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Hearing on State TANF Spending and Its Impact on Work Requirements

May 17, 2012

Hearing on State TANF Spending and Its
 Impact on Work Requirements










May 17, 2012


Printed for the use of the Committee on Ways and Means


DAVE CAMP, Michigan, Chairman

WALLY HERGER, California                         
PAUL RYAN, Wisconsin
DEVIN NUNES, California
JIM GERLACH, Pennsylvania
TOM PRICE, Georgia
RICK BERG, North Dakota
DIANE BLACK, Tennessee
TOM REED, New York

RICHARD E. NEAL, Massachusetts
JOHN B. LARSON, Connecticut
RON KIND, Wisconsin

JENNIFER M. SAFAVIAN, Staff Director and General Counsel
JANICE MAYS, Minority Chief Counsel

GEOFF DAVIS, Kentucky, Chairman

RICK BERG, North Dakota
TOM REED, New York
TOM PRICE, Georgia
DIANE BLACK, Tennessee






Ms. Kay E. Brown
Director, Education, Workforce, and Income Security, U.S. Government Accountability Office

Mr. Grant Collins
Senior Vice President for Workforce Services, ResCare

Ms. Carol Cartledge
Director, Economic Assistance Policy Division, North Dakota Department of Human Services

Mr. Peter Palermino
TANF Administrator, Connecticut Department of Social Services, Representing the American Public Human Services Association

Dr. LaDonna Pavetti, Ph.D.
Vice President for Family Income Support Policy, Center on Budget and Policy Priorities


Hearing on State TANF Spending and Its
 Impact on Work Requirements

Thursday, May 17, 2012
U.S. House of Representatives,
Committee on Ways and Means,
Washington, D.C.


The subcommittee met, pursuant to call, at 2:55 p.m., in Room 1100, Longworth House Office Building, Hon. Geoff Davis [chairman of the subcommittee] presiding.

[The  advisory of the hearing follows:]


Chairman Davis.  Good afternoon.  Before we get started, I want to thank all of our witnesses and our guests for your patience.  The voting schedule is not always coordinated with the Human Resources Subcommittee, and we had a little bit of a delay in the last vote series, so thank you for your flexibility.  Or, as we used to say in the Army, parroting that Marine motto, Semper Gumby. 

Our hearing today reviews a key provision of welfare reform:  State spending requirements and their impact on work requirements.  As part of welfare reform in 1996, States were given a Federal block grant for the Temporary Assistance for Needy Families, or TANF, program, which maintains Federal spending on welfare ‑‑ or maintained record Federal spending on welfare.  At the same time, States were allowed to reduce State spending to as little as 75 percent of prior levels under maintenance of effort, or MOE, requirements.  This requirement was meant to ensure continued Federal‑State partnership in helping families move from welfare to work.  But now there is cause for concern that in some States, this financial partnership is becoming a more one‑sided proposition, with States no longer matching Federal spending reliably as they once did. 

Ironically, recent official data from the Department of Health and Human Services, including fiscal year 2011 data published yesterday, appears to suggest States have been increasing their own TANF spending rapidly.  As this graph shows on the monitors, since 2005, States have reported spending almost one‑third more on TANF, including during and after the Great Recession; however, what appears to be behind this growth is not actual increases in State TANF spending, but rather increased State reporting of TANF spending, including spending by third parties that States are now claiming as their own. 

Why would States choose to start reporting more TANF spending?  There are several reasons.  First, under 1999 regulations, States can reduce the share of adults they must engage in work if they spend more than required.  These, quote, “excess MOE credits,” closed quote, have attracted greater State interests since work requirements were strengthened in the Deficit Reduction Act signed into law in early 2006. 

The most recent data suggests 16 States used excess MOE credits to satisfy work requirements, effectively reducing the share of adults on TANF that are expected to work or train in order to maintain TANF benefits. 

Second, other sources of Federal TANF spending, the ongoing contingency fund and the one‑time welfare emergency fund created in the 2009 stimulus law, require increased levels of State spending.  So to get more Federal funds, States had to spend more State dollars, or at least report that they were doing so. 

This slide, taken from a presentation given to State TANF Directors at a December 2006 conference, illustrates how the hunt for MOE has been on, and it appears to be behind some reported increases in State TANF spending. 

Many States have scoured their budgets to find other current spending programs, such as for pre‑K, child care, and after‑school programs, that they could report as TANF spending.  This went further to, if you will, the salesman working the plan to gain maximum advantage within the context, if outside the spirit, of the regulation law.  Others began counting third‑party spending such as assistance offered by food banks and Boys and Girls Clubs as TANF spending.  One State even apparently found a way to count the value of volunteer hours by Girl Scout troop leaders as State TANF spending. 

I want to be clear that this is not illegal, but that doesn’t make it right.  States’ ability to claim such a broad range of items as TANF spending, as well as the availability of excess MOE credits when they do so, have eroded key features of the Federal‑State partnership in place since 1996. 

Today’s hearing will review these issues and consider whether the law should be adjusted to ensure TANF continues to meet its goal helping low‑income parents find and keep jobs. 

We have an excellent panel of witnesses joining us today to review these issues, which are colleagues on both sides of the aisle.  I look forward to working with all of our colleagues and invited guests on this as we consider TANF reauthorization later this year.]

Chairman Davis.  With that, I would like to yield to my friend and ranking member, Mr. Doggett from Texas, for 5 minutes. 

Mr. Doggett.  Thank you, Mr. Chairman. 

As one who supported the 1996 welfare reform legislation, I welcome this opportunity to examine how well the States have been fulfilling their obligations under that legislation.  Having seen more than a few examples of mismanagement of Federal tax dollars by State officials in my home State of Texas, I fully appreciate the value and the necessity of strong oversight. 

But we also need to focus on how decisions made here in Washington are affecting all of the programs that vulnerable Americans depend upon, whether we have a safety net that is so frayed that it is all hole and no net. 

TANF is supposed to be a partnership between the Federal Government and the States.  Unfortunately, both ends of that partnership seem to be fraying and, along with it, the protection that millions of poor families rely upon. 

Last year, the House Republicans targeted the 17 mostly high‑poverty States for cuts in TANF by refusing to extend, without any justification I ever heard, the so‑called Supplemental Grant Program.  That includes my home State of Texas, which already had one of the lowest amounts of Federal TANF funding in the entire country relative to the number of poor children.  The end of these grants amount to a loss of about $53 million every year.  According to the Center for Public Policy Priorities in East Austin, this has meant fewer funds were available in Texas for preventing high school dropouts and child abuse and neglect. 

All of the Texas miracle stuff that we have heard so much about has done very little to those who are caught in poverty.  Only last week House Republicans enacted from ‑‑ approved here in the House a highly partisan bill that would completely eliminate the Social Services Block Grant.  That is the loss of another $137 million to assist low‑income families and protect vulnerable children in Texas, as well as senior citizens. 

