# Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/crs%3AR42767 ## Record - **Collection:** Congressional research report - **Document type:** CRS Report - **Published:** September 11, 2014 - **Citation:** R42767 ## Text Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited (name redacted) Specialist in Social Policy September 11, 2014 Congressional Research Service 7-.... www.crs.gov R42767 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited Summary One of the central features of the Temporary Assistance for Needy Families (TANF) block grant is promoting work and job preparation for parents (mostly single mothers) in families that receive cash assistance. TANF was created in the 1996 welfare law, which was the culmination of a decades-long evolution from providing single mothers “pensions” to permit them to stay home and raise children to a program focused on work. State TANF programs were influenced by research conducted during a period of much experimentation on welfare-to-work initiatives in the 1980s and early 1990s, which found that mandatory work requirements could reduce welfare receipt and increase employment among single mothers. TANF aids some of the most disadvantaged families with children. These families are in a wide range of circumstances, and some of them are not subject to state welfare-to-work efforts. In FY2011, about 6 in 10 TANF assistance families had “work-eligible” individuals. TANF workeligible individuals comprise in great part single mothers with young children. In FY2011, about a third of TANF work-eligible mothers were young (under the age of 24). Additionally, 40% of all work-eligible women lacked a high school diploma or the equivalent. As a block grant to the states, TANF sets federal goals such as ending dependence of needy parents on government through work and job preparation, gives states flexibility in program design to achieve those goals, and measures the performance of states. The work requirements that actually apply to recipients are determined by the states, not by federal rules. In FY2011, 42% (monthly average) of all work-eligible adults were either working or engaged in a job preparation activity. The most common activity was working in a job while remaining on the rolls. Job search and vocational educational training followed as the second and third most common activities. While state rules—not federal rules—determine work requirements for individual TANF recipients, federal TANF law establishes work participation standards that apply to the states and influence state program designs. The federal work standards are performance measures used to assess state TANF welfare-to-work efforts. The federal TANF work standards set target participation rates, specify activities that can be counted toward meeting the standards, and set minimum hours of engagement per week in a month for a recipient to be considered engaged in countable activities. The target participation rates vary by state: the statute sets a 50% standard for all families, but the standard is reduced by credits states may earn for caseload reduction. In FY2011, the official TANF work participation rate was 29.5%; however, all but seven states, the District of Columbia, and Guam met their all-family work standard. The TANF work standards date back to the 1996 law, and reflect the policy concerns and the research on welfare-to-work programs of the time. Research on new welfare-to-work models since the 1996 law has yielded mixed and limited results. However, some innovations in workforce and education programs have yet to be tested within a welfare-to-work context. Policy makers also face questions about whether the sole focus of the assessment of TANF’s success ought to be welfare-to-work. TANF has evolved into a program where cash assistance represents less than 30% of its funds. Policy makers thus face questions of whether consideration might be given to developing measures and assessment of how well TANF does in meeting other goals related to improving the circumstances of families with children. Congressional Research Service Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited Contents Introduction...................................................................................................................................... 1 Brief History: Work Requirements and Cash Aid for Needy Families with Children ..................... 2 Welfare Reform and Research on Welfare, Dependency, and Work ................................................ 6 Research on the Duration of Welfare Receipt ........................................................................... 6 Pre-1996 Welfare-to-Work Experiments ................................................................................... 7 GAIN—Riverside (California) ............................................................................................ 7 The National Evaluation of Welfare-to-Work Strategies (NEWWS) .................................. 8 Earnings Supplement Programs .......................................................................................... 9 New Hope............................................................................................................................ 9 Post-Welfare Reform Research................................................................................................ 10 Welfare “Leaver” Studies .................................................................................................. 10 Experimental Studies......................................................................................................... 11 TANF Welfare-to-Work Provisions ............................................................................................... 12 TANF Work-Eligible Individuals................................................................................................... 14 Who Is a TANF Work-Eligible Individual? ............................................................................. 14 TANF Assistance Families With and Without Work-Eligible Individuals .............................. 14 Characteristics of TANF Work-Eligible Individuals ............................................................... 15 TANF’s Work Requirements for Work-Eligible Individuals ......................................................... 18 Federal Requirements that Apply to Individual Recipients ..................................................... 18 Employability Assessment ................................................................................................ 18 Work Within Two Years .................................................................................................... 18 Sanctions for Failure to Comply with Work Requirements .............................................. 18 Activities of TANF Work-Eligible Individuals........................................................................ 19 Working While on the TANF Assistance Rolls ....................................................................... 21 Participation of Work-Eligible Individuals by Selected Characteristics: FY2011................... 21 Trends in Work Activity .......................................................................................................... 24 Sanctions.................................................................................................................................. 25 The TANF Work Participation Standard: Measuring the Performance of State Welfare-toWork Efforts ............................................................................................................................... 27 The Numerical Participation Standard..................................................................................... 28 The Work Participation Rate ................................................................................................... 29 Families Included in the TANF Work Participation Rate .................................................. 29 Engaged in Work: Countable Activities ............................................................................ 32 Engaged in Work: Hours of Participation.......................................................................... 36 FY2011 Participation Rates............................................................................................... 43 Trends in “Effective” Work Standards and Rates, FY2002-FY2011 ....................................... 44 Trends in Effective Standards............................................................................................ 45 Trends in Work Participation Rates ................................................................................... 46 A Note on the Two-Parent Family Standard...................................................................... 47 Implications for Failing the Standard ...................................................................................... 48 The 2002-2005 TANF Reauthorization Debate ............................................................................. 48 Looking Ahead: Welfare-to-Work Issues for Congress ................................................................. 49 Changing Employment Patterns (Again): The Case of Youth ................................................. 50 Subsidized Employment .......................................................................................................... 51 Congressional Research Service Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited Policy Innovation..................................................................................................................... 52 Measuring State Performance .................................................................................................. 53 Conclusion ..................................................................................................................................... 55 Figures Figure 1. TANF Assistance Families, by Family Type, FY2011 ................................................... 15 Figure 2. Work Participation of TANF Work-Eligible Individuals: FY2011 ................................. 20 Figure 3. TANF Effective (After-Credit) Work Participation Standards for FY2011 .................... 29 Figure 4. TANF Assistance Families Included and Not Included in the Work Participation Rate: FY2011 .............................................................................................................................. 30 Figure 5. Percentage of TANF Work-Eligible Individuals Included in the Participation Rate in TANF Work Activities: FY2011 ..................................................................................... 34 Figure 6. TANF Families Included in the Work Participation Rate, By Family Type, FY2011 ....................................................................................................................................... 38 Figure 7. Distribution of TANF Single Parent Families Included in the TANF Work Participation Rate by Hours of Participation in Activities and by Presence of a Child Under Age 6 in the Family, FY2011 ........................................................................................... 40 Figure 8. Distribution of TANF Two-Parent Families Included in the TANF Work Participation Rate by Hours of Participation in Activities, FY2011 ........................................... 41 Figure 9. Percentage of TANF Work-Eligible Individuals Included in the Work Participation Rate Who Participated in Work- and Education-Related Activities, FY2011 ....................................................................................................................................... 43 Figure 10. TANF Effective Work Participation Standards and Work Participation Rates, by State, FY2011 ........................................................................................................................ 44 Figure 11. National Average TANF Work Participation Rate for All Families, FY2002-FY2011 ......................................................................................................................... 47 Tables Table 1. Summary Characteristics of Work-Eligible Individuals: FY2011 ................................... 16 Table 2. TANF Work-Eligible Individuals Employed or Participating in a Work or Job Preparation Activity: by Characteristic, FY2011 ................................................................. 22 Table 3. Percentage of Cash Assistance Adults and Teen Parents Employed or Engaged in a Work or Job Preparation Activity............................................................................................. 25 Table 4. TANF Families Sanctioned for Work, Educational, or Activity Requirements: FY2001-FY2011 ......................................................................................................................... 26 Table 5. TANF Assistance Families Included and Not Included in the TANF Work Participation Rate, FY2011......................................................................................................... 31 Table 6. Countable TANF Work Activities and Their Definitions ................................................. 32 Table 7. TANF Hours Requirements for the All-Family Rate and the Two-Parent Family Rate (Excludes Special Rule for Teen Parents), by Family Type ............................................... 36 Congressional Research Service Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited Table 8. TANF Work Participation Among Teen Parents Included in the Participation Rate Without a High School Diploma, by Age, FY2011 .................................................................... 39 Table 9. TANF “Core” and “Supplemental” Work Activities ........................................................ 42 Table 10. Effective TANF Work Participation Standards for All Families: FY2002-FY2011 ......................................................................................................................... 45 Table 11. Employment Status of Young Adults (Aged 20 to 24), Selected Years 1994-2011 ........................................................................................................... 50 Table 12. Enrollment in Educational Programs of Young Adults (Aged 20 to 24), Selected Years 1994-2011 ......................................................................................................................... 51 Table A-1. Effective TANF Work Participation Standards for All Families by State: FY2002-FY2011 ......................................................................................................................... 