Revised February 12, 2003

RECYCLING AN UNWISE PROPOSAL:
State Concerns and New State Fiscal Realities
Ignored in House Republican Welfare Bill
By Sharon Parrott, Heidi Goldberg, and Shawn Fremstad

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On February 4, 2003, Rep. Deborah Pryce (R-OH) introduced TANF reauthorization legislation (H.R. 4) in the House of Representatives.  The full House is expected to vote on the bill on February 13, 2003.  (The bill will go straight to the House floor, and will not be “marked up” by the committees with jurisdiction over the programs affected by the legislation.)  The bill is nearly identical to the bill passed by the House on an essentially party-line vote last year.  The House bill also is largely similar to the Bush Administration’s TANF reauthorization proposal originally unveiled in February 2002, which earlier this year the President called on Congress to enact.  (See box on page 3 for a brief summary of the main provisions in the bill.)

House Republicans, following the Administration’s lead, have proposed a bill with the same formula as last year — one that imposes expensive new mandates, reduces state flexibility, and fails to provide needed additional resources.  This is particularly striking in light of the almost unprecedented fiscal crisis now facing states, the cuts states already have made and are now considering in TANF and child care programs, and the serious concerns states raised about the House bill’s approach during the debate on this legislation last year.

• Expensive New Mandates: The bill would require states to increase dramatically the number of parents receiving TANF cash assistance that must participate in work activities and would sharply increase the required hours to 40 per week.  States currently have the flexibility to require 40 hours of participation from families, but most have not chosen to do so universally, typically because such a requirement has not been seen as the most effective way to increase employment among single-parent families.  Instead of focusing on keeping participants busy for precisely 40 hours per week while they are on welfare, states have placed a greater emphasis on structuring work programs that provide the types of activities needed to move participants into paid employment and off of welfare (regardless of the precise number of hours these activities add up to each week).  In addition, most states have determined that providing supports to low-income families, such as child care and transportation assistance, before they resort to welfare, is an essential part of work-based welfare reform.  By increasing work program costs for families on welfare, a 40-hour requirement would limit the resources states have to help other low-income working families stay off of welfare.

• Reduced State Flexibility: The bill would reduce the flexibility states now have to tailor work activities to the individual needs of parents and families.  In particular, states would have less ability to place recipients in vocational education programs because such activities generally would not count toward the first 24 hours of participation required of parents.  To meet the new work mandates, most states likely would have to develop large-scale “workfare” programs.  While under current law states can operate such programs now, most do not because they have not been found effective at helping parents find private employment.  The bill also would limit significantly states’ ability to engage recipients in activities designed to address various barriers to employment — such as physical, mental, and learning disabilities, domestic violence, and substance abuse — because these activities would not “count” for the bulk of the mandated hours of participation.

• No Funding to Meet New Federal Requirements: The bill would provide too little in additional child care resources to avert cuts in child care programs even in the absence of new costs related to increased requirements.  Last year, the Congressional Budget Office estimated that an additional $4.55 billion in child care funding over the next five years is needed to ensure that the mandatory federal child care funding stream, state funds used to match these federal funds, and the TANF funds devoted to child care keep pace with inflation.[1]  The House bill, however, provides only $1 billion in additional mandatory child care over the next five years.  The bill also would freeze TANF funding, despite imposing costly new work mandates on states.

Last year, the Congressional Budget Office estimated that if states were required to enforce the 40-hour work requirement and meet the increased participation rate targets in the bill, the costs to states of meeting the new work requirements would be up to $11 billion over five years (roughly $6 billion in work program costs and $5 billion in increased child care costs for work program participants).  If these mandates are placed on states without the funding needed to meet them, states will have to cut effective programs now funded with TANF — including programs that help low-income working families stay off of welfare by providing key supports such as child care and transportation assistance — in order to comply with the new federal mandates.  As is discussed further below, these cuts will be on top of substantial cuts in TANF and child care programs that states already have made and further cuts now under consideration in these programs.

Brief Summary of the Main Provisions in House Welfare Bill (H.R. 4) Imposes Costly Work Requirements: The bill would increase the number of cash assistance recipients who must participate in work activities and would increase the number of hours they must participate to 40 hours per week.  The bill would provide no additional TANF funding and just $1 billion over five years in additional child care resources, less than the Congressional Budget Office has said states need to continue providing child care to the same number of children now being served. Reduces State Flexibility: The bill would reduce the flexibility states now have to design their welfare-to-work programs and tailor employment-related services to the needs of individual recipients.  The bill also would mandate that states terminate all assistance to a family — including the children in the family — when a parent does not meet work program expectations, even if states do not want to adopt such a policy. Retains Discriminatory Restrictions on Legal Immigrants’ Eligibility for TANF and Medicaid: Despite bipartisan support in the Senate Finance Committee last year for easing some of the restrictions in this area, the House would continue to prohibit states from providing TANF-funded benefits and Medicaid and SCHIP benefits to recent legal immigrants. Includes Radical “Superwaiver” Proposal: The bill includes the risky “superwaiver” provision that would allow federal agency heads to override nearly all federal laws and rules associated with a number of low-income programs, including: the Food Stamp Program, public housing and homeless assistance programs, the Child Care and Development Block Grant, the Social Services Block Grant, most workforce investment and job training programs funded under the Workforce Investment Act, the Employment Service, adult education programs, and TANF. Food Stamp Program Block Grant: Five states would be allowed to block grant the food stamp program with virtually no limits on how states could structure benefits, thereby eliminating any assurance that the Food Stamp Program would serve as a nutritional safety net for all poor households in states that elect the block grant. Marriage Promotion Funding: The bill would direct up to $1.8 billion (this includes $1.2 billion in federal funding and $600 million in state resources, which can be federal TANF funds) between 2003 and 2008 to a narrow set of marriage-promotion projects. Modest Child Support Improvements: The bill would make modest improvements in the child support enforcement system to help states defray the cost of ensuring that more of the child support paid by noncustodial parents is received by their children, rather than being retained by the federal and state governments to offset welfare costs.  The changes are far more modest, however, than the provisions included in last year’s Senate Finance Committee TANF reauthorization bill and in legislation approved overwhelmingly by the House in 2000.

While the House Republican TANF bill is nearly identical to last year’s bill, much has changed since last spring when this measure was debated in the House.  The magnitude of the fiscal crisis facing states is now well understood; over the past year, states undertook serious budget cuts and still larger cuts now are being considered for FY 2004.  Similarly, data from the Department of Treasury on TANF expenditures makes clear that nearly all states have exhausted or nearly exhausted any unspent TANF funds from prior years.  This has led many states to cut TANF-funded programs, including key supports such as child care and transportation programs for low-income working families.  And, finally, governors and other state officials from across the political spectrum made clear in the months since last year’s House debate the extent to which the House bill would force them to make cuts in important programs currently funded with TANF resources and change fundamentally their welfare-to-work initiatives in ways they do not think will lead to better employment outcomes for families.

These issues — the budget realities that already are leading to cuts in programs and governors’ concerns — as well as information about provisions in the House bill are discussed in more detail below.

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End Note:

[1] CBO’s $4.55 billion figure may understate the cost of maintaining current services because the estimate assumes that states will be able to maintain their current levels of using TANF for child care.  This is unlikely to occur.  In 2002, states spent $1.6 billion more than their annual TANF allotments, by drawing on unspent TANF funds carried over from prior years.  These “carry-over” funds have been exhausted or nearly exhausted in most states.  To bring spending in line with their annual TANF block grant allotment, many states will have to cut TANF funding for various programs, including child care programs, in the next few years