Today, we are likely to hear that some States also may be withdrawing their support.  I am sure Texas will withdraw as much as it possibly can rather than continue to spend State funds to meet TANF maintenance‑of‑effort requirements. 

Some States do seem to be increasingly counting spending that is done from nonprofit insurable organizations.  One report indicates that nearly half of the funds that one State, Georgia, declares as meeting its spending requirement actually comes from non‑State private sources. 

While we should certainly encourage the tremendous work of charitable organizations across the country, allowing States to reduce their funding for services for needy families by counting existing spending by hard‑pressed nonprofits threatens to reduce the total amount of support for our poorest children. 

As the chairman just pointed out, changes in how the States count spending also impacts work participation rates that the States are required to comply with under TANF.  I firmly believe we should expect States to diligently work with folks to help them find meaningful employment.  To ensure this outcome, we need standards that meet our bottom‑line goal of helping jobless parents find real work so they can support themselves and support their children. 

We will likely hear some concerns today that the current work participation standard is too focused on how many TANF recipients are in certain activities, rather than on how many people are actually moving into real jobs. 

The current performance measure does not account for how many jobless parents a State is really helping.  For example, a State that has 104 unemployed mothers, but only provides assistance to 2 of them, that State would meet the current Federal work participation if just 1 person was in a work activity.  If that scenario sounds rather extreme and hypothetical, consider the fact that my State of Texas provides TANF assistance to only about 5 out of every 100 children that are living in poverty today. 

Mr. Chairman, if the Federal Government and the States reduce their commitment to our poorest citizens once again, the path out of poverty will become even harder and longer for millions of our youngest Americans.  I stand ready to work with you to ensure that both the Congress and the policymakers in the State meet their obligations to help these struggling families, and I look forward to hearing from all of our witnesses today, and thank each one of them for participating. 

Thank you. 

Chairman Davis.  Thank you very much, Mr. Doggett.

Chairman Davis.  I would like to remind our witness to limit their oral testimony to 5 minutes; however, without objection, all the written testimony will be made part of the permanent record. 

On our panel this afternoon, we will be hearing from five distinguished individuals:  Ms. Kay Brown, Director of Education, Workforce, and Income Security with the U.S. Government Accountability Office; Mr. Grant Collins, senior vice president for workforce services at ResCare; Ms. Carol Cartledge, director of Economic Assistance Policy Division, North Dakota Department of Human Services.  Mr. Peter Palermino, TANF administrator, Connecticut Department of Social Services; and Dr. LaDonna Pavetti, vice president for family income support policy with the Center on Budget and Policy Priorities. 

Ms. Brown, please proceed with your testimony.


Ms. Brown.  Chairman Davis, Ranking Member Doggett and members of the subcommittee, I am pleased to be here today to discuss our work on State spending requirements for the TANF program.  My remarks are based on several previously issued GAO reports and will focus on two points:  the key features of State MOE requirements and changes in the role of State MOE spending over time. 

First on the MOE requirements.  When Congress designed the TANF program, it coupled the $16.5 billion block grant with what was viewed as strong MOE requirements.  This was to ensure that States remained solid fiscal partners.  States continued to be expected to spend a minimum of 75 to 80 percent of the amount they spent on welfare‑related programs before TANF was created.  Over the past 15 years, this has amounted to about 40 percent of the $406 billion in total program spending. 

MOE provisions help ensure that State spending supports Federal goals, and that States are limited in the extent to which they can replace State funds with Federal funds.  To count towards MOE, State funds generally must be spent on families that meet financial eligibility criteria, be used for activities that support one of the four broad TANF goals, and be above the prereform spending levels if spent outside traditional welfare programs. 

In addition to its own spending, though, a State can count towards its MOE certain in‑kind or cash expenditures by third parties, such as nonprofit organizations that support program goal and serve eligible families.

Turning to changes in the role of MOE spending, during 2005, State MOE levels remained stable, hovering around the required minimum.  When States experienced a significant drop in caseloads following reform, the MOE provisions facilitated a shift away from cash assistance to a broader range of services, such as child care, transportation, and child welfare services, as long as these services supported TANF goals.

Then in 2006, the MOE spending levels began to increase until they exceeded the minimum requirements by about $4 billion in fiscal years 2009 and 2010.  These increases were likely the result of several factors.  For example, additional Federal funds were made available during the recent recession; however, to access these funds, States had to increase their MOE spending.

States also have increased the use of MOE to help meet their required work participation rate.  States’ performance is measured in large part by their success in engaging at least 50 percent of work‑related families in allowable activities.  However, States can turn to certain options instead.  For example, when States spend in excess of the required MOE amount, this spending can be used to help lower their required participation rates.

When Congress tightened these requirements in 2005, some States found it difficult to meet them and began to claim this excess MOE, an allowable option that had rarely been used before.  For fiscal year 2009, 32 of the 45 States that met their rate claimed excess MOE spending, and 16 would not have met their rates without claiming MOE expenditures.

In conclusion, MOE is now playing an expanded role in TANF programs.  Some States may be making programmatic decisions and budgetary decisions to claim excess MOEs in order to avoid penalties for not meeting their work participation requirements.  It is important to ensure that MOE spending reflects the commitment to serve low‑income families and supports the Federal program goals. 

While we, GAO, have not reviewed HHS’s existing efforts to monitor MOE, and we do not know how effective they are, we know that MOE provisions can be difficult to administer and oversee.  Yet with appropriate attention to design, implementation and monitoring, MOE provisions can be a useful tool to help strike a balance between heightened State flexibility and ensuring a focus on certain national objectives. 

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

[The statement of Ms. Brown follows:]

Chairman Davis.  That was actually precisely 5 minutes and zero seconds.  Thank you for your precision.

Ms. Brown.  You are welcome. 

Chairman Davis.  I would like to now introduce Mr. Grant Collins, senior vice president for workforce services at ResCare, which is based in my home State, the Commonwealth of Kentucky.  ResCare provides workforce services for individuals with barriers to employment, as well as residential and support services for people with disabilities. 

Grant was previously the Deputy Director of the Office of Family Assistance at HHS, which is the office responsible for administering the TANF program at the Federal level.  He was involved with the drafting of TANF regulations as a result of the passage of the Deficit Reduction Act in 2006, and because of his involvement, he is very familiar with the issues that we are discussing today.  He has previously worked on welfare reform in both Wisconsin and New York City, and I am very pleased that he can join us today. 

Mr. Collins, would you proceed with your testimony.


Mr. Collins.  Good afternoon, Chairman Davis, Ranking Member Doggett, and distinguished members of the subcommittee.  Thank you for inviting me to testify on the impact of State TANF spending on TANF work requirements. 

