucial part of the way that Texas, Tennessee, Georgia, a total of some 17 States, address the problems that they face, and they were part of the reform in 1996.  Isn’t it true that these 17 States who had their assistance cut when the TANF Supplemental Program was allowed to expire this summer, that these are the same States that are already receiving less funding through TANF per person than most of the other States in the country? 

Ms. Pavetti.  Yes.  The reason why the supplemental grants were included as a part of the TANF block grant was that there were a group of States that really fit two characteristics.  One is that they had less spending per poor family, and the other is that there was some adjustment for our changes in population, so that it really was just a different way of getting funding to those States, but they have always been perceived as part of the original deal. I don’t know where the name “supplemental” came from, but it is part of what they think of as their block grant, and for them it is a cut.  And again, it is to the poorest States in the country.

Mr. Doggett.  Well, I think the important point, we may have differences on the committee and among our witnesses about where the priorities ought to be in making changes here; whether they ought to be on marriage or work, or both, or the substance abuse issues that are so critical that you obviously have some creative ways of handling and note some of the problems within the current system.  But whatever your priority is, in these 17 States, if this program is not renewed, if the expiration continues and they get shortchanged in the funds that they have to do any of the things ‑‑ new, old, wrong, right, high priority or low priority ‑‑ and that is why I think it is so critical that any extension include this Supplemental Grant program. 

Dr. Pavetti, you were about to comment as your time ran out about a contingency fund.  Would you like to elaborate on that? 

Ms. Pavetti.  One of the other parts of the original deal was the contingency fund, which was really intended to help States during poor economic times.  There was a recognition that with a block grant you needed to have some mechanism to provide additional assistance to States. 

And there are two problems with the contingency fund, two main problems.  One is there is no money, so there really is no money for States to draw on to provide extra help.  And the other is the contingency fund is very poorly designed.  And Mr. Alexander mentioned this in his testimony.  It is very difficult for States to access that fund, and when they do access it, there is no guarantee that they actually use those resources for countercyclical activities. 

So I think there are two things that need to happen.  One is we need to fund it, and the second is we really need to think of a redesign that will allow it to do some of the countercyclical things that we know are successful, like subsidized employment, emergency assistance, things that really do help families who are looking for work and can’t find it.

Mr. Doggett.  And, Ms. Brown, if I understand correctly, this Governmental Accountability Study concluded that 90 percent of almost all of the decline in the TANF caseload is due to fewer eligible families receiving cash assistance? 

Ms. Brown.  Yes.  That is a study we did where we actually looked at the time that the program changed, up until about 2005‑2006.  And at that time it was about 87 percent of the decrease in the caseload was caused ‑‑ was related to families who were eligible but, for whatever reason, chose in their decision‑making process not to participate.

Mr. Doggett.  Thank you.  And Dr. Pavetti, is one of the reasons for that low rate of participation that some of the States are diverting eligible families away from TANF? 

Ms. Pavetti.  They are.  One of the things States did, particularly after the Deficit Reduction Act, was they made it much more difficult for families to get onto TANF.  One of the ways a State can meet their work participation rate is to make sure that the only families who get on TANF are families who can meet that rate, so they just increased the standards.  And so it means that the front door is closed to many families.

Mr. Doggett.  What type of family would be excluded? 

Ms. Pavetti.  Well, you know, any family ‑‑ like in one State that I visited, any family who cannot participate for 30 hours a week.  So a family ‑‑ I can give you an example of a woman whose case I reviewed in a study I did who had a very serious anxiety problem to the point that she could not leave her house, and she had sores throughout her head because she would pick her head, so that there was no way she could show up at the agency.  That kind of ‑‑ that person with those issues would not be able to receive assistance in a State that requires people to show up for 30 hours before they get assistance.

Mr. Doggett.  Thank you.  Thank you.

Chairman Davis.  Thank you very much.  I would like to recognize the gentleman from North Dakota, Mr. Berg, for 5 minutes. 

Mr. Berg.  Thank you, Mr. Chairman.  And thank you all for being here.  I appreciate the input from the witnesses, and obviously a scenario that needs a lot of review, it needs a lot of thoughtful debate. 

