Aid to Families With Dependent Children Program: Demonstration Projects Under Section 1115(a) of the Social Security Act

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

Aid to Families With Dependent Children Program: Demonstration

Projects Under Section 1115(a) of the Social Security Act

AGENCIES: Office of the Secretary; Administration for Children and

Families (ACF), HHS.

ACTION: Public Notice.

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SUMMARY: This public notice invites States to submit demonstration

project applications under section 1115(a) of the Social Security Act

to test welfare reform strategies in various areas. It further advises

that the Department would commit to approving applications that comply

with the demonstration components within 30 days of receipt.

FOR FURTHER INFORMATION CONTACT: Howard Rolston, Administration for

Children and Families, Department of Health and Human Services, 370

L'Enfant Promenade, 7th Floor, West Wing, Washington, DC 20447, (202)

401-9220.

SUPPLEMENTARY INFORMATION:

I. General

Under Section 1115, the Department of Health and Human Services

(HHS) is given latitude, subject to the requirements of the Social

Security Act, to consider and approve demonstration proposals that are

likely to assist in promoting the objectives of titles IV-A and B and

XIX of the Act. The Department believes that State experimentation

provides valuable knowledge that will help lead to improvements in

achieving the purposes of the Act. Since January 1993, HHS has approved

33 welfare reform demonstration projects testing a broad range of

strategies designed to promote the objectives of title IV.

The Department has reviewed the provisions of these projects, as

well as those of prior projects, data from completed and continuing

projects, other literature evaluating the welfare system, and the

welfare reform proposals being considered by Congress. Based on this

review, and our commitment to transform the Aid to Families With

Dependent Children system into one that provides maximum opportunities

and incentives for families to achieve financial independence, we have

identified five strategies for improving the efficacy of the welfare

system in helping recipients become self-sufficient for which we

believe additional experimentation would be especially useful. We have

concluded that demonstrations testing these strategies are likely to

provide important new information on ways to accomplish the objectives

of the Social Security Act more effectively and efficiently. This

information can guide the development of both national and state

policy.

These strategies are: (1) Work requirements, including limited

exemptions from such requirements; (2) time-limited assistance for

those who can work; (3) improving payment of child support by requiring

work for those owing support; (4) requirements for minor mothers to

live at home and stay in school; and (5) public-private partnerships

under which AFDC grants are diverted to private employers to develop

jobs and training programs. These areas, and approvable demonstration

project provisions, are discussed in detail in section II below.

To date, the Department has approved a number of demonstration

projects including components using one or more of these strategies. We

have reviewed comments submitted regarding each of these strategies.

Our overall judgment is that testing additional demonstrations in each

of these areas would likely promote financial security for dependent

children within a stable family and, thus, further the objectives of

the Social Security Act. (Specific rationales justifying demonstrations

in each policy area are set out in section II.) Moreover, in view of

every state's unique circumstances, the Department believes that it is

critically important that each state be given the opportunity to test

combination(s) of these strategies that are designed to address the

needs of the recipients in that state.

Accordingly, we plan to approve within 30 days of receipt

demonstration project applications that States submit which would

implement, on a statewide or substate basis, any (or any combination)

of the provisions discussed in section II. Further, because such

projects may incorporate only the provisions already announced in this

notice, which have been found by the Secretary to further the

objectives of the Social Security Act, the Department will not apply

its ``Federal Notice'' procedures generally applicable to demonstration

projects. 59 Fed. Reg. 49250 (1994). Other policies and procedures

stated in that notice remain applicable, including state public notice

requirements, rigorous evaluation, and cost neutrality, except that the

application and review process with

[[Page 42575]]

respect to the latter two requirements will be modified to facilitate

the faster process.

II. Demonstration Project Areas and Techniques

A. Requiring People on Welfare to Work and Providing Adequate Child

Care to Permit Them To Do It

Since Congress enacted the JOBS program in 1988, a central goal of

the AFDC program has been to move recipients into the labor force,

while ensuring that their children receive necessary child care while

their parents are in activities that promote self-sufficiency. There is

a mounting body of evidence that mandatory activities involving a

connection with the work force can lead to substantial increases in

employment and earnings among welfare recipients. Studies of various

welfare-to-work approaches, conducted over the past decade in different

parts of the country subject to different labor market conditions, have

consistently shown significant gains in earnings. In the most recent

results, from three sites in the Department's JOBS Evaluation, an

approach emphasizing job search, work activity, and short-term

employment-focused training yielded a 23-percent increase in overall

employment and a 22-percent reduction in AFDC expenditures at the two-

year point, and a 39-percent increase in employment with earnings

equivalent to at least $10,000 per year.