I am currently the senior vice president of ResCare Workforce Services.  ResCare is a human service company dedicated to helping people achieve their highest levels of self‑sufficiency.  However, today I also wish to offer a few insights from my role as former Deputy Director of the Office Family Assistance, the Federal agency that oversees the Temporary Assistance for Needy Families program. 

In particular, I am here to discuss a few specific TANF provisions:  State spending requirements, known as maintenance‑of‑effort, or MOE requirements; the counting of State and third‑party spending towards MOE requirements; and the impact of that State spending on work participation rates.

Work requirements were a key part of welfare reform in 1996.  States must keep at least 50 percent of adults participating in activities like employment, job search, or vocational training.  States receive credit toward meeting the 50 percent work rate if they reduce caseloads over time. 

Another key provision of welfare reform is what is called maintenance‑of‑effort, or MOE, requirements.  That makes sure States continue to invest their own money in the program.  The goals of the work and MOE requirements were to will ensure that the program continued to be a Federal‑State partnership, and that both parties were financially invested in helping families become self‑sufficient. 

After welfare reform became law, child poverty declined, unmarried birth rates fell, and many recipients went to work.  As a result caseloads fell dramatically.  Because States received credit for their work requirements if caseloads dropped, it also meant the 50 percent work requirement was near zero or near zero in many States. 

To strengthen the work requirement, Congress passed the Deficit Reduction Act of 2005.  As a result many States increased their efforts to find people work.  However, States also found other ways to meet the Federal requirements, one of which became known as “excess MOE.”  The excess MOE provision allows States to reduce their work requirement if they spend more than is required.  Only one State used excess MOE prior to DRA, but today dozens of States report spending more than is required. 

This chart shows how spending reported annually by States appears to have increased dramatically in the years since the DRA was passed.  The post‑DRA years are shaded in red.

Why would States begin reporting increases in spending during that time?  One reason is because excess MOE meant that they could reduce their work requirement by reporting additional spending.  So even though the DRA was intended to strengthen work requirements, as there were 19 jurisdictions at the time with no work requirements, now there are more, 22, that have no work requirement partially due to excess MOE. 

Because of the excess MOE credit, States began looking at spending in other departments throughout government that could be claimed in the TANF program, as is allowed under current program rules.  So a State may begin counting new child‑care programs, prekindergarten classes, or earned income tax credits as TANF spending.  The State may even count volunteer hours as MOE by multiplying the hours by an estimated wage and reporting this as TANF spending.  States can also report spending by third parties as MOE.  For example, a State may count the value of food given out at food banks as TANF spending. 

In closing, I want to point out that none of these practices are illegal.  None of them are questionable according to current policy.  States cannot be blamed for working within rules and regulations to meet Federal requirements.  However, based on my experience as overseeing the TANF program and implementing the Deficit Reduction Act regulations, I believe that this combination of factors has resulted in weaker work requirements, less investment in TANF families, and fewer families becoming self‑sufficient. 

I appreciate the subcommittee’s interest in this issue, and I hope that the members of this subcommittee and this panel can work together to ensure that TANF is working as intended.  I look forward to answering any questions that you might have.

Chairman Davis.  Thank you very much, Mr. Collins.

[The statement of Mr. Collins follows:]

Chairman Davis.  I would like to recognize Mr. Berg from North Dakota to introduce the witness from his own State, Mr. Cartledge.

Mr. Berg.  Thank you, Mr. Chairman. 

I am really tickled to have Carol Cartledge here from North Dakota.  She oversees the TANF program in North Dakota, and I asked her to come out and share some of the commonsense things that they are doing in North Dakota with the committee. 

And so thank you for being here.

Chairman Davis.  Thank you, Ms. Cartledge.  You may proceed. 


Ms. Cartledge.  Chairman Davis, members of this subcommittee, I am here today to provide you with information on North Dakota Temporary Assistance for Needy Families program. 

Maintenance of effort is the amount a State must spend in order to receive the TANF Block Grant.  Excess MOE is in excess of the amount that States need to meet the MOE expenditure requirements. 

A State may claim as excess MOE existing State and third‑party spending.  Using this option allows the State to reduce their target work participation rate and operate separate State programs to address special needs of families with severe barriers to employment. 

Target work participation rate is a percentage of a TANF household required to participate in work activities, which may be lowered by a caseload reduction credit. 

States must engage 50 percent of the TANF participants who are work eligible and 90 percent of two‑parent TANF families in work activities, or States face financial penalties for failing to meet the work participation rate.  However, the rates a State must actually meet for a Federal fiscal year are reduced by the amount of a State’s caseload reduction credit.  Generally the caseload reduction credit equals the number of percentage points that a State reduces its overall caseload in the prior fiscal year compared to the overall caseload in base year, which is 2005.  If a State utilizes the excess MOE option, it further reduces the caseload reduction credit. 

North Dakota took a serious look at the excess MOE option with the implementation of the Deficit Reduction Act.  After much discussion North Dakota decided not to rely on excess MOE as a means of meeting the work participation rate, but instead looked at other options under TANF.  Taking it a step further, we looked at ways to meet the 50 percent work participation rate without using the caseload reduction credit to stay within the Federal work requirements.  In order to achieve this goal, North Dakota researched our current policies and procedures. 

In 2006, the North Dakota Department of Human Services conducted on‑site visits to the counties and State levels to determine where improvements could be made.  Many of the discussions surrounded why TANF clients could not do the work activities.  Obstacles typically related to mental health, family and health issues. 

Based on these visits, we learned we needed to change the focus from what clients can’t do to what they can do.  Further, we needed to look at the entities that work with our families with multiple barriers and agencies with the skills and the expertise to work effectively with various populations in North Dakota.

This led to contracts for case management and employment services with three agencies:  Community Options, Job Service North Dakota, and Tribal Employment and Training.  Under TANF, adults receiving assistance are expected to engage in work activities and develop capacity to support themselves and their families. 

We also shifted our focus on the federally defined work activities and on how to make the work activities work for us instead of against us.  North Dakota uses the full array of options, with some individuals involved with many activities.  We have become creative with the work activities such as working with our tribal agencies for TANF clients to achieve the required hours.  One of the examples is during a powwow, where we can count some of the hours that some of the individuals may be participating in a powwow. 

North Dakota continued to look at the TANF and how we could improve the program to better serve our clients and their needs.  Today North Dakota has regular TANF benefits and these additional options:  Diversion assistance, which provides short‑term benefits to families that are employed or will be employed to help the parent or caregivers remain employed. 

We also have our regular TANF benefits.  Within the regular TANF benefits we have ‑‑ it is called Pay After Performance ‑‑ work‑eligible individuals are required to meet work requirements before their needs are met.  This means that the child‑only payment is made, and if the work‑eligible individual meets the work requirements, we would provide them with a supplement benefit.  If the work‑eligible individual does not meet the requirement, a sanction is imposed.  The reasons for this requirement is so that individuals will become work ready, get used to what a paycheck is like.