Mr. Besharov, our last authorization, North Dakota, was part of trying to develop some new and innovative ways, and we came up with a program called Pay After Performance.  In essence what it says is, during the first 4 months the TANF portion goes to the children, but the other portion is kind of held for that 4 months to ensure that that work requirement is fulfilled, and then the participant would receive their portion of that after that period.  And quite frankly, it has shown in our State; we have had over a 50 percent participation rate. 

And I guess my question is how can we use what we have done successfully in North Dakota and some of these other States to apply to a national level to create positive incentives within the program? 

Mr. Besharov.  Thank you very much, Mr. Berg.  I think throughout the program the incentives have become skewed since its original passage in 1996, as Dr. Pavetti said, as a number of us have said.  As the rules have gotten more complicated, as there is this footnote rule and that footnote rule.  But many of the States, I think most or a vast majority, in fact, game the system.  I think Gary even talked about his own State and how it does it.  These participation numbers don’t really reflect the level of nonparticipation that happens in a State. 

So the short answer is the kind of innovation that you described has to be encouraged by the law, not discouraged.  And my sense about that is to simplify the participation requirements so that the States have an easier way of explaining how they are going to show participation.

Mr. Berg.  Mr. Chairman, just in a nutshell, how would you simplify them?  If there was like one statement ‑‑ you said, well, do this, it will simplify and make it easier ‑‑ what would that be? 

Mr. Besharov.  Thank you very much because I do have a view about that.  Forget about all this other stuff and say 15 percent of the caseload has to be in a work experience program, everything else falls into place.  You can’t have 15 percent, or make it 10 or whatever number you make; you can’t get any percentage of the caseload into an actual work experience program without doing all the other things we want the State to do.  That is all you would have to do, and the States I think would be pretty honest about fulfilling that requirement.

Mr. Berg.  Thank you.  Dr. Wetzler, a lot of organizations believe TANF’s recipients with substance abuses should be exempted.  We kind of talked about that and you kind of in your testimony kind of addressed that, and I guess kind of almost got the impression that to some degree people with drug abuse would benefit from the activity.  And I just want to know how participating in a work program will help people who are recovering from substance abuse? 

Mr. Wetzler.  Yes, thank you, Mr. Berg.  It is true that there are many people that seem to believe that somehow ‑‑ that going to work is somehow going to be so stressful that it will lead people to not participate in treatment, or to actually relapse.  But our experience over the last ten years has been that actually work has a very positive effect when it is done conjointly with treatment; that it helps people, it gives them a structure, it gives them a focus for their daily activities, it actually can increase self‑esteem.  And I think, most importantly, it actually increases expectations for what they should do and really combats a culture of dependency.  And even if it is done, as we said before, about coercively or it is mandated in some way, it really does ‑‑ people do participate and they do benefit from it, from the treatment.

Mr. Berg.  Do you have like some specifics in your case management where again there is financial incentives or consequences in addition?  How is that working? 

Mr. Wetzler.  So in New York there are all sorts of sanctions that occur if people don’t attend these mandatory appointments.  For the person who is going to work and going to treatment simultaneously, they have a heavy schedule, they have to do both; and if they miss either one, they will be sanctioned and that will have some problems. 

On the other side of it, we also have some positive incentives for people who actually do obtain employment.  There are what we call performance milestones that people get for obtaining employment at the end of the day.

Mr. Berg.  Thank you.  I yield back.

Chairman Davis.  Thank you.  The chair now recognizes Mrs. Black from Tennessee for 5 minutes. 

Mrs. Black.  Thank you, Mr. Chairman.  And Mr. Besharov, pronounce ‑‑

Mr. Besharov.  Besharov.

Mrs. Black.  Yes.  Thank you very much.  I will not kill your name. 

So let me go back to a statement that you made, and in your testimony you talked about European countries and how many now have a larger portion of their population working than we do.  Do you have a sense for why is that?  Is that by policy or is it more employment availability, or what is it that makes that difference? 

Mr. Besharov.  I think those countries looked at the trend lines of a greater and greater proportion of their citizens not working and became frightened, as we should in this country.  And whether it was Germany, the Netherlands the U.K., even now France, they said what levers does policy have to increase labor force participation?  And actually one of the things they did is they looked at TANF, and they took the ideas from TANF and applied them to the other social assistance programs that they ran.  I think that is a large explanation for why their labor force participation is increasing while ours decreases. 