57 Table A-2. TANF Work Participation Rates by State: Official Rates (Including Grandfathered Waivers), FY2002-FY2011................................................................................. 60 Table A-3. TANF Work Participation Rates for All Families Excluding the Effects of Grandfathered Waivers by State: FY2002-FY2011 .................................................................... 63 Table A-4. TANF Effective Work Participation Standards and Work Participation Rates: FY2011 ....................................................................................................................................... 66 Table A-5. TANF Families Receiving Assistance, by Type of Family and State: FY2011............ 68 Table A-6. TANF Families Receiving Assistance, by Work Participation Rate Status and State: FY2011 ............................................................................................................................. 70 Table A-7. TANF Families Included in the Work Participation Rate, by Family Type and State, FY2011 ............................................................................................................................. 72 Table A-8. TANF Sanctions and Sanction Rates by State: FY2011............................................... 74 Appendixes Appendix A. Additional Tables ...................................................................................................... 57 Appendix B. Methodological Notes .............................................................................................. 77 Contacts Author Contact Information........................................................................................................... 77 Acknowledgments ......................................................................................................................... 77 Congressional Research Service Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited Introduction One of the central features of the 1996 welfare reform law (Personal Responsibility and Work Opportunity Reconciliation Act of 1996, PRWORA, P.L. 104-193) was its focus on requiring and promoting work and job preparation for parents (mostly single mothers) in needy families with children. That law created the Temporary Assistance for Needy Families (TANF) block grant, and completed a decades-long evolution in policy, from one where cash assistance was provided to families headed by single mothers to permit them to stay at home and care for their children to one of encouraging and ultimately requiring work. It is sometimes said that TANF requires adult recipients to work in exchange for their family’s cash assistance. However, this is not what federal law says. In any given month, many recipients work or are engaged in work-related activities; however, many are not so engaged. TANF establishes numerical work participation performance standards that apply to a state’s total caseload, not individual recipients, and leaves to states the decision about how to meet those standards. It is the states that determine who is required to work or participate in activities. It is also the states that determine the activities that meet an individual recipient’s work requirements. TANF’s work rules generally date back to the 1996 welfare reform law, which was enacted following a period of growth in the welfare rolls. Cash assistance caseloads increased greatly from 1960 through the mid-1970s, ushering in a period of debate about “welfare reform.” The caseloads again began to increase in the very late 1980s, reaching a peak of 5.1 million families on the rolls in March 1994. Discussion of TANF work rules today is in a different context than occurred in the late 1980s or early 1990s. The cash assistance rolls diminished greatly, and stood at 1.9 million families in FY2011. In any given month in FY2011, state TANF welfare-to-work efforts could touch a population of about 1.3 million adults. This report examines the work participation standards and requirements for cash assistance recipients of the TANF block grant, which was created in the 1996 welfare reform law. This report • provides a short history of work requirements in programs that provide cash assistance to needy families with children; • reviews the major studies that contribute to the knowledge of what types of welfare-to-work programs are effective; • discusses the TANF work provisions that apply directly to individuals and analyzes FY2011 data on engagement in work and work-related activities of adults in TANF households; • discusses the TANF work participation standards that apply to states and analyzes FY2011 data on participation as they relate to those standards; and • discusses some issues that Congress might consider in the future, such as how the work standards can address changing circumstances and the difficulties of measuring the performance of states in the context of a block grant. Congressional Research Service 1 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited Brief History: Work Requirements and Cash Aid for Needy Families with Children In the early 20th century, prior to the enactment of a federal cash-in-aid program for families caring for dependent children in their own homes, many states had laws providing aid to mothers with dependent children, often called “mothers’ pensions.”1 The general purpose of these pensions was summarized by a 1914 report published by the then-newly created Children’s Bureau (then operating under the U.S. Department of Labor), which described the basic function of the various state pension laws as “preventing the breaking up of the home when on account of death or disability the support of the natural breadwinner of the family is removed.”2 By 1921, 40 states and the then-territories of Alaska and Hawaii had laws providing support for children in their own homes.3 The intended recipients were, for the most part, widows and women whose husbands were disabled, were imprisoned, or had deserted the family. However, restrictions on eligibility varied by state and in some cases only widows were eligible.4 Limited state budgets meant that in many cases these early programs operated only partially or not at all. A Missouri law of 1911 applied only to Kansas City and limited expenditures for all pensions to $12,000 annually. In cases where funds were insufficient, a juvenile court would select “the most urgent cases” to receive pensions.5 The Great Depression exacerbated the degree to which counties dropped or downsized their programs, and by 1935 the number of families eligible for such aid under state laws was three times greater than the number of families actually receiving it.6, 7 Concern over the lack of sufficient support under state programs, as well as an increase in demand for financial help as a result of the Great Depression, prompted President Franklin D. Roosevelt to establish by Executive Order the Committee on Economic Security (CES) in 1934 to serve the broader purpose of “[providing] at once security against several of the great disturbing factors in life.” Within six months, the CES had designed a proposal for the nation’s first comprehensive federal 1 Prior to “mothers’ pensions” (the first of which was enacted in 1911), the most common way care was provided for needy, dependent children was in institutions. Public sentiment began to shift toward the idea that children should be cared for in their own homes following the first White House Conference on Dependent Children in 1909. See Jo Anne B. Ross, Fifty Years of Service to Children and Their Families, Social Security Bulletin, October 1985/Vol. 48, No. 10., http://www.ssa.gov/policy/docs/ssb/v48n10/v48n10p5.pdf. 2 U.S. Department of Labor, Children’s Bureau, Laws Relating to “Mothers’ Pensions” in the United States, Denmark, and New Zealand, Dependent Children Series, No. 1. Bureau Publication No. 7 (Washington, DC: Government Printing Office, 1914). 3 Joanne L. Goodwin, ‘Employable Mothers’ and ‘Suitable Work’: A Re-Evaluation of Welfare and Wage-Earning for Women in the Twentieth-Century United States, Journal of Social History, Vol. 29, No. 2 (Winter 1995), pp. 253-274. 4 U.S. Department of Labor, Children’s Bureau, Laws Relating to “Mothers’ Pensions” in the United States, Denmark, and New Zealand, Dependent Children Series, No. 1. Bureau Publication No. 7 (Washington, DC: Government Printing Office, 1914). 5 Ethel Cleland, Pensions for Mothers, The American Political Science Review, Vol. 7, No. 1 (February 1913), pp. 9698. 6 Joanne L. Goodwin, ‘Employable Mothers’ and ‘Suitable Work’: A Re-Evaluation of Welfare and Wage-Earning for Women in the Twentieth-Century United States, Journal of Social History, Vol. 29, No. 2 (Winter 1995), pp. 253-274. 7 See the Report of the Committee on Ways and Means, U.S. House of Representatives, 74th Congress, 1st Session on H.R. 7260, printed April 5, 1935, http://www.ssa.gov/history/reports/35housereport.html. Congressional Research Service 2 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited social insurance program, which included aid to “children deprived of a father’s support.” In their report to the President in January 1935, the CES urged the creation of federal grants-in-aid to release from the wage-earning role the person whose natural function is to give her children the physical and affectionate guardianship necessary not alone to keep them from falling into social misfortune, but more affirmatively to rear them into citizens capable of contributing to society.8 In essence, the committee was proposing a program to provide mothers with the financial assistance necessary to remain at home with their children. Later that year, following the recommendations of the CES, the Aid to Dependent Children program (ADC) was established as a federal grant-in-aid program to states to help them fund cash assistance to needy families with children. Authorized under the Social Security Act of 1935 (P.L. 74-271; H.R. 7260), ADC grants provided assistance to children under the age of 16 who had “been deprived of parental support or care by reason of death, continued absence from the home, or physical or mental incapacity of a parent.” Cash benefits provided under ADC were primarily intended to enable mothers (typically widows) to stay at home and rear children. Echoing the sentiment voiced in the CES report to the President, the House Report accompanying H.R. 7260 stated that these benefits were to assist in aiding the families on relief who were “without a potential breadwinner other than a mother whose time might best be devoted to the care of her young children.”9 Over the coming decades, the demography of ADC recipients began to change. Some of this change reflects changing demographics in the general population, such as the increase in femaleheaded families headed by divorced, separated, or never-married mothers as opposed to widows. Also affecting the demography of the ADC caseload was Social Security policy changes. At the program’s onset, the most common ADC family was headed by a widow. Social Security benefits to widows, widowers, and child survivors were created in the Social Security Amendments of 1939, and those receiving ADC increasingly were families where the father was alive but absent. By 1942, the proportion of ADC families with women who were divorced, separated, or unmarried was about equal to the proportion of women who were widows. The caseload also became increasingly nonwhite.10 Though federal policy documents connected with the establishment of ADC stressed child-rearing as the policy rationale for providing aid, the expectations for work among low-income women 8 See the Report of the Committee on Economic Security to the President, transmitted to the President on January 15, 1935. 9 See the Report of the Committee on Ways and Means, U.S. House of Representatives, 74th Congress, 1st Session, on H.R. 7260, printed April 5, 1935, http://www.ssa.gov/history/reports/35housereport.html. 10 Studies of the characteristics of the cash assistance caseload have measured race and ethnicity differently over time, precluding a precise analysis of the change in the racial/ethnic makeup of the caseload. However, there is enough evidence to point to the changing racial and ethnic makeup of the caseload. The Social Security Administration published a report on changes in the ADC caseload from 1942 to 1948 in 16 states. Over this period, the percent of recipient children who were non-white grew from 21.4% to 30.2%. By 1956, 40% of the caseload was classified as nonwhite. In 1973, data on whether or not a recipient was Hispanic became available. In that year, it was reported that white non-Hispanic heads accounted for a minority (38%) of all AFDC families. Blacks headed 43% of all AFDC families and Hispanics headed 13.4% of all AFDC families in 1973. These data are from various reports showing the characteristics of AFDC families over the years. Congressional Research Service 3 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited may have differed at the state level. Some states adopted rules barring “employable” mothers from aid.11 Additionally, in the last half of the 20th Century, female participation in the workforce was on the rise, as norms for middle-class mothers changed with respect to child-rearing and work.12 The assumption that women should remain in the home with their children began to diminish.13 The 1950s ushered in an increased focus on the self-sufficiency and rehabilitation of public aid recipients, and amendments to the ADC law began to reflect this reorientation. In 1956, the law (P.L. 84-880; H.R. 7225) was amended to include the provision that its purpose was to not only provide financial assistance to needy families with children, but also “to help such parents or relatives to attain the maximum self-support and personal independence consistent with the maintenance of continuing parental care and protection.” The Senate Finance Committee Report accompanying H.R. 7225 further explained that “[s]ervices that assist families and individuals to attain the maximum economic and personal independence of which they are capable provide a more satisfactory way of living for the recipients affected.”14 The 1956 amendments also added Disability Insurance to the Social Security program, again potentially aiding some families that might otherwise rely on ADC for benefits. With the advent of the 1960s, the focus on self-sufficiency progressed from symbolic statements and funding for services to actual federal program requirements. At first, however, these requirements focused on men when cash assistance was extended to families with two ablebodied parents with one unemployed. In 1961, in the midst of a recession and high unemployment, President Kennedy called on Congress to amend the ADC program to include the children of the unemployed.15 That year, the law was changed to temporarily extend eligibility for ADC to dependent children of unemployed parents. For a state to provide assistance to families on the basis of unemployment, they were required to include in their state plan provisions for ensuring that the unemployed parent was registered for job placement services. If the parent refused to accept employment without “good cause” (as determined by the state), the state was required to halt assistance to the family.16 For the first time since the program’s inception, ADC now had the beginnings of federally mandated work requirements for families receiving assistance. Continuing in this vein of promoting self-sufficiency, President Kennedy’s speech to Congress the next year emphasized a shift toward favoring services over cash assistance. Public welfare, he stated, “must be directed increasingly toward prevention and rehabilitation ... we must place more stress on services instead of relief.”17 Also in 1962, the name of the program was changed to Aid 11 Joanne L. Goodwin, ‘Employable Mothers’ and ‘Suitable Work’: A Re-Evaluation of Welfare and Wage-Earning for Women in the Twentieth-Century United States, Journal of Social History, Vol. 29, No. 2 (Winter 1995), p. 262 12 Joanne L. Goodwin, ‘Employable Mothers’ and ‘Suitable Work’: A Re-Evaluation of Welfare and Wage-Earning for Women in the Twentieth-Century United States, Journal of Social History, Vol. 29, No. 2 (Winter 1995), p. 262. 