We have now entered into a new endeavor, which is called a career ladder, where we are allowing individuals to pursue secondary education.  We have a Kinship Care program, which expands the options of placements for children who are in the care, custody, and control of the child welfare system.  We have transition assistance, which promotes job retention by providing extended periods of assistance to qualified families.  And then we have post‑TANF, which is once they totally lose TANF assistance.  We also provide support services to families. 

Implementing these changes to North Dakota has resulted in a work participation rate increase.  In Federal fiscal year 2005 without a caseload deduction credit, North Dakota work participation rate was 31.45 percent.

Chairman Davis.  Ms. Cartledge, would you mind summing up briefly?  We are over a bit. 

Ms. Cartledge.  Of course.

With these changes, North Dakota has been able to increase its work participation rate by 128 percent. 

That concludes my testimony, and I would be happy to answer any questions that you may have. 

Chairman Davis.  Thank you very much.

[The statement of Ms. Cartledge follows:]

Chairman Davis.  Mr. Palermino.

Mr. Palermino.  Good afternoon, Chairman Davis, Ranking Member Doggett, distinguished members of the Committee.  My name is Peter Palermino.  I am the TANF administrator as well as the child care administrator for the State of Connecticut.  The TANF program is operated through the Connecticut Department of Social Services.  I am here on behalf of the State of Connecticut, the National Association of State TANF Administrators, and the American Public Human Services Association. 

I am pleased to be here to discuss the ongoing partnership between the Federal Government and the States, and the ongoing effort to support low‑income or no‑income families to attain self‑sufficiently.  I expect that today’s hearing will move us forward in an open discussion on how States such as Connecticut are faring in their efforts to help families with complicated needs, how our State is implementing strategies to help families through strategic investment of our State TANF MOE dollars, and possible options for improving the system based on our experience and experiences of other States across the country.

Let me share a few stats for you for Connecticut.  Our TANF Block Grant is $267 million, which brings our MOE requirement to $183 million, for a total of $450 million.  That is a nice piece of change to use to help support a lot of families, and yet despite that, we still look for more as best we can. 

We currently serve 17,500 with direct cash assistance each month.  That total is down from a high of 24,000 back in 2005.  And we also serve several thousand more families with the TANF MOE to obtain and maintain self‑sufficiency. 

Connecticut has a time limit of 21 months, with up to two 6‑month extensions for mandatory recipients.  So our typical length of stay for a TANF client is around 33 months.

Since October of 2010, Connecticut’s monthly work participation rate has exceeded 50 percent without factoring in the caseload reduction credit or any excess MOE credit.  Since the work participation rate is dependent on so many factors, including barriers of individuals’ access to jobs, education, transportation, and other supports, we are pleased to know that the State’s additional investments in excess MOE may assist us if our rate begins to drop.  We have used the caseload reduction credit and excess MOE in years past, and we expect we may need to in the future. 

States do like the flexibility provided by the TANF Block Grant.  The ability to design programs and utilize State and Federal funds is essential to meet differing needs of our State populations and economic variables, and yet still address the four TANF purposes.  Thus, we urge you to continue to maintain this flexibility and honor those provisions that are in the TANF regulations. 

A little historical information.  In 1996, Connecticut’s TANF program expanded beyond the Aid to Families with Dependent Children population to serve a much broader and diverse population to families with incomes less than 75 percent of the State median income level. 

We have other programs that are supported by TANF and MOE funds, and they include job training, child care, transportation.  Those are important and critical employment support programs for those individuals.  These programs do help targeting families get to and stay at work and begin the road to self‑sufficiency. 

In October of 2007, Connecticut did move our two‑parent cash assistance families to a solely State‑funded program.  We recognized that we could not attain the 90 percent participation rate.  Hard decision in 2007, similar to other States, was eventually recognized by Chairman Davis in a statement he made in 2011, which I quote:  “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,” quotations closed. 

TANF MOE in Connecticut has been very consistent over several years.  The excess MOE is an extension of those funds that demonstrate the additional commitment of funding by the State to these TANF‑directed programs.  Connecticut has exceeded its MOE requirement for several years, and we expect to continue to do so. 

We do believe that the work participation rate is limiting, and there are a variety of reasons why, but we believe the caseload reduction and the application of excess MOE is a thoughtful provision for our States.

In conclusion, I believe Congress and the Department of Health Human Services in the States all desire similar results, and we are here today to work with you and will be happy to take some questions. 

Thank you.

Chairman Davis.  Thank you, Mr. Palermino.

[The statement of Mr. Palermino follows:]

Chairman Davis.  Dr. Pavetti.

Ms. Pavetti.  Good afternoon, Chairman Davis, Ranking Member Doggett, and distinguished members of the subcommittee.  Thank you for inviting me to testify today. 

The key point I would like to make today is that States rely on excess MOE to meet their work rate because of the work rate’s flaws.  If the work rate was replaced with a new measure that focused on what States achieve through their TANF work programs, the excess MOE issues related to meeting the work rates would largely disappear. 

States didn’t begin to use excess MOE to help to meet their work rate until after the passage of the Deficit Reduction Act, which included changes that made it harder for States to meet the rate.  One important change was moving the base year for the caseload reduction credit from 1995 to 2005.  This matters because as you can see in figure 2 on this screen, by 2005, States had already reduced their TANF caseloads far below their prereform levels. 

For every 100 families in poverty in 2005, states served just 35 families in their TANF programs, down from 68 families in 1996. 

In 2009, just eight States met their 50 percent work rate without any caseload reduction credit.  That is either from reducing their TANF caseload or from claiming excess MOE.  Comparing them to two larger States with much lower work participation rates, Washington and California, shows that the work rate fails to adequately measure whether States are meeting the primary goal of welfare reform, increasing the employment among participants while providing a safety net for families unable to work. 

As you can see in figure 3, Washington has done quite well at getting single mothers employed.  In 2009, two‑thirds of single mothers were employed, a higher share than in 38 of the 50 States.  Yet its performance on the work rate does not paint the same picture of success.  In 2009, the State achieved a work rate of just 23 percent.  Without the help of an excess MOE claim, It would not have met its work rate. 

California was one of five States that failed to meet its work rate in 2009 even with an excess MOE claim.  Yet the State’s low work rate obscures its success.  Even with the State’s unemployment rate at 11.4 percent, 60 percent of single mothers were employed.  In 2009, almost 90,000 TANF recipients met their work requirements, and that was an increase of 40,000 recipients from 2005, a measure of success by just about any standard except the TANF work rate. 

As figure 4 shows, what is even more telling is that for every 100 single mothers in California who were unemployed in 2009, there were 13 TANF recipients, who met their work requirement.  This ratio was the second highest in the country, and higher than the States that achieved a 50 percent work rate. 