I should add a footnote here.  Someone is going to say, well, you know, you have to control for demographics and so forth, but I think that is the story line.  And I think it was policy, and I think it was policy because the European countries saw what was coming and knew they couldn’t afford that many people on, in effect, welfare.

Mrs. Black.  Thank you. 

Mr. Alexander, I want to come to you and ask you ‑‑ or excuse me, it was Ms. Brown.  In your testimony you note that over half of the current TANF caseloads consist of child‑only cases, meaning that children are living with an adult who is not subject to the work requirements.  And from your research, do you know if these families receive any assistance from TANF agencies in becoming self‑sufficient?  And second, is this like the old AFDC program, where these families receive benefits year after year until the child turns 18, without the family moving forward in independence from welfare benefits? 

Ms. Brown.  Regarding the question about whether they receive assistance for self‑sufficiency, many don’t.  The types of families that are receiving the assistance, the child‑only assistance, include families like where a parent may be SSI‑eligible and determined that they were unable to work, so they are not able to participate in the TANF program, they are not eligible, but the child would be eligible for the benefits. 

Another example would be if a caretaker, like a grandmother was taking care of their grandchild, that in many cases would not be an expectation that they work in some States, not even a means test.  But there are also cases where there certainly would be opportunities to encourage work.  And the flip side of that example of the caregiver is if a child were living with a caregiver that was of the age where they would be eligible for work and unable to work, there is ‑‑ right now most of them are not required to do that.

Mr. Besharov.  Could I add one outrageous example here to this?  I don’t know the exact number.  The last time I looked, though, it was over 25 percent of the child‑only cases involved the children of immigrants; immigrants not being eligible for TANF, therefore, they are not on TANF, but the child is eligible.  So here is the irony.

Mr. Besharov.  If you are a noncitizen, TANF’s requirements don’t apply to you but they do apply to citizens. 

Mrs. Black.  So in that case you might have a child then from birth until 18 years old is continuing to get the services without the parent ever being required to work? 

Mr. Besharov.  Sure.  But the great thing about this country is most of those people are on the up escalator for work and they eventually get jobs and do better.  But yes, that is a technical possibility and I am sure it happens in some number of cases. 

Mrs. Black.  Are there others that wanted to speak to that?  I yield back my time.

Chairman Davis.  I thank you. 

With that I would like to recognize the gentleman from Washington State, Mr. McDermott for 5 minutes.

Mr. McDermott.  Dr. Pavetti, I do casework in your office; it is always interesting and I have a case for you.  It is a couple.  He is 47, she is 45, high school education, they had a combined income of 90,000 bucks or 84,000 bucks when all this started back in 2007.  They both lost their jobs.  They have three kids, 7, 9, and 12.  They have drawn on all their unemployment benefits, all 99 weeks, so they have nothing left.  They have been using their 401(k), what little they had, to keep their mortgage payments up so they wouldn’t lose their house, but now they are in foreclosure and they have no house and they are going to move into their car. 

What State would you suggest they go to where they could find a program that would meet the needs of a middle‑class couple that is being crushed by this economy of 9.2 percent unemployment?  You can put them on all the work search you want, they can go out every day looking, they have been doing it for 2 years, they haven’t found anything.

Where should they go?  Or is there a State that has a program that meets the needs of a family like that that was once middle class 2 years ago and is now not?

Ms. Pavetti.  Well, there aren’t many.  And the one that I think ‑‑ and I mentioned this last time when I was here talking about program integration ‑‑ the place where they would probably be treated ‑‑ everybody is treated the same is Utah.  So anybody that walks in the door in Utah, regardless of whether they are middle class or on TANF, goes through the same set of employment services, so that they really wouldn’t be treated any differently there. 

Mr. McDermott.  Would they be able to get a cash grant?  AFDC was set up in the thirties to deal with children.  They need food and clothing and housing and medical care.  That is what AFDC was about.  Then in 2006 when we wrote this TANF bill, it was at the height of an economy that was booming, the bubble around the high‑tech industry was going like mad, you could find a job anywhere, and now we are in a place where you can’t find a job anywhere.  And in fact people who have been unemployed are having difficulty because employers don’t want somebody who has been unemployed 2 years.  They want somebody ‑‑ because you have got a bad credit rating.  They have used their credit cards, they have got themselves into horrible messes.  So where is the program, or what needs to be done to make something available for those people in what is now a totally different economy than 2006?