13 Susan W. Blank and Barbara B. Blum, A Brief History of Work Expectations for Welfare Mothers, The Future of Children, Vol. 7, No. 1 (Spring 1997). 14 Report of the Senate Finance Committee, U.S. Senate, 84th Congress, 2nd Session, on H.R. 7225, printed June 5, 1956. 15 Special Message to the Congress: Program for Economic Recovery and Growth, Speech delivered by President John F. Kennedy, February 2, 1961, http://www.presidency.ucsb.edu/ws/?pid=8111#axzz1rH0u7Ceg. 16 See P.L. 87-31 (H.R. 4884). 17 Special Message to the Congress on Public Welfare Programs, President Kennedy, February 1, 1962, (continued...) Congressional Research Service 4 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited to Families with Dependent Children (AFDC) to reflect the enlarged focus of the program and to emphasize the maintenance of two-parent families.18 The Social Security Amendments of 1967 (P.L. 90-248) enacted both financial incentives for adult recipients to work and, for the first time, requirements for AFDC mothers to work. These amendments required states to disregard from a family’s countable income some earnings when determining its “need” and benefits.19 They also created the first work program under AFDC—the Work Incentive Program (WIN). WIN was compulsory for fathers, and states could determine whether it would be compulsory or voluntary for mothers. In practice, two-thirds of participants in the WIN program between 1968 and 1971 were mothers. In 1971, the federal rules changed to require all parents to enroll in WIN, with the exception of mothers with children under the age of six.20 AFDC work requirements continued to evolve in the 1980s. The Omnibus Budget Reconciliation Act of 1981 (P.L. 97-35) gave states the option to require “workfare” (unpaid work in exchange for cash assistance) through Community Work Experience Programs (CWEP). The Family Support Act of 1988 (P.L. 100-485) ended WIN, replacing it with the Job Opportunity and Basic Skills (JOBS) Training Program. It was designed to provide AFDC recipients either job training and education or the quick acquisition of a job.21 It also removed the participation exemption for many single parents by lowering the age-of-youngest-child exemption from six to three years (at state option, this could be lowered further to one year), while also increasing funding for child care. Significantly, JOBS legislated minimum participation rates for states in order to be eligible for their full federal fund allotment.22 The program also placed an increased focus on education, as evidenced by the requirement that states offer education to any adult lacking a high school diploma and the provision of federal funding for such activities.23 The progression of welfare from a cash assistance-based program to one of work incentives, requirements, and supports culminated in the mid-1990s with welfare reform. With the signing of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193), AFDC was replaced by the Temporary Assistance for Needy Families program. TANF instituted a range of work-related requirements that apply to both states and recipients. These requirements, and the extent to which they are being met, will be discussed below. (...continued) http://www.presidency.ucsb.edu/ws/?pid=8111#axzz1rH0u7Ceg. 18 A concern at the time was that the program’s benefits and eligibility standards discouraged marriage. The program was thus renamed to indicate that its purpose was to provide assistance to families. Susan W. Blank and Barbara B. Blum, A Brief History of Work Expectations for Welfare Mothers, The Future of Children, Vol. 7, No. 1 (Spring 1997). 19 An enrollee would receive $30 a month while in training, plus an allowance for child care and other work-related expenses. If they became employed, the first $30 of earnings plus one-third of subsequent earnings would not be taken into account when calculating the family’s AFDC grant. 20 William J. Reid and Audrey D. Smith, AFDC Mothers View the Work Incentive Program, Social Service Review, Vol. 46, No. 3 (September 1972), pp. 347-362. 21 Job Opportunity and Basic Skills Training Program (JOBS), ChildTrends 2003, http://www.childtrends.org/ lifecourse/programs/JOBS.htm. 22 Daniel Friedlander and Gary Burtless, Five Years After: The Long-Term Effects of Welfare-to-Work Program, Russell Sage Foundation, New York, 1995. 23 Judith M. Gueron and Edward Pauly, From Welfare to Work, Russell Sage Foundation, New York, 1991. Congressional Research Service 5 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited Welfare Reform and Research on Welfare, Dependency, and Work Welfare was the subject of a great deal of research from the 1960s through the 1990s. Economic theory suggested that providing assistance without work reduces work effort, and a fairly large number of empirical studies supported that contention.24 Additionally, proposals to replace the existing welfare system with a negative income tax (with a minimum guaranteed income) was the subject of some of the first large-scale social experiments beginning in the 1960s and continuing into the 1980s. These experiments found that such policies reduced work effort and potentially even led to an increase in marital dissolutions.25 The negative income tax with an income guarantee was offered as welfare reform during the Nixon and Carter administrations, but not thereafter.26 TANF was influenced by two major types of research published in the 1980s and early 1990s. The first was analyses of how long families remained on welfare. The second was a series of experimental evaluations of welfare-to-work initiatives: programs that offered employment services and education or training that encouraged participation, required participation, or did a combination of both. Research on the Duration of Welfare Receipt Beginning in the 1980s, research began to examine how long families remained on the rolls based on data that permitted examination of an individual’s program receipt over time. A study conducted by Mary Jo Bane and David Ellwood prepared for HHS concluded that while most periods of welfare receipt are short, some families stay on the rolls for a long period of time.27 Subsequent studies generally confirmed the basic findings of Bane’s and Ellwood’s initial report. Additionally, some recipients experienced multiple periods of benefit receipt. In a subsequent study, Ellwood found that close to one-fourth of those who ever come on to the welfare rolls would receive benefits for 10 years or more in their lifetime.28 Long-term benefit receipt raised concerns about welfare dependency. That is, there was concern that for some families, receipt of welfare had essentially become a way of life rather than a shortterm means of coping with events such as job loss or marital dissolution. 24 Robert Moffitt, “Incentive Effects of the U.S. Welfare System: A Review,” Journal of Economic Literature, vol. 30, no. 1 (March 1992), pp. 1-61. 25 Alicia H. Munnell, ed., Lessons from the Income Maintenance Experiments, Proceedings from a Conference Held in September 1986, Federal Reserve Bank of Boston, 1986. 26 For a discussions of the welfare reform proposals offered during the Nixon Administration, see Vincent J. Burke and (name redacted), Nixon’s Good Deed: Welfare Reform (New York: Columbia University Press, 1974); and Daniel P. Moynihan, The Politics of a Guaranteed Income, the Nixon Administration and the Family Assistance Plan (New York: Vintage Books, 1973). 27 Mary Jo Bane and David T. Ellwood, Transitions from Welfare to Work, Urban Systems and Engineering Inc., Cambridge, MA, 1983. 28 David T. Ellwood, Targeting “Would-Be” Long-Term Recipients of AFDC, Mathematica Policy Research, Princeton, NJ, 1986. Congressional Research Service 6 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited Pre-1996 Welfare-to-Work Experiments29 The 1980s also saw welfare-to-work programs evaluated using random-assignment “social experiments” to test whether there were effective programs to move recipients from welfare to work.30 Early studies focused on whether mandatory, relatively low-cost programs could affect the behavior of cash welfare recipients. The evaluations found that such programs that require mandatory participation can have positive impacts.31 Most of these programs emphasized job search. Evaluated unpaid work experience programs (e.g., “workfare”) tended to produce little in the way of positive employment impacts or reductions in welfare receipt, though the activity itself had value in providing services to the public at large.32 The period between the enactment of the Family Support Act of 1988 and PRWORA in 1996 saw a surge in experimentation on welfare-to-work approaches. In addition to authorizing the JOBS program itself, the Family Support Act of 1988 also authorized the study that would examine the impact of 11 mandatory welfare-to-work programs operating in seven sites. This major, eightyear study would come to be known as the National Evaluation of Welfare-to-Work Strategies (NEWWS). NEWWS studied the impact on welfare recipients and their children of these programs that took different approaches to getting recipients into work. In addition to NEWWS, a number of states conducted evaluations of their own initiatives. These evaluations were a condition of states receiving “waivers” under Section 1115 of the Social Security Act. The key initiatives that influenced welfare reform and the design of state TANF programs were waiver programs that allowed recipients who went to work at low-paying jobs to remain on the rolls and supplement their earnings with a reduced welfare benefit, restricted the period of time families could receive benefits (time limits), and enhanced sanctions for those who failed to comply with program requirements. These “waiver” programs often became the basis for states’ post-1996 TANF cash assistance programs. GAIN—Riverside (California) An early, influential set of welfare-to-work experiments was conducted on California’s GAIN (Greater Avenues of Independence) program.33 The GAIN program was evaluated in six counties, one of which was Riverside. The evaluation studied recipients who entered the GAIN program between 1988 and mid-1990. 29 This section discusses the most influential studies of the pre 1996 period. It is based on more comprehensive reviews published in the 2000 and 2004 GreenBooks published by the House Ways and Means Committee. 30 For a discussion of this research, as well as how randomized controlled experiments became the preferred methodology of welfare reform experiments, see Judith M. Gueron and Howard Rolston, Fighting for Reliable Evidence (New York: Russell Sage Foundation, 2013). 31 Judith M. Gueron and Edward Pauly, From Welfare to Work, Russell Sage Foundation, New York, 1991; and Daniel Friedlander and Gary Burtless, Five Years After. The Long-Term Effects of Welfare-to-Work Programs, Russell Sage Foundation, New York, 1995. 32 See Thomas Brock, David Butler, and David Long, Unpaid Work Experience for Welfare Recipients: Findings and Lessons from MDRC Research, MDRC, MDRC Working Papers, New York, NY, September 1993. 33 James Riccio, Daniel Friedlander, and Stephen Freedman, GAIN: Benefits, Costs, and Three-Year Impacts of a Welfare-to-Work Program. California’s Greater Avenues for Independence Program, Manpower Demonstration Research Corporation, New York, September 1994. Congressional Research Service 7 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited Like other counties’ GAIN programs, Riverside placed a heavy emphasis on skill-building services—about 60% of participants entered an education or training activity—but also maintained a strong focus on employment. Among the findings for each of the six counties, Riverside’s program was the least costly to operate and generated the largest return for taxpayers. Over the three-year period in which it operated, Riverside’s program increased the experimental group’s earnings by an average of $3,113—a 49% gain over the control group average. The National Evaluation of Welfare-to-Work Strategies (NEWWS) The NEWWS evaluation studied impacts for those who entered its programs from mid-1991 through the end of 1994. The overall results of the NEWWS evaluations showed that mandatory participation in work or job preparation activities was likely to increase the amount of work recipients participated in and reduce the amount of welfare they received.34 However, the requirements alone were not likely to raise incomes. A key feature of NEWWS was its evaluation of different types of welfare-to-work strategies. In three locations—Atlanta, GA, Grand Rapids, MI, and Riverside, CA—programs based on job search, known as labor force attachment programs, were tested “head-to-head” against programs that provided more long-term education. In each location, both the labor force attachment and the education-focused programs produced positive impacts. Both types of programs raised employment and reduced welfare receipt. However, when impacts are compared over a relatively long period (five years), the labor force attachment programs produced some larger impacts than the education-focused programs. This was particularly true for those without a high school diploma, as the labor force attachment programs increased employment rates more than the education-focused program in this subgroup over five years. A separate analysis of NEWWS adult basic education activities, such as adult basic skills courses, pursuit of the General Educational Development (GED) credential, high school completion programs, and English as a Second Language (ESL), was published. In general, participation in these activities did not yield positive employment impacts. That study found that the programs attended by recipients of cash assistance often were not modified to account for the specific needs of students, and most participants failed to actually receive a GED. However, some positive impacts were found for the few who did go on to post-secondary education after receiving a GED.35 The program with the largest impacts in the NEWWS evaluation was the one operated in Portland, OR. That program was referred to as a “mixed” program model. It emphasized employment as a goal, but also permitted caseworkers the discretion to assign participants to education if warranted. Further, Portland’s program emphasized finding a “good job,” not just any job, and permitted extended job search. 