Mississippi shows the other side of the story.  Mississippi achieved the highest work rate of 61 percent in 2009, but its employment rate among single mothers was among the 10 lowest in the country.  And for every 100 unemployed single mothers, there were just 4 TANF recipients who met their work requirement. 

Moreover, Mississippi was able to achieve a high work rate because it served few families in its TANF programs.  As figure 5 shows, for every 100 Mississippi families in poverty, only 10 received any TANF cash assistance, compared to 66 in California and 49 in Washington. 

The weakening of the cash safety net for families has resulted in increased numbers of children living in deep poverty, and has removed the safety net from the most vulnerable families who have the most to gain with the help that TANF can provide, those that have physical or mental health issues, and those caring for a sick or disabled child. 

The work rate is so terribly flawed that reconsideration of it should be central to any TANF reauthorization discussion.  In the interim, I offer two changes to include in a TANF extension that would begin to refocus State aid efforts on what matters:  getting TANF recipients employed. 

First, allow States to count individuals that leave TANF for work in their work rate for up to 12 months; and second, ask HHS to initiate a demonstration project to encourage States to develop and hold themselves accountable for alternative performance measures that focus on outcomes. 

Now, I would like to make a few statements about third‑party MOE, which I believe is a significant problem.  States have found ways to withdraw State funds from programs and services that had been supported with TANF MOE funds and still meet their MOE requirement by identifying this third‑party MOE. 

Importantly, this practice is not limited to States that report excess MOE expenditures.  Some States have identified third‑party spending and have used this spending simply to meet, not to exceed, their MOE requirement.  This is not what Congress intended, and this practice should be stopped. 

These are hard economic times, and many families are struggling, and there are two actions ‑‑ and I am going just do those quickly and end ‑‑ that Congress should also consider that are related to MOE.  One is redesigning the contingency fund, which has very complicated excess MOE provisions and makes it difficult for States to meet, and the other is funding the TANF supplemental grants, which has taken money out of State programs that really they need to be able to meet those requirements. 

With that, I will stop and take any questions that you might have. 

Chairman Davis.  Thank you very much, Doctor, for that.

[The statement of Ms. Pavetti follows:]

Chairman Davis.  With that, we will move to questions.  I essentially see two questions today. 

I see some opponents to reform are messing with our sound system now.

The first question that I have ‑‑ I am going to put two of these together and then ask a couple of you to respond.  First, is the way that we define State spending in the TANF program correct, part 1, the right type of definition of the standard?  And second, should States be able to reduce the share of adults on welfare expected to work if the State spends more than expected? 

Mr. Collins, currently States can count spending by non‑State third parties like charitable organizations as if that were State welfare spending.  Does that policy make sense to you, and do you think this potentially allows States to back out of their own obligations to the detriment of low‑income families? 

Mr. Collins.  Chairman Davis, I have done a lot of thinking about this.  It is hard for me to understand how an incentive can be created when what it ends up doing is having people stay dependent on welfare for longer periods of time.  So I don’t believe that it works well in the way that it is set up right now. The way we define State spending in the TANF program is incorrect.

Chairman Davis.  Dr. Pavetti, you have said this practice of allowing third‑party spending to be counted as State welfare spending, quote, “should be stopped,” closed quote.  Why? 

Ms. Pavetti.  That is third‑party MOE, because I don’t think that that was what the intent was.  It has allowed States to reduce State spending. 

But I would like to comment on the difference with the work rate.  I think there are two sides to that, and in your opening statement, you basically said States are allowed to use the excess MOE, but that doesn’t make it right. 

I think you can make exactly the same statement about States reducing their caseloads in order to meet the rate or to get the credit.  That doesn’t make it right. In the slides I showed, you can see States are not serving families in need, and they are not working, so we are not measuring the right things. 

So I think it is not an issue about whether or not we want TANF recipients to go to work, it is about whether or not we are measuring whether or not they are going to work, and that is what I think the issue is. 

Chairman Davis.  I appreciate you sharing that.  You know, ultimately the issue is making sure that we are measuring the right outcomes and also the process is correct. 

And the question of allowing apparently excess State welfare spending to reduce work requirements, can anyone on the panel explain the logic of this provision to me?  Why should we reduce work requirements just because a State spends more on TANF benefits? 

Before we double back here, I would like to give a ‑‑  actually Dr. Pavetti could be a staff member almost with the number of times I have seen her here.  I appreciate her erudite contributions to the subcommittee over the last 18 months that I have chaired. 

Mr. Palermino? 

Mr. Palermino.  What I would like to share is this, is that the complexities that we have encountered with some of the families, and some of the opportunities that we would like to provide based on the way the current rules are set up with providing, for example, more adult basic skills type of opportunities, we would like to take those risks.  I think our State legislators want to work with us and want us to take some more risk to serve people that won’t count towards what the work participation rate allows us to be countable. 

So in taking those risks, we would like to think that if there is excess MOE, and we have accounted for that, and that excess MOE does support the purpose statements, that then if the risk we take did not come through, and we were unsuccessful, at least at that time, we would be able to still comply with the ultimate goal of the TANF law and then also give opportunities for families that may not get it because we just didn’t have that opportunity. 

Chairman Davis.  Ms. Cartledge, would you like to comment? 

Ms. Cartledge.  Mr. Chairman, members of the committee, North Dakota has chosen not to use excess MOE, and it has to do with not wanting to be reliant on third parties to meet our MOE requirements.  And also we wanted to be able to look at how we can help our families.  We do not want to shift people, and we knew after going out and doing research, we discussed what were some of the issues families were experiencing.  Like I said, mental health issues, and also health issues, and also some of the other things came up as hygiene issues. 

So when we went out and did the research, it was, okay, how can we address those things to help our families get to work?  And a very basic examples is one of our first clients that we saw when we did a little bit of shifting of the individual had very poor hygiene.  So it means that, okay, these are some of the things we are seeing.  This is why they can’t become employed.  We need to take them by the hand and take them to the store; here is a toothbrush.  We are going to take you in a bathroom and show you how to brush your teeth. 

So we chose instead to go to this is how we can help our clients, because we felt that was the intent of TANF was take them from where they are and move them into employment.  And I did include several, a couple, three examples of actually how we did move some clients to employment. 

So I am not really an expert on utilizing excess MOEs because we chose not to.

Chairman Davis.  With that, thank you. 

I am going to recognize Mr. Doggett for 5 minutes. 

Mr. Doggett.  Thank you very much. 

Mr. Palermino, what is your feeling about what the States will do if we bar them from continued use of excess maintenance‑of‑effort credits? 

Mr. Palermino.  The example that I shared a few minutes ago with regard to the one clear example right now is with our families with basic skills is that if we are not allowed that flexibility to challenge ourselves or challenge our clients, then I think we may have to resort to moving those individuals out of the TANF Block Grant and make them State‑only individuals.  That would be the way to avoid our not being compliant in order to meet the work participation rate. 