Ms. Pavetti.  I think part of what needs to happen is we need to acknowledge, one, that the economy is part of the problem and that unless Utah has jobs, even if they could get services, it is not going to lead to employment.  So I think what needs to happen is really trying to figure out ‑‑ and Mr. Besharov mentioned this ‑‑ is that this is a time where it works for people to upgrade their skills; but it doesn’t work to upgrade your skills if you can’t work along with that or if you can’t have some sort of cash support to do that.  For that reason I would send them to Chairman Davis’ State, to Kentucky, which does probably one of the best jobs in the country of really allowing people to do education and combine that with work. 

Mr. McDermott.  Would they let this person, this couple, go to community college ‑‑

Ms. Pavetti.  They would.

Mr. McDermott.  Upgrade and get a welfare grant at the same time? 

Ms. Pavetti.  Yes.  What they would do in Kentucky, what generally happens for people is they do encourage people who have the skills and interests to go to community college, and they provide a cash grant to help them get started.  And then they basically have used quite a bit of their TANF funds to do work study so that they provide work for people after a year because of the work participation requirement.  So it is one place where they probably could be able to figure out a way to move forward. 

But I think that our system is not set up to serve that group of families.  It is really set up on an expectation that people don’t want to work, and need to be required to work, so that all that is generally provided for TANF recipients is job search.  So they are required to show up and to participate in a class to look for jobs.  There is not a lot of help that is provided beyond that. 

Mr. McDermott.  No help for the children.  Will they get onto Medicaid for the kids? 

Ms. Pavetti.  Yes.  I don’t know what their assets are and how that would play out.  I don’t know the assets rules as well as I probably should.  But they should be able to, if they meet the asset rules, to be able to get food stamps and Medicaid and, depending on the State, a cash grant.

Mr. McDermott.  So the only thing they are eligible for is food stamps. 

Mr. Besharov.  I would just add that you opened your question with a statement that they have been on unemployment for 99 weeks.  And what I would ask:  What did they do, and what did we do for them in those 99 weeks?  Because that is a long time for them to just be looking for a job without getting a different set of skills. 

Look, it is very bad out there.  I don’t want to minimize how much unemployment there is.  But every day people get jobs.  There are about 3‑1/2 million available jobs today.  I am sure the President tonight is going to say that there are jobs available for some number of people if we can retrain them.  Part of that ought to be in that 99 weeks, and we shouldn’t be asking TANF to do all the work here. 

There are, as the chairman said, a whole set of programs that have not been harnessed for this emergency; they have not been harnessed, and they ought to be.

Chairman Davis.  The gentleman’s time has expired, but I am going to indulge the panel in continuing this discussion for a moment. 

One of the challenges relates to integrating these siloed programs that in many cases don’t talk to each other.  Within certain constraints within States they have been able to get a degree of integration, but often bump up against the Federal statutes, which create additional costs and also has folks fall through the cracks. 

But I know Mr. Alexander was chomping at the bit over here to share an insight.  Since you came through the rain, I thought we would just give him a chance to do so.

Mr. McDermott.  It is on his time. 

Chairman Davis.  I was looking at this as bipartisan right here. 

Mr. McDermott.  We share the extension. 

Mr. Alexander.  Could you tell me which State you are from again?  I am sorry, maybe I missed it.

Mr. McDermott.  Washington State. 

Chairman Davis.  Which is usually like the environment you drove down in today. 

Mr. Alexander.  Yes, absolutely. 

You said they were 47 and 45, had a combined income of $84,000.  They have three children, so presumably they at least have a high school education if they were making 40‑ to $50,000 a year.  What I would say is that there are jobs available for them.  The jobs may not pay exactly as much as they were making. 

Part of my job as a welfare director, I have been in this business for over 15 years and have served at the head of agencies in two States.  Every time I go into a store, whether it is Target, the Dollar Store, WalMart, I ask ‑‑ I go up to the desk and ask for an application for employment.  And nine out of ten times they give me the application.  And I ask them:  Are you hiring?  They say, yes, we are.  And then when I ask them what the general requirements are, most times it is basically a high school diploma or a GED. 