34 U.S. Department of Health and Human Services and the U.S. Department of Education, National Evaluation of Welfare-to-Work Strategies: How Effective are Different Welfare-to-Work Approaches? Five Year Adult and Child Impacts for Eleven Programs, 2001. 35 Johannes M. Bos, Susan Scrivener, and Jason Snipes, et al., National Evaluation of Welfare-to-Work Strategies. Improving Basic Skills: the Effects of Adult Education on Welfare-to-Work Programs, U.S. Department of Education and U.S. Department of Health and Human Services, 2002. Congressional Research Service 8 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited While NEWWS included programs that were successful in raising employment rates and earnings and reducing welfare receipt, none—even the program with the largest positive impacts in Portland—succeeded in raising incomes. That is, increased earnings from work offset, but did not exceed, reductions in cash welfare and food assistance. Mandatory work requirements alone could increase work—but not necessarily the income of adult recipients and their children. Earnings Supplement Programs Several programs tested in the 1990s combined mandatory work participation with a policy that allowed recipients who went to work to remain on the rolls at higher levels of earnings or for longer periods of time than allowed under regular pre-1996 welfare law. This was seen as increasing financial incentives to work. One program—Minnesota’s Family Investment Program or MFIP—also regarded this approach as a way to increase incomes and reduce poverty.36 The earnings supplement programs were generally successful in increasing work and raising incomes.37 The MFIP program also examined the impact of being in the program on various measures of child development. It found some positive impacts in that domain as well. However, the increased income and positive child impacts came at a cost—the budget cost of additional welfare payments that supplemented earnings. New Hope The New Hope program was conducted in Milwaukee, WI, and existed from 1994 through 1998. It was available to adults living in one of two targeted neighborhoods who had a household income at or below 150% of the poverty line (it was the only program that did not limit participation to adults with children). The evaluators of New Hope described the program’s philosophy: Four principles underlie the New Hope program: (1) that people who are willing and able to work full time should be assured the opportunity to do so; (2) that people who work full time should not be poor; (3) that people who work more hours should take home more pay; and (4) for those eligible for public assistance, that full-time work should make people better off financially than they would be on welfare. These principles are realized by providing four benefits and services to participants who are willing to work an average of at least 30 hours per week: help in obtaining a job (including access to a CSJ [Community Service Job] if fulltime employment is not otherwise available), an earnings supplement to bring low-wage workers’ income above the poverty level, subsidized health insurance, and subsidized child care.38 Participants were expected to work at least 30 hours per week, and the program provided a twopart income supplement—the first part was based on the number of children in the family, and the 36 The MFIP program was established under waivers granted under Section 1115 of the Social Security Act and a separate provision of what was then Food Stamp law. In addition, several states evaluated enhanced earnings disregards under Section 1115 of the Social Security Act, including Connecticut, Delaware, Florida, Vermont, and Virginia. 37 For a synthesis of the research finding for these programs, see Gordon L. Berlin, Encouraging Work, Reducing Poverty: The Impact of Work Incentive Programs, MDRC, March 2000. 38 Thomas Brock, Fred Doolittle, and Veronica Fellerath, et al., Implementation of a Program to Reduce Poverty and Reform Welfare, MDRC, October 1997. Congressional Research Service 9 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited second was based on the participant’s earnings. The program also supported work by including health benefits and child care assistance. Additionally, New Hope offered unemployed recipients the opportunity to apply for a community service job in a nonprofit organization. These jobs paid the minimum wage, and allowed participants to also receive federal and Wisconsin earned income tax credits. The New Hope evaluation program found that, after two years, the program increased earnings and employment for those who were not working full-time when they entered the program. It also resulted in a modest increase in income during the first two years. The increase in income was also accompanied by some positive impacts on the development of the children of participants. The evaluation also found that subsidized community service employment played a central role in New Hope. After New Hope ended, participants still experienced reduced poverty at five years after having entered the program, though impacts had faded by eight years after a recipient entered the program. New Hope was a far broader program than merely a welfare-to-work program, and many of its features are reflected in the broader changes in low-income assistance that took place in the mid1990s. TANF and welfare reform were a part of a series of changes to low-income assistance programs that expanded earnings supplements to “make work pay” through the Earned Income Tax Credit (EITC), increased funding for subsidized child care, and expanded health insurance coverage through the creation of the Children’s Health Insurance Program (CHIP) in 1997 and ultimately the Affordable Care Act of 2010.39 However, the current system of aid to low-income families lacks several elements of New Hope. One such element is the emphasis on full-time work. Another element the current system has generally lacked is publically-funded community services jobs when other jobs are not available—except for a brief period when extra TANF funds were available under the American Recovery and Reinvestment Act of 2009 (P.L. 111-5). (Subsidized employment under ARRA is discussed later in this report.) The system lacks such publically-funded community service jobs even though TANF funds may be used for them. Post-Welfare Reform Research The years immediately after the enactment of the 1996 welfare reform law saw a continuation of a high volume of research about cash assistance and its recipients. With the rapid decline in the cash assistance caseload, states examined the circumstances of those who left the rolls. Additionally, HHS continued to fund a series of experimental studies examining program innovations aimed at improving the impact of welfare-to-work programs on participants’ employment and well-being. Welfare “Leaver” Studies Welfare “leaver” studies examined the circumstances of those who left the rolls: to what extent were they working, what were they earning, what other types of government benefits did they 39 For a discussion of this restructuring of low-income assistance programs and federal spending trends on low-income aid, see CRS Report R41823, Low-Income Assistance Programs: Trends in Federal Spending, by (name redacted). Congressional Research Service 10 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited receive, and did they come back to the assistance rolls. A large number of these studies were conducted by the states using varying methodologies. Congress provided special funding to study the effects of welfare reform, and HHS used these funds to award grants to states and counties to conduct a set of studies using more consistent research methods. A synthesis of the HHS leaver studies generally confirmed what had been found in the statedeveloped leaver studies:40 • The majority of those who leave welfare do so for work. Among the 15 states and localities examined in the HHS leaver studies, the “median study”—the midpoint of the ranking of all 15 studies—showed 57% of its leavers employed in the first quarter after exiting the rolls. Employment rates tended to remain fairly constant when examining the second, third, and fourth quarters after exit. • Though most work after leaving the rolls, most studies report that only between 30% and 40% of those who left the welfare rolls worked in all four quarters after leaving welfare. • Because not all welfare leavers find work or steady work, some of those who exit the rolls return to welfare. In the fourth quarter after leaving welfare, many of the states and localities reported that about one-fifth (20%) of their leavers had returned to the rolls. Experimental Studies Follow-up studies to the welfare-to-work experiments of the 1980s and 1990s have yielded mixed results on new initiatives to improve program impacts. HHS launched six multi-site experimental studies to examine additional program approaches for the cash assistance and related populations. Two of these studies are complete, with four studies planned or currently underway (with results forthcoming). The Employment Retention and Advancement (ERA) Project: 1998-2011 The Employment Retention and Advancement (ERA) project sought to build on the knowledge of how to move welfare recipients into jobs by testing initiatives to improve impacts by increasing employment stability and advancement.41 It provided some additional evidence that providing earnings supplements combined with employment services could result in positive earning impacts, including employment retention. ERA also produced some evidence that communitybased organizations or for-profit providers of employment services could also produce positive employment impacts. ERA also tested programs that combined work with education for those on the rolls. Those programs did not produce positive employment impacts. 40 Gregory Acs, Pamela Loprest, and Tracy Roberts, Final Synthesis Report of Findings from ASPE’s “Leavers” Grants, U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, December 2001. 41 U.S. Department of Health and Human Services, Office of Planning Research, and Evaluation, Administration for Children and Families, Increasing Employment Stability and Earnings for Low-Wage Workers, Lessons from the Employment Retention and Advancement (ERA) Project, OPRE Report 2012-19, April 2012. Congressional Research Service 11 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited The Hard-to-Serve: 2001-2012 Several ERA sites, as well as sites in a second experimental study, focused on populations that were hard to serve.42 Some of these programs were not geared to the TANF cash assistance population, but rather, other disadvantaged groups (e.g., those leaving prison—who tended to be men). Programs that tested approaches such as subsidized “transitional jobs” provided both income boosts and employment to participants while they were in subsidized jobs, but there were no long-term impacts from program participation on employment or earnings. A program in New York City that focused on those with cash assistance recipients who had limiting disabilities found positive earnings impacts and reduced cash assistance. However, employment rates for those in that program were below those in the general cash assistance population, and evaluators attributed much of the reduction in cash assistance to a high rate of sanctioning in the program. Current Experimental Evaluations HHS is fielding four additional experimental studies that at least partially focus on TANF assistance recipients or related populations that have yet to yield impact findings. The Innovative Strategies for Increasing Self-Sufficiency Project (ISISS) will test the “career pathways” model that seeks to move participants into better paying jobs within a sector through combining work and training. The Health Professions Opportunity Grant (HPOG) evaluation is measuring the impact of a program intended to provide career pathways within the health care sector. HPOG was created in the Affordable Care Act of 2010 (ACA, P.L. 111-148) with TANF cash assistance recipients and other low-income individuals as its target population. The Subsidized and Transitional Employment Demonstration (STED) examines subsidized employment models. The Job Search Assistance (JSA) strategies project is intended to measure the relative impact of differing job search services offered through TANF programs. TANF Welfare-to-Work Provisions TANF was created by the 1996 welfare reform law (the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, P.L. 104-193). On the eve of that law’s enactment, federal law already had in place rules requiring mandatory participation in welfare-to-work activities for some recipients. Aid to Families with Dependent Children required certain recipients to participate in activities, and it had a sanction for those who failed to participate.43 States were also subject to participation standards. Many states had already gone further than federal law in requiring work of more recipients, increasing sanctions for noncompliance, and fashioning their own welfare-to-work approaches under “waivers” of AFDC federal rules. The Clinton Administration granted welfare waivers to 43 states.44 Thus, though ending AFDC and 42 U.S. Department of Health and Human Services, Office of Planning, Research and Evaluation (OPRE), Administration for Children and Families, What Strategies Work for the Hard-to-Employ? Final Results of the Hard-toEmploy Demonstration and Evaluation Project and Selected Sites from the Employment Retention and Advancement Project, OPRE Report 2012-08, March 2012. 