So we are very concerned as a State to meet the work participation rate.  No one wants to be faced with a penalty, and Connecticut’s penalty would be roughly $13 million if we failed to meet that rate. 

Mr. Doggett.  So the most immediate effect would be to deny those individuals participation in the Federal program? 

Mr. Palermino.  These are the more hard‑to‑serve individuals that are receiving assistance.

Mr. Doggett.  Yes. 

Dr. Pavetti, are there features in the current regulations ‑‑ if this Congress does nothing, and that seems to be one of the things that we are best at, but if we do nothing, will there be provisions in the current regulations that will reduce the work participation requirements through special credits?  In other words, even if Congress doesn’t act, aren’t many States likely to face higher effective work participation requirements in TANF starting this year? 

Ms. Pavetti.  They are.  One thing that happened was their final regulations haven’t gotten fully implemented because there were “hold harmless” provisions that were implemented because of the recession, knowing that States were going to have difficulty meeting those rates. 

So what will happen this year which is that excess MOE will be treated much as it was intended, which is that only the share of basic assistance will be counted.  So it will be constrained.  States only spend about 30 percent of their TANF dollars on basic assistance.  So basically if the State spends $100, they will only be able to use $30 of their excess MOE spending for caseload reduction credit.  So it is going to substantially reduce what they can do, and it also gets it back to what it was intended, which is that if States spent more on basic assistance, they should not be penalized for doing that.  That was the idea.  So if nothing happens, it will already be harder for States to meet their work rates.

Mr. Doggett.  I gather from the chart you presented in your testimony, your response to the chairman’s questions, that the real problem here is that these TANF requirements don’t account for what the States are really doing to help poor mothers find jobs; basically that the current standards are too focused on the process and not enough on the results in terms of women who find jobs. 

Ms. Pavetti.  Right.  That is very true. 

There are lots of different ways in which this is problematic.  I would say the biggest problem is that it is a rate.  Because it is a rate, you can manipulate the denominator, by not serving people, which is what many States have done.  And the other thing is that when you see States like California that, since 2005, has increased the number of people in meeting their work participation rate by 40,000 people, but they don’t meet their work rate, something is wrong.  They have done a lot to engage TANF recipients in work activities.  It is the rate that creates the problem.

So unless we fix it, we are always going to be measuring the wrong things, and we are not going to be necessarily helping families to move forward, which is, I think, what we all want to achieve. 

Mr. Doggett.  Thank you all very much. 

I yield back, Mr. Chairman. 

Chairman Davis.  I thank you very much. 

And with that, I recognize Mr. Paulsen for 5 minutes. 

Mr. Paulsen.  Thank you, Mr. Chairman, also for holding the hearing.  And also for all of the witnesses who took the time to be here today. 

It was interesting as we heard in the testimony earlier about States that are counting third‑party spending now as if it were spending towards TANF MOE, the requirements, and I am trying to get a sense, do we know how many States are, in fact, counting third‑party spending in this count towards TANF?  Do you have an idea, Ms. Brown?  Do we have an idea of how many of the States numerically? 

Ms. Brown.  Although we haven’t studied the third‑party spending issue, we did have a recent discussion with HHS, and our understanding is they don’t know how many States, nor do they know the dollars involved. 

Mr. Paulsen.  Do you think that agents just would have adequate oversight to understand State MOE spending or what States are reporting as MOE; do they have adequate oversight to determine that? 

Ms. Brown.  When I talked about MOE spending, I mentioned the things that can make it effective are good design, good implementation, and good monitoring.  And we have been talking a lot about design and implementation today, but monitoring is a really key part of that. HHS has some administrative reports that come in to them, but they also rely a lot on the Single Audit Act, on the single audits that are done on the programs, and our work on those audits has shown us that the quality is uneven, and they may not catch the kinds of complex policy issues that we are talking about here today.

Mr. Paulsen.  Mr. Palermino, from the association’s perspective, do they have any information on how many States are using third‑party spending, or how much they are counting?  I did note that in a report that the Georgia Budget and Policy Institute ‑‑

Mr. Palermino.  No.  At this point there is no formal report that has been issued with regard to that specific information. 

Mr. Paulsen.  Okay. 

Mr. Palermino.  Just to let you know for the record, for Connecticut, we have been using primarily State investments, and when we report on our excess MOE, we are talking about State investments and not necessarily some of the other, I think, responses that have been referenced in there, too. 

When we worked with our TANF ECF, we did do, we did work with some nonprofits.  There are some community‑based organizations that carry out a lot of similar functions that are similar to the TANF purpose statement, so they present opportunities because we know that the State government nor the Federal Government can handle this alone.  In fact, we work very closely with private foundations in order to encourage them to look at investing some of their dollars.  And that was attractive, as I am sure you would expect, for them to invest private dollars when they knew they could leverage some of the Federal funds. 

Mr. Paulsen.  I am just trying to get a sense, because it sounds like there is a report that Georgia Budget and Policy Institute, noting that about half of Georgia’s MOE spending is from third parties.  And, you know, from my perspective ‑‑ now we heard the reference to at least one State counting a Girl Scout troop leader’s time as State spending in the TANF program.  Is that something that is sort of common knowledge out there?  Has anyone else on the panel heard about that, or could anyone explain how a Girl Scout leader’s volunteer time or troop time would meet TANF’s purposes, program purposes? 

Mr. Collins.  The opportunities to amass this type of third‑party spending is quite vast actually, particularly in organizations that deal with youth, because that particular group fits purpose 3, and it allows the TANF agency to go in and find the program, establish the TANF purpose.  Once you do that, the organization can sign an agreement, and once that has happened, you can then use the actual expenditures as TANF spending.  In some cases you can use the volunteer hours in a similar sort of way. 

So there are a number of ways to get third‑party expenditures to count as TANF spending.  I think the opportunities are far greater than actually what we know. 

Mr. Paulsen.  So if the opportunities are far greater than what we know, I mean, do you believe or does anyone on the panel believe that we should be counting a Girl Scout troop leader’s volunteer time towards excess MOE counts or spending?  I mean, to me it just seems a little crazy. 

Mr. Collins.  The challenge that I have with it is until someone can show me how it directly impacts more welfare recipients going in to work and how that actually comports with the intent of TANF, then I think no, I don’t think it makes a lot of sense at all actually. 

Mr. Paulsen.  Right. 

Mr. Chairman, if I could, just for the record, put an article or position paper that identifies the Girl Scout leader issue in ‑‑ the State of Hawaii I believe was the State ‑‑ into the record. 

Chairman Davis.  Without objection. 

[The information follows, The Honorable Erik Paulsen:]

Chairman Davis.  And the gentleman’s time has expired.  I thank the gentleman. 