And I will tell you from my experience that we have a lot of people in our programs, especially the food stamp program which has no asset test, that have an abundance of an education and they have assets and they choose not to go to work because they are getting these benefits.  And I have questioned some people on the program as such. 

What I would say to you is that I would like to speak to this couple, if you don’t mind, and try and help them find a job.  And I will tell you this, I was just in Philadelphia. 

Mr. McDermott.  Philadelphia. 

Mr. Alexander.  I was in Philadelphia yesterday at what we call an “earn center,” which is where clients come in to actually find jobs.  And there was a management job available there, I can’t remember the company, but it was a management track job; not a management job, but a management track job.  And they were asking me ‑‑ they were having trouble actually encouraging people in the earn center to take the position.  So there are jobs out there. 

And lastly, I just want to say that I am very interested in the discussion of substance abuse because it does present barriers to clients. 

But I would like to sit and learn more from you.  People want to work and can work.  And I will give you an example.  In Luzerne County in Pennsylvania, Lowes, which is a major corporation, has a distribution center of 1.5 million square feet.  We have been working with Lowes to create jobs for intellectually disabled and physically disabled individuals.  They have hired over 70 individuals with either intellectual or physical disabilities.  Their productivity is as good or if not better than folks like you and I.  Their tenacity to come to work and their enthusiasm to come to work is better than you and I, and they are very happy that they have these jobs.  Lowes happened to do this on its own with very little government money. 

We have to do as government workers and as Congress and as States, we have to do a much better job of reaching out to the business community to try and create jobs.  Will there be hundreds of thousands?  I don’t know.  But certainly we can start to place one individual at a time.  And I believe we can do that because the opportunities are there.

Chairman Davis.  Thank you very much.  I would like to recognize Dr. Price from Georgia for 5 minutes. 

Mr. Price.  Thank you, Mr. Chairman.  And I want to thank the witnesses as well.  This is an important topic and I think we are beginning to have some interesting conversation now, and I appreciate the input. 

The folks that I hear from back home want to make ‑‑  nobody wants anybody to go without help when they need it.  And they want to know that the individual receiving the help is intent upon getting back on their feet and back in the mix. 

And so I want to touch on the incentives that are in place right now that, as a couple of you have alluded to, make it such that individuals look at the, entry‑level job or the down‑income job from what they had before, and the incentives for them not to engage in that position because of the assistance that is provided, one.  And, two, I want to ‑‑ I have heard that we aren’t aligning the work requirement with other programs in our system. 

And I would ask kind of a general question:  What is keeping us from doing that?  Is that our ineptitude?  Or is that the program is written in the wrong way or what?  Mr. Alexander, would you like to start? 

Mr. Alexander.  Yes, I would like to start off.  Yes, it is the Federal Government.  Because there is not a day that goes by that I don’t get emails from Washington, from the Federal establishment, about new rules and regulations.  And trying to run a 20,000‑employee welfare agency, the largest in the Nation in Pennsylvania, I don’t have time to read all that. 

We need to have a new partnership with the Federal Government, with States, so that we have clear and simplified rules across all programs with clear performance measures.  If we had that, States can innovate and achieve excellence, and we can work together with you to do that.  The Federal Government should be there to monitor our progress, incentivize us, and pay us for performance.  And if you do that, you will start to see States work more like private businesses.  But we can’t.  We are inundated with the flood of rules and regulations and a myriad of programs, myriad of agencies.  It is USDA, it is Department of Ed, it is HHS, it is CMS.  We can’t handle all this. 

So even ‑‑ this crosses Democratic and Republican.  This is not a Republican issue.  Most of my colleagues would agree that we need a new relationship. 

Now, some people may want more benefits, some people might want less benefits.  But the bottom line is we have to have clear expectations, and we can’t be trying to figure out rules and regulations on a daily basis. 

So we need to work across programs, start to bring some of them together to comport with one another.  Most of these individuals or families exist in each of those programs, and we need a new redesign.  And I think working together, if you engage the States, I think we can do this. 

Mr. Price.  Would you recommend that under a waiver of the existing programs not being able to meet ‑‑ or is it a new law? 

