Reducing Caseload or Reducing Poverty?

Just a few years ago, one could correctly assume that most poor children received cash assistance from the government.

That's no longer true. Because the caseload decline has been much steeper than the decline in child poverty, most poor children no longer receive cash assistance. As reported by the Center for Law and Social Policy, from 1995 to 1998 the share of poor children receiving welfare assistance dropped from 64 percent to 47 percent.

Data collected by the PA Department of Public Welfare (DPW) bears this out. Among parents that left welfare during 1997 and 1998, just over one-third had continuous employment and earned about $13,000 a year. Nearly two-thirds had sporadic earnings or no earnings at all. Their families - part of the celebrated reduction in welfare rolls - remain deeply in poverty.

Pennsylvania could soon see another big drop in the welfare caseload. In March 2002 (16 months from now) DPW will begin the next round of cuts. Most families that have received 60 months of federal cash payments (TANF) on that date will lose federally funded assistance. An estimated 15,000 families could be cut off immediately with another 5-10,000 families affected in succeeding months.

Poor children have severely diminished prospects for good health, successful school performance and steady employment. These diminished prospects reduce their quality of life as well as the entire Commonwealth's. Having solved the "welfare problem" by cutting caseloads, policymakers face the more important challenge of reducing the number of poor children.

DPW planning for the next phase of welfare reform is in full gear. The outline of its plans will be part of the next Ridge Administration budget proposal, which will be announced in February.

Lots of Policy Options

A poverty-reduction strategy will focus on family outcomes, not on caseload reduction. Federal TANF funds can be used in a variety of ways to support such a strategy, even beyond 60 months, so long as the funds are not paid to families to meet regular and ongoing needs for food, clothing, shelter, etc. Permitted uses include work subsidies to employed parents, earned income tax credits, transportation benefits, or crisis funds to meet short-term needs. For example, Pennsylvania could design a program that pays a $200 monthly stipend to any parent who is employed at least 30 hours a week and whose family's income is below a specified level.

What about the thousands of families that exhaust their 60 months of federal TANF benefits and in which the parents are not employed?

Again, Pennsylvania has a range of options. The existing federal cash assistance payments may continue beyond 60 months and without time limit for 20 percent of the caseload. Pennsylvania is free to define the hardship conditions that qualify families for this option. Examples adopted by other states include residence in an area of high unemployment, domestic violence, and evidence of a good faith effort to secure employment.

The General Assistance Program - funded entirely by state revenue - also has no time limit. It is available to families in which the parent is temporarily or permanently unable to work because of a physical or mental disability, to families in which the parent is undergoing treatment for substance abuse, and to two-parent families with a child under 13 years of age.

In addition, Pennsylvania could commit state funds to a family support program that is linked to proven pathways to self-sufficiency. Such a program could provide monthly cash assistance to parents who meet identified goals related to employment, to participation in employment support programs, and/or to training. Some states have implemented such an approach already - before the federal 60 month limit - as a way to reward parents who are regularly employed but are not earning enough to end cash assistance entirely.

Delivery System Reform

A little-discussed aspect of all this is the low "take-up rate" for existing self-sufficiency programs. Low-income families simply are not participating in existing programs in the numbers expected.

Examples abound. Among families that have left welfare during 1997 and 1998, only 51 percent received food stamps; only 24 percent of the parents who had pre-school children received childcare subsidies. DPW's various employment-support programs are under-subscribed. As a result, Pennsylvania's unspent TANF balances exceed $300 million.

How can Pennsylvania improve the way in which programs are made available to people? That also needs to be part of our poverty reduction strategy.