Mr. Berg from North Dakota is recognized for 5 minutes. 

Mr. Berg.  Thank you, Mr. Chairman. 

And thank you, Ms. Cartledge, for being here.  You know, one of the things in your testimony that really jumped out at me is since 2005 where our work participation rate was 31 percent, and it has gone up to 72 percent in 2012.  I mean, I just want to commend you for digging into these, each cases, and helping people.  We didn’t get to it, but there are some great stories at the end of your testimony and really putting people back to work and helping them both with work as well as education. 

Two quick questions, and then I have a question for Mr. Collins.  The first question is why did North Dakota decide not to count this outside money?  What was that thinking?  Why was that decision made? 

Ms. Cartledge.  Mr. Chairman, members of the committee, the reason North Dakota decided not to is we didn’t want to be dependent on a third party to meet our MOE requirement or have to do like a chase to get the requirement.  So we preferred to be independent and wanted to meet our requirements by using our general funds or also other means. 

Mr. Berg.  So it really creates more stability for the program ‑‑

Ms. Cartledge.  Right.

Mr. Berg.  ‑‑ rather than have some third party that may be there one year and gone the next? 

Ms. Cartledge.  Correct. 

Mr. Berg.  The other question was brought up today that it may be easier for small, rural States to meet the work participation requirements, and that States like North Dakota have a very weak safety net for families in need.  And I guess I would just like to ‑‑ I mean, how do you feel about that?  To me, it seems like North Dakota has a very strong safety net.  Could you respond to that? 

Ms. Cartledge.  Yes.  Mr. Chairman, members of the committee, North Dakota does have a strong safety net for our children.  As one of the example of our TANF families, the TANF program itself has like a pre‑ and postprogram, so it tries to avoid the cliffhanger effect that once they become employed, they are done, they are gone. 

What we did was we have the transition assistance for 6 months.  We give them a smaller TANF benefit, and we keep them with supportive services.  Once that ends after 6 months, then they can get additional 6 months with transportation allowance.  Those are not counted as part of meeting our work requirement, as also those who go beyond the educational point. 

So we are taking additional steps like the educational ladder, the career ladder, is to move people out of, further out of, poverty by giving them the educational skills to also work themselves totally off of the TANF benefits. 

Mr. Berg.  Thank you very much. 

Mr. Collins, I have a question for you, and just to follow up on the chairman, I am having trouble with the underlying logic here if our goal is to put people back to work, and we are saying, gee, if a State spends more money, then you can have fewer people working.  I mean, if we believe more money is the right program and doing the right thing, if a State has a higher maintenance of effort, it should, in fact, have more people working, not fewer. 

And so to me it seems like on the fundamental core here, the incentives and consequences are somehow twisted around and backwards.  Could you just help me either figure out why it is the right thing, or what the alternative should be? 

Mr. Collins.  Well, what is interesting is, you know, when the provision was created, it was in the 1990s.  We have evolved.  We have gone through the deficit reduction act (DRA); things have changed.  So it is a fair statement to rethink really what we are doing with this particular incentive, because it seems to be the opposite of what it is that you would want to do. 

A couple of things.  One, if you cannot tie it directly to more single parents moving into paid employment or participating in work activities, I am struggling with what the reward would be.  That would be necessary. 

And, second, to be fair, a lot of this happened because the Deficit Reduction Act created a stronger work requirement, and States found a way around it, and they used the excess MOE to do that. 

I would argue that the best and safest way to guard yourself against penalties is to do what North Dakota did, engage your caseload; figure out what they are doing, where they are at, and make sure that they make progress. 

And the last piece I would add to that is it is about what you can do, not what you can’t do.  There are 12 different work activities that people can do.  If there are no paid employment opportunities right now, people need to get ready for when that opportunity comes around in the future.  Sitting at home and waiting is not a strategy.  Hope is not a strategy.

Mr. Berg.  Thank you. 

I will yield back, Mr. Chairman. 

Chairman Davis.  I thank the gentleman. 

Mrs. Black is recognized for 5 minutes. 

Mrs. Black.  Thank you, Mr. Chairman. 

First of all, Ms. Cartledge, I want to commend you in North Dakota for what you are doing.  It seems to me that you are doing a very commonsense thing.  You recognize that your role is to get people back to work and to help them to become self‑sufficient, and I commend you for what you have done in going out and actually meeting with folks and figuring out why it is that they are having a hard time getting employed, and really giving them the opportunity for upward mobility. 

That is truly what this is about, and it saddens me that we get to that position where States will do things to try to twist and turn and almost cover up what they are really doing, what they are putting into the program in order for it to be successful.  It really does bother me. 

But let me ask you, Ms. Brown, because you are the person who looks at the statistics and so on, in your testimony about the States that can count this third‑party spending as if it were spending toward their maintenance of effort, do you know how many States are doing so today and how much in the third‑party spending they can count in that State spending? 

Ms. Brown.  The information I gave on 2009 is the most recent that we have.  It is not something that you can just look at a set of data and figure it out.  It requires quite a bit of calculating to determine how much of someone’s caseload reduction credit is due to different factors. 

Mrs. Black.  And why is that so complicated?  It would seem to me there would be categories that say, okay, here is how much the State actually puts in, dollar number; here is how much the State gets from volunteer hours; and here is how we figure it.  Is that not what gets reported, or how does it get reported? 

Ms. Brown.  Well, you know, we have also gone on record about the problems with the work participation rate and don’t believe that it is achieving the goals that it should be.  But beyond that, that is really the primary metric that they use to gauge the success of the program.  And so as the caseloads have gone down since the beginning, since welfare reform, many more funds are being devoted to other types of activities, and we don’t know enough about what those are.  We actually have some work ongoing right now where we are trying to figure some more of that out. 

Mrs. Black.  And I note that in the Congressional Research report on page 9 where we have the pie chart, and when I look at how the money is being used, there is 16 percent of the money that is being used in the “other” category.  That is a pretty large percent, especially when you compare that to the capability of using the two‑parent family formation and pregnancy prevention, which seems to me if we were looking at it from that end of making sure that people are keeping solid relationships and not getting into the situation to begin with, because obviously prevention is the best medicine there.  But we have got 16 percent that is in the “other” category. 

Ms. Brown.  Yes.  And the tricky part about that is what we don’t really know ‑‑ in addition to not knowing enough about every activity is in that “other,” we don’t know how many people are actually getting served, and we don’t know if it is effective or not. 

Mrs. Black.  So obviously the point is being made that if this program really is a temporary assistance for needy families, and we call it TANF, which we talk about as an acronym, but don’t really talk about what its real mission is, that if we don’t know how the dollars are being spent in order to help someone to become self‑sufficient, it is hard to say that the dollars are really being spent for the mission of the program. 

I want to go also to the child care category, because 17 percent of the money is being spent on child care.  Is there any way that we can tell whether the folks who are using the child care and the expenditures on that are being used for parents being in school, in programs that are actually working, or do we know that? 