Mr. Alexander.  No.  The reason why I would not encourage ‑‑ just by its nature, the word “waiver” means that the existing program is broken.  We need a new redesign of and clear goals and performance measures that work:  work retention, healthy living, children in school, drug‑free society.  We need to have these type of broad performance measures from the Federal Government.  The Federal Government needs to get out of the business of trying to run what is going on in the State.  And if the Federal Government wants to do that, I will be happy to give up my position and let them come in and just run everything. 

Mr. Price.  Mr. Besharov. 

Mr. Besharov.  This might be the first time I disagree with my learned friend here, Gary Alexander.  Part of the problem is the Congress and the committee structure, because many of these programs are in different committees ‑‑

Chairman Davis.  I would remind the gentleman that has been a tradition since 1789.  So. 

Mr. Crowley.  Has TANF been around that long, Mr. Chairman? 

Mr. Besharov.  I think I have seen the waiver process generate knowledge and political support for reform.  That is what happened in welfare reform and other programs as well. 

So, Gary, yes, if they can get it; but if not, something like the super waiver that has been on the table for a number of years would be very helpful.  And then not to recognize ‑‑ not to not recognize what the chairman mentioned earlier, some States are trying to work around this entirely by their IT systems, which is to say if you can’t fix it from Washington, the power of computers now will enable many States to do much of what we are talking about; not similar rules across States, but will let the States figure out the best way to work the programs together internally.  And at a minimum, that ought to be encouraged in any new legislation.

Mr. Price.  My time has expired, but I think you are absolutely right.  I think that is the direction we should head, is to allow the States to be able to have the flexibility and then teach us what the heck we need to do to fix this. 

Chairman Davis.  I thank the gentleman.  And now Mr. Crowley from New York is recognized for 5 minutes. 

Mr. Crowley.  Thank you, Mr. Chairman.  Thank you for holding this hearing today, and I particularly want to thank Dr. Wetzler from New York, and from the Bronx in particular, from in his day job at Montefiore Hospital.  So thank you for being here today.

Dr. Pavetti, research has shown that women leaving the TANF program are far more likely to stay employed if they have adequate child care and subsidies to pay for the child care.  I have introduced Child First Act to increase funding for child‑care subsidies so the parents are better able to access child care, which in many States costs more than a college tuition.  And I don’t know about college tuition in New York, but I can attest certainly to high school tuition.

I was wondering if you could discuss the role child‑care availability plays in helping parents find work, and maybe more importantly, help them to keep that work and keep those jobs after transitioning out of the TANF program. 

Ms. Pavetti.  What we have learned through the years in TANF is that there was an expectation that people would move into low‑paying jobs and they would move up a ladder, and that is really not what we saw.  So what happens is people move into low‑wage jobs and they stay in those low‑wage jobs for very long periods of time, which means that they cannot afford child care, so that the only way they are able to work, particularly in low‑wage jobs, is to have a child‑care subsidy. 

One of the things we have also seen in TANF is States have done very different things, so some of States have used a lot of their TANF dollars for child care and others have used lesser amounts.  But what we do know is that you cannot have an expectation of work without also having a way for people to afford child care.  It is not safe for kids, and it means a very unstable workforce if parents don’t have child care.  So I think it is a critical need.  And I think that without it we can get nowhere. 

The other thing I think is important, as you said, you increase funding.  In many States, the TANF grant is so much lower than the cost of child care, without additional funds there isn’t money to actually pay for the child care that is required to go to work. 

Mr. Crowley.  Thank you. 

Dr. Wexler, I am glad that you highlighted some of the work that New York City is doing to make the TANF program work even better, particularly with case management. 

Is it fair to say, based on your experience and your expertise, that New York has been successful in identifying TANF recipients in need of substance abuse treatment without requiring every TANF applicant or recipient to be drug tested? 

Mr. Wetzler.  Well, I am sure there are about ‑‑ today, about 12 percent of the caseload in New York City has identified substance abuse disorder, and it comes through when they apply for welfare.  They get a basic screen at the welfare center, in a sense they are self‑identifying, and then they get referred to us for a more thorough clinical evaluation ‑‑

Mr. Crowley.  My question is, do you think that ‑‑

Mr. Wetzler.  So there clearly are many, many more people than that that actually have a substance abuse disorder that are on the welfare system, but because they actually are participating and being referred for the work activities that are required, it is obviously not severe enough to interfere with that.  So even though they are not identifying it, it isn’t that severe or would ultimately become apparent when they actually are on the work site, in which case they would then be referred.