43 The AFDC sanction was the removal of the noncomplying adult from the assistance unit, a reduction in the family’s benefit. 44 For a description of these waivers, see U.S. Department of Health and Human Services, Office of the Assistant (continued...) Congressional Research Service 12 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited creating TANF was a major change in social policy, the welfare-to-work aspects of TANF represent a step in the evolution of welfare-to-work policies. TANF is a broad-based block grant that provides funds to states, the territories, and Indian tribes to help them finance cash welfare programs for needy families with children as well as provide a wide range of other benefits and services to either ameliorate the effects or address the root causes of child poverty. The basic federal block grant for the 50 states and District of Columbia is funded at a total of $16.5 billion per year. States are required, under a provision known as the maintenance of effort (MOE) requirement, to expend from their own funds a minimum total of $10.4 billion per year in addition to federal funds on TANF or TANF-related programs. The statutory purpose of TANF is to increase state flexibility to achieve the following goals: 1. provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives; 2. end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage; 3. prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for preventing and reducing the incidence of these pregnancies; and 4. encourage the formation and maintenance of two-parent families. Though the block grant is a set amount, states may use TANF funds to finance any activity “reasonably calculated” to achieve any of these four TANF goals. This gives states broad leeway in spending TANF funds. In general, state MOE funds can be used for these same activities (there are some technical differences in the use of federal and state funds). States determine the size of TANF benefits, and there is a wide range of benefit amounts among the states. In July 2011, the maximum monthly benefit for a family of three varied from $923 per month in Alaska and $788 per month in New York City to $170 in Mississippi. TANF has a fiveyear time limit on receipt of cash assistance financed by federal funds. Recipients of cash assistance also must cooperate in having their children’s paternity established and other requirements relating to enforcement of child support orders. TANF funds may be used to support work in various ways, including through helping states finance tax credits for low-income working families, providing assistance with transportation, and funding child care. TANF funds may supplement those from a separate child care block grant as TANF funds may be transferred to the child care block grant or spent within TANF itself on child care.45 Cash welfare itself accounted for less than 30% of all TANF and MOE funds in FY2011. The cash welfare rolls and the amount of funds spent on cash assistance have declined substantially since the creation of TANF. In 1994, the combined federal and state expenditures on AFDC cash (...continued) Secretary for Planning and Evaluation, Setting the Baseline: A Report on State Welfare Waivers, June 1997, http://aspe.hhs.gov/hsp/isp/waiver2/title.htm. 45 See CRS Report RL30785, The Child Care and Development Block Grant: Background and Funding, by (name red acted). Congressional Research Service 13 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited assistance were $22.7 billion. By FY2011, this had declined to $9.6 billion. The decline would be even steeper in inflation-adjusted dollars. In FY2011, TANF cash assistance was received by 1.9 million families per month. Within these families, there were 1.3 million work-eligible adults. The next several sections of this report • provide a description of TANF work-eligible adults; • briefly discuss TANF’s work requirements as they apply directly to work-eligible individuals; and • discuss the TANF work participation standards—the main performance measure for TANF that assesses state welfare-to-work efforts. TANF Work-Eligible Individuals Who Is a TANF Work-Eligible Individual? Under TANF, work-eligible persons are either adult recipients of cash assistance or certain nonrecipient parents of children receiving assistance who are expected to work. The following adults in TANF or MOE-funded households are not considered work-eligible: • adult non-recipients who are non-parent caretakers (e.g., grandparent, aunt, uncle); • ineligible noncitizen parents; • at state option, adults receiving Supplemental Security Income (SSI);46 • parents who are needed in the home to care for disabled family members; • at state option, parents who are Social Security Disability Insurance (SSDI) recipients; and • at state option, a parent who became eligible for SSI during the fiscal year. TANF Assistance Families With and Without Work-Eligible Individuals Figure 1 shows a breakdown of the types of families that received TANF assistance in FY2011. It shows that of all families receiving assistance, 61% included a work-eligible individual and 39% did not include a work-eligible individual in that year. Most TANF families with a work-eligible individual are single-parent families. In FY2011, single-parent families with a work-eligible 46 Before October 1, 2006, all families without an adult recipient were excluded from the work participation rate calculation. The Deficit Reduction Act of 2005 (P.L. 109-171) required HHS to issue regulations to determine the circumstances under which a family with a non-recipient parent must be included in the work participation rate calculation. The HHS regulations generally require that states include the following types of families without an adult recipient in the work participation rate calculation: (1) except for three months in a 12-month period, families subject to a sanction that removes the adult from the TANF assistance unit; and (2) families that reach state time limits that remove the adult from the TANF assistance unit but continue aid on behalf of the family’s children. Congressional Research Service 14 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited individual comprised 55% of all TANF families; two-parent families with work-eligible individuals comprised 6% of all TANF families. Figure 1. TANF Assistance Families, by Family Type, FY2011 Two Parent Family 6% No Work-Eligible Individual 39% Single Parent Family 55% Source: Congressional Research Service tabulations of the FY2011 TANF National Data Files. Notes: Information in this analysis differs slightly from the information HHS publishes with the official TANF work participation rates because of some differences in the data used to compute the work participation rates and the publically available TANF National Data Files. See Appendix B for a discussion of these differences. Characteristics of TANF Work-Eligible Individuals TANF provides assistance to some of the most disadvantaged families with children. These are families that are not aided by the larger, more widely received social insurance programs such as Social Security Survivors, Social Security Disability, or Unemployment Insurance. The demographic characteristics of work-eligible individuals reflect those often associated with economic disadvantage. Most are single mothers, many with young children. Many of the mothers themselves are also young, either teen parents or young adults (under age 25) who might be considered “youths” in other contexts and programs. TANF work-eligible individuals also tend to have lower educational attainment than the population as a whole, with 41% lacking a high school diploma or equivalent. Additionally, twothirds of work-eligible individuals are minorities: African-Americans are 34.3% and Hispanics 25.9% of all TANF work-eligible individuals. Table 1 shows the summary characteristics of work-eligible individuals in FY2011. In that year, 84% of work-eligible individuals were women and 16% were men. Most of the women were not Congressional Research Service 15 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited married, and 76% of them had never married. A little more than one-third of the women who were work-eligible were under the age of 25. Men who were TANF work-eligible were more likely to be married and living with a spouse (that is, in two-parent families) and also tended to be slightly older. A large share of TANF work-eligible individuals had failed to complete high school. For comparison with the general population, 37% of TANF work-eligible women who were 25 and older did not complete high school, while 39% of TANF work-eligible men did not complete high school. Among all women age 25 and older in 2011, 12% lacked a high school diploma or equivalent; among all men age 25 and older in 2011, 13% lacked a high school diploma or equivalent.47 Table 1. Summary Characteristics of Work-Eligible Individuals: FY2011 By Gender Women Gender Men Totals 84.4% 15.6% 100.0% Single never-married 75.8 48.5 71.5 Married living together 9.5 40.1 14.3 Married living apart 9.5 5.5 8.8 Widowed 0.3 0.8 0.4 Divorced 5.0 5.2 5.0 Totals 100.0 100.0 100.0 Teen parents 6.4 3.4 5.9 Age 20 to 24 28.6 14.2 26.3 Age 25 to 29 23.6 17.5 22.7 Age 30 to 34 17.3 18.4 17.5 Age 35 to 45 18.7 29.7 20.4 Age 45 and older 5.5 16.8 7.2 100.0 100.0 100.0 Infant 18.7 16.6 18.3 1 to 3 years old 39.6 34.8 38.9 4 to 5 years old 13.2 12.2 13.0 Marital Status Age Total Age of Youngest Child in Household 47 This is based on data from the U.S. Census Bureau. See detailed data tables at https://www.census.gov/hhes/ socdemo/education/data/cps/2011/tables.html. Congressional Research Service 16 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited Women Men Totals 6 to 12 years old 20.1 23.3 20.6 Age 13 and older 8.4 13.2 9.2 100.0 100.0 100.0 White, Non-Hispanic 31.8 41.4 33.3 Black, Non-Hispanic 36.8 20.5 34.3 Hispanic 25.7 27.1 25.9 American Indian or Alaskan Native 1.4 1.3 1.4 Asian or Pacific Islander 2.6 6.7 3.2 Unknown 1.7 3.0 1.9 100.0 100.0 100.0 Less than high school diploma 40.3 42.4 40.6 High school diploma or GED and above 57.8 55.0 57.4 Unknown 1.9 2.6 2.0 100.0 100.0 100.0 37.0 39.0 37.4 Total Race/Ethnicity Total Educational Attainment Total Percent age 25 and above without a high school diploma or GED Source: Congressional Research Service tabulations of the FY2011 TANF National Data files. Notes: Information in this analysis differs slightly from the information HHS publishes with the official TANF work participation rates because of some differences in the data used to compute the work participation rates and the publically available TANF National Data Files. See Appendix B for a discussion of these differences. The TANF national data files do not contain information necessary to examine the incidence of many “barriers” to employment. For example, they do not contain information on whether a work-eligible individual has a physical or mental impairment, substance abuse issues, or a criminal record.48 48 Such barriers were examined in Susan Hauan and Sara Douglas, Potential Employment Liabilities Among TANF Recipients: A Synthesis of Data from Six State TANF Caseload Studies, U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, October 2004. Congressional Research Service 17 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited TANF’s Work Requirements for Work-Eligible Individuals All TANF’s work requirements are actually requirements on states as conditions of receiving federal block grant funds. There are essentially two sets of work requirements: (1) those that require states to have certain program rules that apply directly to recipients, which are described in the following sections; and (2) numerical performance standards computed in the aggregate for each state. This second set of work requirements is discussed later in the report. Federal Requirements that Apply to Individual Recipients Federal TANF law has three work-related requirements that states must apply to each adult or teen parent recipient: employability assessment, a requirement that all parents and caretakers be engaged in work within 24 months, and sanctions for refusal to comply with work requirements. Employability Assessment States are required to assess each adult recipient’s or teen parent’s skills, work experience, and employability. The assessment is required to be made within 90 days of determination of the recipient’s eligibility for assistance. States may use this assessment to develop an Individual Responsibility Plan (IRP) that sets forth employment goals and obligations of the recipient and describes the services the state will provide to the individual. The IRP is an option for the states; it is not required by federal law. States may sanction families for failure to comply with IRPs.49 Work Within Two Years States are required to engage each parent or caretaker adult in “work,” as defined by the state, within 24 months of his or her coming on the rolls. For this requirement, the state is free to determine what constitutes being engaged in work; it need not follow the federal rules for the activities and hours that determine whether the family is counted as a participant toward the work participation performance standard (this standard is discussed later). This requirement is a part of the TANF state plan, and there is no specific penalty for a state that fails to engage a parent or caretaker in work by the 24-month deadline. Sanctions for Failure to Comply with Work Requirements States are required to sanction a family with a member who refuses to comply with its work requirements without “good cause.” States are free to determine the sanction amount, and whether to reduce benefits or terminate benefits for families that fail to comply with work requirements (a full-family sanction). States also determine what constitutes good cause for not complying with work requirements. Under TANF, sanctions have become a more integral part of 49 CRS Report RL32748, The Temporary Assistance for Needy Families (TANF) Block Grant: A Primer on TANF Financing and Federal Requirements, by (name redacted). Congressional Research Service 18 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited state programs and can sometimes result in the suspension or termination of the entire family grant. States are prohibited from sanctioning a family with a single parent with a child under