Ms. Brown.  Well, we have done some work looking at the multiple funding streams that go into funding child care in States, and in addition to TANF and some of the Child Care Block Grants, there is also Social Service Block Grant funding.  Those go into a pool to be provided for services for people who are determined eligible.  And the States actually set their own specific eligibility requirements, but they are often things that are related to needing child care because you are low income and you are trying to work, or you are doing other activities that are acceptable to the State. 

Mrs. Black.  I see that I am on the yellow, which means I am going to turn red ‑‑ oh, right now I turned red, so I am going to be out of time, but what I would ask is if I had the opportunity and the time to ask one more question, I would ask each of you how it is that we can fix this program, both in meeting the mission and, second, in the requirements that we should have in the reporting to make sure that what is being spent and the way it is being done is really ultimately meeting the mission of getting people to work so they can fulfill their dreams. 

So thank you for that. 

Chairman Davis.  Thank you, Mrs. Black. 

The chair now recognizes Mr. Reed from New York. 

Mr. Reed.  Well, thank you, Mr. Chairman, and I will be as kind as I can for the lady from Tennessee and go with her question to the panel first and use up some of my time to answer her question.  Hope you were listening to that question.  Anyone want to take a stab at that?  Mr. Collins?  Oh, no, Dr. Pavetti, you jumped up.  Please.  We haven’t heard much from you today. 

Ms. Pavetti.  I think the single most important thing we could do is to fix the work rate.  I would just like to say I have the numbers.  I looked to compare the numbers from 2005 to 2009, and Ms. Cartledge gave her rate and how it increased, but the numbers of people meeting the work rate requirement are pretty much the same.  And so I think that we just don’t know how to measure whether States are doing the work to get recipients to work.  So I think we need to really give States the opportunity to try different ways of saying, this is what I am doing, and this is how I think I should be held accountable.  So that is one thing on the work rate. 

On the spending, I think that there are very detailed reports.  We did ‑‑ there was a report on the “other,” and I think States should be required to do more detail than they are now so that we do have a better accounting.  And I think that, again, you can constrain the MOE spending without putting States at risk of not serving people because of the way it relates to the work rate. 

Mr. Reed.  Well, thank you very much. 

Mr. Collins, you wanted to offer something? 

Mr. Collins.  Yes. 

My answer would be to do what North Carolina and the other eight States did that were able to meet the 50 percent work participation rate of which over 65 percent are in paid employment.  Get dirty.  Get in there and work with people.  Get in there and build a fully comprehensive program, all 12 work activities.  There are people who can work today, and there is going to be people who need help so they can work tomorrow, and we shouldn’t let the one overshadow the other.  Every one of them needs help, and what we should do is focus on what people can do. Now. Today.

So this isn’t about work participation hours.  This is not about really meeting the rate.  What it is about is engaging people and making sure that their government provides a service while they are on time‑limited assistance.  It is called Temporary Assistance for Needy Families.  It has a time limit associated with it.  I think you can start to understand really what the intent of the program is, and we should not let people sit, and we should not let them wait. 

I am referring to the fact that even before the DRA was passed, more than half of all TANF recipients who had a requirement for work activities had no hour in a single activity for the entire year, and I am suggesting, whether it is excess MOE or not, that we can do significantly better than that. 

Clearly, there could be other reports that would shed a light as to how these credits are put together, but I think that what we are doing is we are diverting ourselves from what I think the real work needs to be.  You don’t want a penalty?  Build a really robust program, and it will never happen to you. 

Mr. Reed.  I appreciate that sentiment, Mr. Collins. 

Mr. Palermino, I want to direct my next inquiry to you because it is along what Mr. Collins was talking about, because when I read the testimony in preparing for today, the excess MOE issue, I know in 2008 you took a stance, or your organization may have taken a stance, that we should not repeal that, we need to continue it, encourage the State investments, spending investments and things. 

Do you still feel that same way?  Does your organization still feel that same way if the repeal of excess MOE was put onto the table, given what everyone is talking about here today? 

Mr. Palermino.  I think that we want to be working together to examine what the best strategies would be, and I think the work participation rate is one.  I think reviewing what the purpose is, if we are going to change the purpose, and who the partners will be I think may lend itself to maybe what that decision would be.  

Mr. Reed.  Well, I guess I am truly focusing on the excess MOE issue.  You think that should continue the way it is, or is there any need to reform that? 

Mr. Palermino.  Well, we have seen some value with it, and not to the extent of some of the examples, I think, that have been used here, but I think we have seen some value with it, with giving us an opportunity to be flexible within our State, being able to ‑‑ and we are not trying to move against families in getting adults in to work because ultimately they need to get a high school diploma before they can move to getting a good job, and that is some of the target populations we want to work to move there. 

So if we change some of the thought process around what the true output should be, and if we recognize that we do have partners beyond just the government ‑‑ now, most of our excess MOE is within the State government.  We do have records and data, and we do track to make sure it fits the purpose and all that so we can report about that.  But I think to the extent that there are other viable partners to work with, maybe that is a way of rethinking how we revisit what the purpose statements are and who should participate with us. 

Mr. Reed.  I appreciate that. 

My time has expired, but I just have to put on the record, Mr. Chairman, if I could have the courtesy of 30 more seconds ‑‑ 

Chairman Davis.  Without objection. 

Mr. Reed.  ‑‑ the focus of the effort must be, in my opinion, to put people to work and provide an opportunity for people getting to work, not the policy initiative of encouraging folks just to spend money at the State level for the sake of making the policy initiative of spending more money.  It just doesn’t make any sense to me, and I echo the sentiments of my colleague from North Dakota and the chairman himself.  It just seems to me counterintuitive.  What we should be focusing on is getting people to work and providing them with the tools that they can go into this competitive workplace sooner than later. 

And with that, I will yield back.  Thank you, Mr. Chairman. 

Chairman Davis.  Thank you very much. 

I would like to thank, again, all of our witnesses for joining us today.  We appreciate your input.  Your different perspectives have all added value to this discussion.  We hope you will continue to share your thoughts. 

We have discussed some opaque provisions of the TANF program, how they work, and some of the troubling consequences of how they have been used in recent years to weaken both work requirements and State spending requirements.  I appreciate your help. 

If Members have additional questions, they will submit them to you in writing.  What we would ask is that you share your responses with us on the committee for the record so all will have access to that information. 

Chairman Davis.  Thank you again, and with that, the committee stands adjourned. 

[Whereupon, at 4:07 p.m., the subcommittee was adjourned.]

Member Submission For The Record

The Honorable Erik Paulsen

Public Submissions For The Record


Boys and Girls Clubs of America Brian Manderfield
Center for Fiscal Equity
Coalition of CA Welfare Rights Organizations
Washington State