Mr. Crowley.  I think the country has a lot to learn what New York is doing.  If New York was required to drug test every TANF applicant and recipient, that would most likely leave less money for treatment programs like yours. 

Do you think it is a better investment, given the nature of the resources that we have, to drug test everyone or to provide treatment to those who have been identified as needing assistance, as is done now? 

Mr. Wetzler.  Well, it would be a huge, huge, practical problem to actually drug test everybody.  It would be hugely expensive.  There are two ways of doing drug testing.  You can either do an oral swab, which is very easy but very expensive; you can do urine screens, which is much less expensive but kind of difficult to enforce.  So it would be very difficult.  It would be very expensive.

The other thing I would say is that you would probably identify somewhere around 35 to 40 percent of the caseload that would test positive in that case, and it is not clear that you actually would be able to have the treatment capacity to receive all those people into treatment.  So it is not clear what you would even do with that information if you had it.

Mr. Crowley.  Dr. Pavetti, can you comment on that, please?

Ms. Pavetti.  I think that the evidence we have from other programs or studies suggest that that number is too high.  I am not sure it would be that high at all.  And  Florida’s experience of doing drug testing has a very low percentage.  So I think that the percent who would test positive wouldn’t be that high.

The other thing I think is important about substance abuse is that there seems to be an impression that most States exempt people who have substance abuse problems. 

I actually did work on substance abuse programs in TANF agencies, and that really is not the case.  What New York has done is very much what other States do except most States don’t do as much around providing case management or the treatment.  But they do, if someone has a substance abuse program issue, they require them to participate in treatment, or they require them to participate in work, and they are sanctioned just like everybody else if they do not participate.  So I think the idea that they are exempted is just a misnomer, and not accurate, based on what States actually do in practice.

Mr. Crowley.  I thank you both.  My time has run out. 

I appreciate again, Mr. Chairman, your giving the opportunity for this hearing.  I think the Nation has a lot to learn in terms of what is happening in New York today in terms of TANF and drug treatment, and I appreciate this hearing today very much.  Thank you.

Chairman Davis.  Thank you very much.  And I would like to thank everybody for taking the time to come here today.  I appreciate your help and understanding ‑‑

Mr. McDermott.  Mr. Chairman, can I make a unanimous consent request? 

Chairman Davis.  Yes.

Mr. McDermott.  I ask unanimous consent that an article from today’s Politico, September 8, by Joe Stiglitz, called “All Roads Won’t Lead to Economic Downfall and Doom,” be entered into the record.

Chairman Davis.  Without objection, so be it.

[The information follows:]

Chairman Davis.  If members have additional questions, they will submit them to you in writing, and we would appreciate your responses back to us for the record as well as to them.  And with that, the committee stands adjourned.

[Whereupon, at 3:30 p.m., the subcommittee was adjourn]

QUESTIONS FOR THE RECORD
Mr. Tom Reed

MEMBER SUBMISSIONS FOR THE RECORD
Mr. Jim McDermott

SUBMISSIONS FOR THE RECORD
American Association of University Women
American Public Human Services Association
Center for Family Policy & Practice
Center for Fiscal Equity
Center for Law and Social Policy
Center for Public Policy Priorities
City University of New York (CUNY) School of Public Health
Coalition of California Welfare Rights Organizations
Congressman Danny Davis and Congresswoman Gwen Moore
Coordinator for the Connecticut Alliance for Basic Human Needs (CABHN)
County Welfare Directors Association of California and the California State Association of Counties
Feminists for Life of America
Goodwill Industries International
Legal Action Center
Legal Momentum
Monroe County Coalition for Children and Families
National Association of Working Women
National Indian Child Welfare Association
NETWORK, A National Catholic Social Justice Lobby
Parents Organizing for Welfare and Economic Rights
Public Citizens for Children and Youth
Sargent Shriver National Center on Poverty Law
The Community Economic Development (CFED)
The Hatcher Group
The National Association of County Human Services Administrators
Welfare Rights Initiative
Western Center on Law and Poverty
Wider Opportunities for Women
Women of Color Policy Network NYU Wagner