the age of six if he or she refuses to comply with work requirements because of an inability to find affordable child care. The parent must demonstrate to a state that the inability to find affordable child care is because (1) appropriate child care within a reasonable distance from the parent’s work or home is unavailable, (2) informal child care by a relative or other arrangement is unavailable or unsuitable, and (3) appropriate and affordable child care is otherwise unavailable. The incidence of sanctioning in TANF assistance programs is discussed in the “Sanctions” section later in this report. Activities of TANF Work-Eligible Individuals What proportion of TANF work-eligible individuals are working or engaged in job preparation activities in a given month? Figure 2 shows the work status of TANF work-eligible individuals in FY2011. It shows that on average in a month in FY2011, • 42% of all TANF work-eligible individuals (about 548,000 persons) were reported as either employed or having participated for at least one hour in a job preparation activity during the month; • participation in activities among TANF work-eligible individuals was split about evenly, with 21% of work-eligible individuals employed in unsubsidized jobs and 21% otherwise engaged in work or job preparation; and • the majority (58%) of work-eligible individuals were reported as having no participation in the month. Congressional Research Service 19 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited Figure 2. Work Participation of TANF Work-Eligible Individuals: FY2011 Unsubsidized employment 21% No Reported Participation 58% Other work or Job Preparation Activity 21% Source: Congressional Research Service tabulations of the FY2011 TANF National Data Files. Notes: Information in this analysis differs slightly from the information HHS publishes with the official TANF work participation rates because of some differences in the data used to compute the work participation rates and the publically available TANF National Data Files. See Appendix B for a discussion of these differences. In FY2011, the overall rate of engagement was less than 50% in any given month. As discussed later, TANF requires states to ensure that a specified percentage of their caseload is participating in work requirements. The statute sets this percentage at 50% (90% for the two-parent portion of the caseload), but, as will be discussed in detail later, almost all states faced an effective participation standard below 50% in FY2011 because of credits against the standard. Thus, the lower rate of participation among work-related individuals does not mean that states, on average, failed their official work participation standards. The overall rate of engagement discussed above is a monthly snapshot of work or participation in job preparation activities. Some recipients with no reported engagement may have been engaged in activities during earlier months; some may be engaged in later months. Engagement in work or job preparation activities measured over a period greater than one month (year, entire period a recipient received TANF) is likely to be higher than the monthly snapshot of engagement.50 Some of the reasons that a work-eligible individual may have no reported participation include (1) being a newcomer to the rolls, with no activity yet assigned; (2) having completed an assigned activity and awaiting the beginning of a new activity; (3) the state has exempted the individual from 50 See Gayle Hamilton, The JOBS Evaluation: Monthly Participation Rates in Three Sites and Factors Affecting Participation Levels in Welfare-to-Work Programs, MDRC, July 1995. Congressional Research Service 20 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited work; (4) the state has determined that the work-eligible individual has good cause for failing to engage in work or activities; (5) the family is not complying with the state work requirement and is in the sanction process; or (6) the state has yet to engage the individual to participate. Working While on the TANF Assistance Rolls Of those participating in an activity, the most common activity of TANF work-eligible individuals has been working while still receiving assistance. States have adopted varying rules for treating families with a working adult. Some states disregard all earnings for a short period of time, allowing even those who get a full-time job to remain on the rolls for a transitional period. Other states disregard a portion of earnings indefinitely, providing an income supplement for low earners. Some states provide time-limited earnings supplements to families that have “left” the formal cash assistance program and have earnings. Many states have more restrictive rules for those coming onto the rolls than for those who get a job while receiving assistance.51 That is, their earnings cutoffs are lower for new applicants than for those on the rolls. Participation of Work-Eligible Individuals by Selected Characteristics: FY2011 Table 2 examines participation in unsubsidized employment or other work or job preparation activity among TANF work-eligible individuals by selected characteristics in FY2011. It also shows participation separately for TANF work-eligible women and work-eligible men. Participation in work activities varies little among men and women in total: an estimated 42.4% of work-eligible women and 41.9% of work-eligible men either were employed or participated in activities in FY2011. For both men and women, participation was lower for those without a high school diploma than for those with that credential. For TANF work-eligible women, participation rates in activities were lower for teen parents and for women aged 45 and older than for those between ages 20 and 44. Participation rates were also lower for women with infants than for those with older children, except that participation rates were also lower for women whose youngest child was a teen than for women whose youngest child was between the ages of 1 and 12. African-American women had a higher participation rate than women of other races and ethnicities. In terms of participation among TANF work-eligible men, there was little variation in participation rates by the age of the youngest child in his family. Except for Asian and Pacific Islander men—who had a higher than average participation rate among TANF work-eligible men—there was little variation in participation rates by a man’s race or ethnicity. 51 For a discussion, see CRS Report R43634, Temporary Assistance for Needy Families (TANF): Eligibility and Benefit Amounts in State TANF Cash Assistance Programs, by (name redacted). Congressional Research Service 21 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited Table 2. TANF Work-Eligible Individuals Employed or Participating in a Work or Job Preparation Activity: by Characteristic, FY2011 Unsubsidized Employment Other Work or Job Preparation Activity No Reported Participation Total Women 20.6% 21.8% 57.6% 100.0% Men 22.1 19.8 58.1 100.0 Total 20.8 21.5 57.7 100.0 TANF Work-Eligible Women Marital Status Single never-married 20.2 22.2 57.6 100.0 Married living together 19.2 19.8 61.1 100.0 Married living apart 24.4 21.0 54.6 100.0 Widowed 13.7 31.6 54.7 100.0 Divorced 23.5 20.2 56.3 100.0 Total 20.6 21.8 57.6 100.0 Teen parents 13.5 24.2 62.4 100.0 Age 20 to 24 19.2 23.5 57.3 100.0 Age 25 to 29 23.3 21.1 55.6 100.0 Age 30 to 34 22.1 22.1 55.8 100.0 Age 35 to 45 20.7 20.3 59.0 100.0 Age 45 and older 19.5 17.5 62.9 100.0 Total 20.6 21.8 57.6 100.0 Infant 14.2 14.2 71.6 100.0 1 to 3 years old 22.3 25.6 52.1 100.0 4 to 5 years old 23.7 23.7 52.6 100.0 6 to 12 years old 22.9 22.4 54.8 100.0 Age 13 and older 19.2 17.4 63.4 100.0 Total 20.6 21.8 57.6 100.0 White, Non-Hispanic 19.8 20.0 60.2 100.0 Black, Non-Hispanic 21.0 24.0 55.0 100.0 Age Age of Youngest Child Race/Ethnicity Congressional Research Service 22 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited Unsubsidized Employment Other Work or Job Preparation Activity No Reported Participation Total Hispanic 21.4 21.4 57.1 100.0 American Indian or Alaskan Native 18.0 21.9 60.1 100.0 Asian or Pacific Islander 17.9 16.4 65.7 100.0 Total 20.6 21.8 57.6 100.0 Less than high school diploma 18.6 20.0 61.4 100.0 High school diploma or GED and above 22.3 23.6 54.1 100.0 Total 20.6 21.8 57.6 100.0 Educational Attainment TANF Work-Eligible Men Marital Status Single never-married 18.8 18.9 62.4 100.0 Married living together 28.3 20.7 50.9 100.0 Married living apart 9.3 16.8 73.8 100.0 Widowed 24.9 39.7 35.3 100.0 Divorced 18.6 22.0 59.4 100.0 Total 22.1 19.8 58.1 100.0 Teen parents 11.2 11.9 76.8 100.0 Age 20 to 24 18.6 22.2 59.1 100.0 Age 25 to 29 22.7 19.6 57.7 100.0 Age 30 to 34 26.2 18.8 54.9 100.0 Age 35 to 45 21.8 20.5 57.7 100.0 Age 45 and older 22.6 19.5 57.8 100.0 Total 22.1 19.8 58.1 100.0 1 to 3 years old 22.4 20.0 57.6 100.0 4 to 5 years old 21.9 19.5 58.6 100.0 6 to 12 years old 26.2 23.3 50.5 100.0 Age 13 and older 21.2 20.0 58.8 100.0 Total 22.1 19.8 58.1 100.0 Age Age of Youngest Child Infant Congressional Research Service 23 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited Unsubsidized Employment Other Work or Job Preparation Activity No Reported Participation Total Race/Ethnicity White, Non-Hispanic 20.6 18.6 60.8 100.0 Black, Non-Hispanic 18.2 23.3 58.5 100.0 Hispanic 24.7 16.8 58.4 100.0 American Indian or Alaskan Native 13.2 23.0 63.9 100.0 Asian or Pacific Islander 32.9 24.7 42.4 100.0 Total 22.1 19.8 58.1 100.0 Less than high school diploma 20.2 16.9 62.9 100.0 High school diploma or GED and above 23.9 22.8 53.3 100.0 Total 22.1 19.8 58.1 100.0 Educational Attainment Source: Congressional Research Service tabulations of the FY2011 TANF National data files. Notes: Information in this analysis differs slightly from the information HHS publishes with the official TANF work participation rates because of some differences in the data used to compute the work participation rates and the publically available TANF National Data Files. See Appendix B for a discussion of these differences. Trends in Work Activity Table 3 shows the percentage of TANF work-eligible persons either employed or otherwise engaged in work or job preparation in FY2011, and it compares these rates with selected prior years under TANF and one year under pre-TANF (FY1994) programs. As shown, reported participation under TANF has been considerably higher than under the pre-TANF programs, attributable in great part to the increase in regular unsubsidized employment among those on the rolls. The rate of participation in other activities also increased. Within the TANF years shown (FY2000-FY2011), there has been little change in total participation. The rate at which recipients were employed in the earlier years of TANF (e.g., 2000) was greater than in the later years shown. This was partially offset by increases in the rate at which recipients were engaged in other activities. Congressional Research Service 24 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited Table 3. Percentage of Cash Assistance Adults and Teen Parents Employed or Engaged in a Work or Job Preparation Activity Selected Years FY1994-FY2011 1994 2000 2006 2011 Unsubsidized employment 8.3% 27.1% 22.0% 20.8% Other work or job preparation activity 10.9 15.7 21.4 21.5 Total employed or in job preparation activity 19.2 42.8 43.4 42.3 Source: Congressional Research Service tabulations of the FY1994 Aid to Families with Dependent Children (AFDC) Quality Control data file and the FY2000, FY2006, and FY2011 TANF National Data files. Notes: For FY1994 through FY2006, these figures represent the percentage of adult recipients; for FY2011, they represent the percentage of TANF work-eligible individuals. Sanctions As discussed above, TANF law requires states to sanction families with a member who refuses to comply with work requirements, but it is the states that determine the actual sanction itself. Sanctions are not necessarily imposed for failure to meet the federal TANF work participation standards (e.g., hours requirements). They are imposed for failure to meet the requirements the state determines for an individual recipient. Additionally, states have the flexibility to determine what may constitute “good cause” for not complying with work requirements. Though state definitions vary, a state may determine that a recipient has good cause for not participating because of a lack of transportation, domestic violence, lack of suitable employment, or illness. Sanctions can range from partial reductions of the TANF grant to lifetime ineligibility. Over time, sanctions against work-eligible adults who do not meet the work requirements have become a significant component of many states’ TANF programs. 52 In recent years an increasing number of states have adopted policies to close cases (end benefits entirely) for families with members who do not comply with work requirements. In FY2001, eight jurisdictions ultimately closed cases when a family refused to comply with work requirements. By FY2011, this number had increased to 23 jurisdictions. 52 Before TANF, a family subject to sanction would generally find only the adult’s portion of the grant reduced. Though support for work over the receipt of welfare had been a popular idea for decades, formal sanction policies first gained federal backing in 1988 with the implementation of the Family Support Act. The act stipulated that workeligible individuals who failed to participate or refused to accept legitimate offers of employment would have sanctions levied against them. The amount of the sanction was set at the adult portion of the family’s AFDC grant. It was not until the early 1990s, when the federal government began granting waivers of the AFDC rules—including the element regarding adult-only sanctions—that states began to impose full-family sanctions. Congressional Research Service 25 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited The increasing number of states using case closure as the ultimate sanction is also reflected in data on TANF families on the rolls and those leaving the rolls. Table 4 shows the number of sanctioned families, as well as the rate of sanctioning, for both those on the rolls as well as those leaving TANF. In FY2001, a monthly average of about 98,000 families, or 4.6% of those on the rolls, was sanctioned for failing to comply with TANF work, educational, or activity requirements. In addition, during that year a monthly average of approximately 11,000 families, or 6.5% of all families leaving the rolls, had their cases closed because they failed to comply with a TANF work, education, or activity requirement. The overall sanction rate (combining those on the rolls and leavers) was 4.8%. Over time, the rate of sanctioning for those on the rolls has fluctuated some, but in FY2011 it was little changed from the rate observed in FY2001. However, both the absolute number as well as the percentage of those leaving the rolls because of a sanction has increased. In FY2011, 24,000 families were sanctioned off the rolls per month, representing 15.4% of all case closures. Table 4. TANF Families Sanctioned for Work, Educational, or Activity Requirements: FY2001-FY2011 Monthly Averages Families on the Rolls Fiscal Year Number of Sanctioned Families (thousands) Percent of Total Families on the Rolls Case Closures Due to Violating Work, Educational, or Activity Requirements Number of Families Sanctioned (thousands) Percent of Total Families Leaving the Rolls Combined Sanction Rate 2001 97.8 4.6% 10.8 6.5% 4.8 2002 109.2 5.3 10.1 6.0 5.4 2003 101.6 5.0 11.6 7.0 5.2 2004 81.9 4.1 16.4 9.7 4.6 2005 81.0 4.2 15.5 9.9 4.7 2006 70.6 3.9 13.4 8.8 4.3 2007 78.5 4.6 15.0 10.0 5.1 2008 70.2 4.3 16.0 11.2 4.9 2009 78.2 4.5 19.7 13.7 5.2 2010 72.9 3.9 21.5 14.0 4.7 2011 79.6 4.3 24.0 15.4 5.1 Source: Congressional Research Service tabulations of the FY2001-FY2011 TANF National Data Files. Notes: Combined sanction rate represents the sum of families on the rolls with benefits reduced because of sanctions and families with cases closed because of failure to work or comply with an activity requirement divided by the sum of total families on the rolls and the total number of families leaving the rolls in a month. The Claims Resolution Act of 2010, which extended TANF through the end of FY2011, required states to make supplementary reports on work participation and examine the circumstances of work-eligible individuals who are reported as having zero hours of participation in activities. In Congressional Research Service 26 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited analyzing these data, HHS found that 16.7% of work-eligible individuals with zero reported hours of participation during the April-June 2011 quarter were either sanctioned or in the process of being sanctioned.53 The TANF Work Participation Standard: Measuring the Performance of State Welfare-to-Work Efforts The previous section of this report describes how states have engaged work-eligible individuals in work or related activities. However, that is not how state welfare-to-work programs are formally assessed. This assessment is done through the TANF work participation standards, which is the focus of much of the attention on TANF’s work provisions. These standards are set in federal law, and include target participation rates, rules for disregarding certain families from the participation rate, and rules for determining whether the state gets credit for participation in terms of countable activities and minimum hours requirements. States that fail to meet their target participation rates are at risk of being penalized through a reduction in their block grant. The participation standard serves two purposes. First, it is a measure of how the state is performing in engaging recipients in work or work activities. Secondly, it reinforces the notion that participation in work or work activities in return for receiving welfare assistance is a policy goal of TANF. The purpose of this section is twofold: 1. it describes the detailed rules of the TANF work participation standard; and 2. it provides data (for FY2011) on the number of families included in the participation rate calculation, their engagement in countable work activities, and their hours of engagement. TANF Work Participation: A Glossary of Terms The language of TANF work requirements and work standards has its own nomenclature. Therefore, a review of the terms used, and their definitions, in discussions of TANF work requirements and standards might be helpful. • Work-eligible individual. Generally parents (either recipients or non-recipients) and non-parent caretakers who themselves are recipients of TANF. Certain parents (discussed in detail above) are excluded from the definition of work-eligible individual. Non-recipient, non-parent caretakers are not considered work-eligible individuals. • TANF work participation standard. The standard is the official assessment of state welfare-to-work programs under TANF law. It comprises: (1) a target rate of work participation; (2) a list of activities countable in the work participation rate; and (3) the minimum number of hours per week of participation in a month required for counting activities toward the work participation rate. • Caseload Reduction Credit. A “credit” or reduction in the target rate of work participation granted for reducing the cash assistance rolls. States can also count as “caseload reduction,” families aided by state spending in excess of what is required under the TANF MOE. 53 U.S. Department of Health and Human Services, Engagement in Additional Work Activities and Expenditures for Other Benefits and Services, April-June 2011, A TANF Report to Congress, March 2012. Congressional Research Service 27 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited • Countable activities. A list of 12 activities (listed in law, defined in HHS regulations) that a work-eligible individual may engage in to have her or his participation counted toward the TANF work participation standards. • Engaged in work. Represents the number of families participating in countable activities for at least the minimum number of hours. • Family included in the TANF work participation rate. A family with at least one work-eligible individual and who is not disregarded from the participation rate. • Work participation rate. A fraction (expressed as a percentage) derived by dividing the number of families considered “engaged in work” by the number of families included in the participation rate. It is the work participation rate that is compared to the target rate of work participation that determines whether a state has met the TANF work participation standard. The Numerical Participation Standard TANF sets minimum work participation standards that a state must meet. The standards are performance measures that apply in the aggregate for each state. They require that a specified percentage of families be considered engaged in specified activities for a minimum number of hours. The TANF statute provides that 50% of all families and 90% of two-parent families must be engaged in work to meet the standard. However, few states have ever faced the full standard because the percentage is reduced for caseload reduction or state spending in excess of what is required under the TANF MOE. The caseload reduction credit reduces a state’s 50% and 90% standards based on caseload reduction measured from FY2005. The caseload reduction credit reduces a state’s numerical standards by one percentage point for each percent decline in the caseload. Additionally, under HHS regulations promulgated in 1999, states also may receive credits for spending in excess of what they are required to spend under the MOE requirement.54 States may consider families assisted by excess MOE as “caseload reduction,” and hence receive extra caseload reduction credits for such families. For example, if a state achieves caseload reduction (including the effect of caseload reduction from excess MOE) of 25%, the state’s work participation standard for the all-family standard is reduced by 25 percentage points—from 50% to 25%. If a state achieves caseload reduction of 50%, its all-family standard is reduced by 50 percentage points—from 50% to 0%. Figure 3 portrays the effective (after-credit) participation standards for all families that states faced in FY2011. It categorizes the effective standards, which ranged from 0% (a state received a 50 percentage point or more caseload reduction credit) to 50% (state or territory had a 0 percentage point caseload reduction). As the figure shows, 23 states faced effective all-family TANF work participation standards of 0% in FY2011. That is, they did not need to engage any families in activities to meet their standards. Two additional states faced effective standards from 1% to 9.9%; 8 states faced effective standards from 10% to 19.9%; 10 jurisdictions faced standards between 20% and 54 These regulations are at 45 C.F.R. §261.43. Congressional Research Service 28 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited 29.9%; six jurisdictions faced standards from 30% to 39.9%; three states faced standards from 40% to 49.9%; and two jurisdictions (South Dakota and Guam) faced the full 50% participation standard. Figure 3. TANF Effective (After-Credit) Work Participation Standards for FY2011 Effective (After Credit) Standard 50% SD, GU 40.0%-49.9% ME, OH, OR 30.0%-39.9% DC, ID, MD, NV, VA, WY 20.0%-29.9% AK, CA, IA, KY, MI, MS, NT, ND, OK, PR 10.0%-19.9% IN, LA, MO, NM, NY, PA, VT, WV 1%-9.9% TX, UT Zero AL, AZ, AR, CO, CT, DE, FL, GA, HI, IL, KS, MA, MN, NE, NH, NJ, NC, RI, SC, TN, WA, WI, VI 0 5 10 15 Number of States 20 25 Source: Congressional Research Service, based on data from the U.S. Department of Health and Human Services (HHS). Figure 10 will compare the TANF effective work participation standards with the work participation rates actually achieved. The Work Participation Rate A state’s TANF work participation rate is computed and then compared to the state’s effective (after-credit) standard. The work participation rate is a percentage, reflecting the number of families determined “engaged in work” divided by the total number of families included in the participation rate calculation. Not all families receiving cash assistance are included in the participation rate calculation, as some families do not have a “work-eligible” individual or are otherwise disregarded from the rate. This section of this report describes in detail the rules for computing the TANF work participation rate. Along with the program rules, it displays FY2011 data indicating how many families were included in the rate calculation, as well as how families were engaged in activities in that year. Families Included in the TANF Work Participation Rate Only families receiving assistance from federal TANF or state MOE funds are included in the participation rate calculation. However, certain families receiving assistance are excluded either Congressional Research Service 29 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited by statute or regulation. Such families may be exempted from TANF work requirements without creating the potential that their nonparticipation would result in a lower participation rate. The families excluded from the participation rate are • families without a work-eligible individual; • at state option, families with a single parent caring for a child under the age of one—this exclusion is limited to a maximum of 12 months in a lifetime for the family; • at state option, families participating in a tribal TANF or tribal work program; and • families under a sanction for refusal to comply with work requirements, for up to three months in a 12-month period. Figure 4 shows the percentage of families receiving TANF assistance that were included in the calculation of the work participation rate. As shown in the figure, after removing all families discussed above, a little more than half (54%) of all families receiving TANF assistance are included in the participation rate calculation. Figure 4. TANF Assistance Families Included and Not Included in the Work Participation Rate: FY2011 No Work-Eligible Individual 39% In Participation Rate 54% Disregarded from the Rate 7% Source: Congressional Research Service tabulations of the FY2011 TANF National Data Files. Notes: Information in this analysis differs slightly from the information HHS publishes with the official TANF work participation rates because of some differences in the data used to compute the work participation rates and the publically available TANF National Data Files. See Appendix B for a discussion of these differences. Congressional Research Service 30 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited Table 5 provides some more detail on families disregarded from the participation rate calculation. Most disregarded families were single-parent families with infants in FY2011. Such families accounted for 5.9% of all TANF assistance families and 80% of those families with a workeligible individual but disregarded from the rate. The next largest category is families that are subject to sanction, at 1.5% of all TANF families. Though the percentage of TANF families disregarded because of participation in a tribal work program is small nationwide, it does comprise a fairly large share of the caseload in a few states (e.g., North Dakota). Table 5. TANF Assistance Families Included and Not Included in the TANF Work Participation Rate, FY2011 Percent of Total TANF Families Total TANF families 100.0% No work-eligible individual 39.1 Disregarded from the participation rate calculation 7.4 Single parent with an infant 5.9 Sanctioned 1.5 Participating in tribal TANF or tribal work program 0.1 Included in the participation rate calculation 53.5 Source: Congressional Research Service tabulations of the FY2011 TANF National Data Files. Notes: Information in this analysis differs slightly from the information HHS publishes with the official TANF work participation rates because of some differences in the data used to compute the work participation rates and the publically available TANF National Data Files. See Appendix B for a discussion of these differences. Tribal TANF Programs Individuals participating in a tribal TANF program can be excluded from the calculation of a state’s work participation rate. Though CRS is not examining tribal TANF data in this report, a short discussion of tribal TANF as it pertains to work requirements may be informative. Tribes, tribal organizations, and tribal consortia are authorized to receive and administer their own Tribal Family Assistance Grant for the support of activities that meet the same purposes as state TANF programs. However, tribes are not subject to all of the same work requirements that states are. Though there are hourly minimums and annual targeted participation rates that they must meet, each of these requirements is set by the tribe, in cooperation with the Department of Health and Human Services. At the recipient level, tribal TANF work activities are not subject to the same restrictions on vocational training as are placed on state TANF programs. Further, tribes may define their own individual work activities that count for the purposes of calculating their work participation rate, so recipients may have a different range of activities that may count towards their own hourly requirements. Certain work requirements that tribes must meet are similar to the state requirements in some ways. For example, all work-eligible recipients are included in the calculation of the tribe’s work participation rate, with a few exceptions. Parents with a child under one and parents subject to a sanction for less than three months in the last 12 months may be excluded from the tribe’s work participation rate calculation. Further, like states, tribes may be subject to a sanction if they do not meet their work participation rate. As discussed above, states determine what requirements apply to individual recipients. Thus, they have the option to exempt additional individuals and families from work requirements, which means that the family will not be sanctioned for failure to engage in work. However, such families will still be included in the calculation of the work participation rate. Congressional Research Service 31 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited Engaged in Work: Countable Activities Work-eligible individuals must participate in specific activities during a month to be considered “engaged in work” and count toward the work participation standard. Work-eligible individuals must also participate in activities for a minimum number of hours per week in a month to be considered “engaged in work.” Federal law lists 12 categories of activities creditable toward meeting TANF work participation standards. HHS regulations define what specific types of activities count under each of the 12 categories. Table 6 lists the 12 creditable categories of activities and the HHS regulatory definition for each. As shown in the table, the specific activities included in the 12 categories are fairly comprehensive in terms of welfare-to-work activities, and include education (including attendance at four-year colleges) as well as rehabilitative activities. However, as will be discussed below, the “pre-employment” activities of job search, rehabilitation, and education are limited in terms of how long or under what circumstances they can be counted toward the official participation standard. Table 6. Countable TANF Work Activities and Their Definitions Activity Definition Unsubsidized employment Full- or part-time employment in the public or private sector that is not subsidized by TANF or any other public program. Subsidized private sector employment Employment in the private sector for which the employer receives a subsidy from TANF or other public funds to offset some or all of the wages and costs of employing an individual. Subsidized public sector employment Employment in the public sector for which the employer receives a subsidy from TANF or other public funds to offset some or all of the wages and costs of employing an individual. Job search and readiness The act of seeking or obtaining employment, or preparation to seek or obtain employment, including life-skills training and substance abuse treatment, mental health treatment, or rehabilitation activities. Such treatment or therapy must be determined to be necessary and documented by a qualified medical, substance abuse, or mental health professional. Participation in this activity may be counted for six weeks (12 weeks in certain circumstances) in a fiscal year. Community service Structured programs and embedded activities in which TANF recipients perform work for the direct benefit of the community under the auspices of public or nonprofit organizations. Community service programs must be limited to projects that serve a useful community purpose in fields such as health, social service, environmental protection, education, urban and rural redevelopment, welfare, recreation, public facilities, public safety, and child care. A state agency shall take into account, to the extent possible, the prior training, experience, and skills of an individual in making appropriate community service assignments. Work experience A work activity, performed in return for welfare, that provides an individual with an opportunity to acquire the general skills, knowledge, and work habits necessary to obtain employment. The purpose of work experience is to improve the employability of an individual who cannot find unsubsidized full-time employment. On-the-job training Training in the public or private sector that is given to a paid employee while he or she is engaged in productive work and that provides knowledge and skills essential to the full and adequate performance of the job. Vocational educational training Organized educational programs that are directly related to the preparation of individuals for employment in current or emerging occupations. Congressional Research Service 32 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited Activity Definition Participation in this activity is limited to 12 months in a lifetime. Caring for a child of a recipient in community service Providing child care to enable another cash welfare recipient to participate in a community services program. This is an unpaid activity and must be a structured program to improve the employability of participating individuals. Job skills training directly related to employment Training or education for job skills required by an employer to provide an individual with the ability to obtain employment or to advance or adapt to the changing demands of the workplace. Education directly related to employment (for those without a high school or equivalent degree) Education related to a specific occupation, job, or job offer. Completion of a secondary school program (for those without a high school or equivalent degree) In the case of a recipient who has not completed secondary school or received such a certificate, this means regular attendance, in accordance with the requirements of a secondary school or course of study, at a secondary school or in a course of study leading to a certificate of general equivalence. Source: Table prepared by CRS based on HHS regulations. See Federal Register, vol. 73, no. 24, February 5, 2008, pp. 6772-6828. Figure 5 shows the percentage of work-eligible individuals in families included in the participation rate by their activity. The percentage of such individuals participating at least one hour in a month in each of the 12 countable activities is presented. As evidenced in the figure, unsubsidized employment—work in a regular job while receiving cash assistance—was by far the most common work activity in FY2011 with 22.8% of work-eligible individuals included in the participation rate in that activity. The time-limited pre-employment activities of job search and readiness (10.7% of all individuals in families included in the participation rate) and vocational educational training (5.9% of such individuals) were the next most common activities. Congressional Research Service 33 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited Figure 5. Percentage of TANF Work-Eligible Individuals Included in the Participation Rate in TANF Work Activities: FY2011 (Excludes Work-Eligible Individuals Disregarded from the TANF Work Participation Rate Calculation) Unsubsidized Employment 22.8% Job Search and Readiness 10.7% Vocational Educational Training 5.9% Work Experience 4.3% Community Service 3.5% Job skills Training 2.6% Secondary School Completion 1.1% Education Directly Related to Employment 1.0% Public Sector Subsidized Employment 0.8% Private Sector Subsidized Employment 0.5% On-the-Job Training 0.1% Child Care for Community Service Participant * 0% 5% 10% 15% 20% 25% Source: Congressional Research Service tabulations of the FY2011 TANF National Data Files. Notes: * Indicates less than 0.05%. Information in this analysis differs slightly from the information HHS publishes with the official TANF work participation rates because of some differences in the data used to compute the work participation rates and the publically available TANF National Data Files. See Appendix B for a discussion of these differences. Unsubsidized Employment As discussed earlier, the most common activity of TANF work-eligible individuals in families included in the participation rate was unsubsidized employment: working in a regular job while on the rolls during a month. States get credit toward their work participation standard for working families on assistance. This encourages them to disregard earnings, providing an earnings supplement for at least a limited period of time. As discussed in the section on welfare-to-work research, evaluated programs with earnings supplements tended to increase work and also raised the incomes of families in those programs. Though a higher proportion of TANF families have earnings than families who received benefits in the pre-1996 program, the smaller caseload means that TANF earnings supplements reach fewer families than occurred before welfare reform. However, the more widely received Earned Income Tax Credit (EITC); Additional Child Tax Credit (ACTC); and other need-tested programs, such as the Supplemental Nutrition Assistance Program (SNAP), also aid low-income working families with children and thus supplement their earnings. Congressional Research Service 34 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited Subsidized Employment In FY2011, the rate at which TANF work-eligible individuals included in the participation rate were engaged in subsidized employment was low: 0.5% reported engagement during a month in subsidized private sector employment and 0.8% reported engagement during a month in subsidized public sector employment. Subsidized employment has historically been relatively rare in TANF welfare-to-work programs. However, the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5) established a two-year Emergency Contingency Fund that provided states with extra federal dollars that could help finance increased expenditures on subsidized employment in FY2009 and FY2010. The ARRA fund did help finance subsidized employment, but most of this activity occurred in FY2010. It is unknown the degree to which the ARRA funds were used to finance subsidized employment for those on the assistance rolls versus those who were not receiving TANF assistance. Only in the former case (for those on the assistance rolls) would subsidized employment be present in the work participation data. States receive no credit toward their TANF work standards for subsidized employment for those who are not on the benefit rolls. Time-Limited Job Search and Readiness and Vocational Educational Training The two most common activities that TANF work-eligible individuals engage in other than unsubsidized employment are job search and readiness and vocational educational training. In FY2011, 10.7% of TANF work-eligible individuals included in the participation rate calculation were in job search and readiness. That year, 5.9% of such persons were engaged in vocational educational training. These two activities are countable only for a specified period of time. The combination of job search and job readiness activities counts for only a maximum of 12 weeks in a fiscal year. HHS regulations afford states some flexibility by setting the weekly limit in hourly equivalents, allowing job search and readiness to be counted in more than 12 calendar weeks in a year. Vocational educational training can only be counted for 12 months in a recipient’s lifetime. Additionally, the combination of vocational educational training and teen parents determined engaged in work by virtue of education cannot exceed 30% of all families determined engaged in work. Participation in such activities over that limit does not count toward the TANF work participation rate. “Workfare” Work experience is the fourth most common activity of TANF work-eligible individuals included in the participation rate, with 4.3% of such individuals engaged in that activity in FY2011. An additional 3.5% of TANF work-eligible individuals included in the participation rate were engaged in community service in that year. Work experience and community service are two activities typically thought of as “workfare”: performing a form of work in return for their cash assistance benefits. Such activities could also be viewed as helping individuals obtain certain skills, such as developing work habits and other job skills. Most states have not adopted large-scale workfare programs under TANF, but these two activities are relatively prevalent in some states. Congressional Research Service 35 Temporary Assistance for Needy Families (TANF): Welfare-to-Work Revisited On-the-Job Training States may count most education and training activities in only a limited way toward the TANF work participation standards. The exception is on-the-job training: training provided to a participant in a paid job. States can count hours spent in this activity under any circumstance. However, engagement in on-the-job training is relatively rare. In FY2011, 0.1% of all TANF work-eligible adults included in the participation rate were participating in on-the-job training. Education For adult recipients (defined in TANF as age 20 and older), engagement in educational activities such as secondary school completion, education directly related to employment, and job skill training count only under limited circumstances or in combination with other activities. Combining work and education will be discussed in a separate section of this report, below. Engaged in Work: Hours of Participation To be considered a “participant” and counted by a state toward meeting its standard, a family member or members must also be engaged in these activities for a minimum number of hours per week in a month. The required minimum hours per week in a month vary by the family’s composition. Table 7 outlines the TANF work participation hours standards. For meeting the “all family” standard, the hours requirement varies depending on family type and the age of the youngest child. The general hours requirement is an average of at least 30 hours per week during the month. However, for single parents caring for a child under the age of six, an average of 20 hours per week during the month is needed in work activities for a state to deem them participants. More hours are required for two-parent families to meet the standard. In two-parent families, the combined hours of both parents are considered in determining whether a family can be considered a participant family. Table 7 shows that certain hours of participation must be in “core” activities, while remaining hours may be in “supplemental” activities. The concepts of core and supplemental activities ar [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/crs%3AR42767. Public record. Not legal advice.