Although much is known in general about the effectiveness of such

programs, more study is needed concerning what works and which

approaches are most effective for which individuals. Therefore, we are

inviting demonstrations that test the effects of requiring recipients

to work in subsidized or unsubsidized jobs, to perform community

service, or to engage in rigorous job search and job preparation.

States can narrow the categories of recipients that are exempt from

work requirements. They also can test the effects of progressively

increasing the sanctions for non-compliance, so that work requirements

have more teeth. To protect children, states must ensure that child

care is available for those who are being required to work.

B. Setting Time Limits for Welfare Receipt, to be Followed by Work

Most of the people who enter the welfare system do not stay on AFDC

for many consecutive years. Two out of three persons who enter the

welfare system leave within two years and fewer than one in ten spends

five consecutive years on AFDC. Most recipients use the AFDC program

not as a permanent alternative to work, but as temporary assistance

during times of economic difficulty.

While persons who remain on AFDC for long periods represent only a

modest percentage of all people who ever enter the system, they do

represent a high proportion of those on welfare at any given time.

Finding ways of helping these persons become self-sufficient is

extremely important in promoting their well-being and that of their

children. Although many face serious barriers to employment, others are

able to work but are not moving in the direction of self-sufficiency.

Many analysts believe that time-limited benefits would help to move

employable welfare recipients toward work and away from reliance on

welfare. There is not a large body of research in this area. Several

states have begun demonstrations of various forms of time limits. More

study is needed in order to know the effects of time limits.

For this reason, we are inviting demonstrations that test the

effects of systems of individualized time limits, systems of time

limits followed by work, preferably in the private sector, in

subsidized work or community service if necessary, and systems of

straight time limits, with exemptions from the time limit for those

who, despite good faith efforts, are unable to work or find a job.

Consistent with the objectives of the Act, demonstrations must protect

families where the adult, through no fault of her or his own, is unable

to find employment.

C. Requiring Fathers to Pay Child Support or go to Work to Pay Off What

They Owe

There is substantial evidence that many custodial parents now

receiving AFDC would not need this support if they received child

support from the non-custodial parent. One of the primary reasons for

non-support by some non-custodial parents, especially never-married

fathers, is unemployment and underemployment. Many of these fathers

need both assistance and incentives to obtain employment and pay

support. Without work requirements, job readiness assistance, job

training, and community service, it will be difficult for many of these

fathers to contribute very much to the financial support of their

children.

The available program evaluation research focusing on non-custodial

parents indicates that a number of programs show promise in assisting

these fathers to support their children. The Parents' Fair Share (PFS)

demonstration programs have developed effective procedures to identify

eligible non-custodial parents and have established court-based

processes to require fathers to participate in work-based program

activities and to enforce regular participation. Preliminary data from

PFS shows that the work and training requirements provide states a

promising mechanism to discover previously unreported income of non-

paying, non-custodial parents. Also, in the PFS sites, as well as in

other non-custodial parent demonstration programs, title IV-D agencies

have developed flexible and responsive child support enforcement

systems to complement non-custodial parent work and training

requirements.

Further testing of these requirements will assist us in determining

whether this approach will result in increased child support payments

and will enhance non-custodial parents' overall support of their

children. To build on the knowledge base being developed through PFS

and similar demonstrations, we are inviting demonstrations that require

unemployed or underemployed non-custodial parents who owe child support

to work or participate in work experience, community service, or job

preparation activities.

D. Requiring Minor Mothers to Live at Home and Stay in School

It has become increasingly important to obtain at least a high

school diploma in order to obtain employment and become self-

sufficient. Moreover, a high school diploma may be essential to achieve

a decent standard of living.

A study of teenage childbearing in the 1980's found that in 1986

only 56 percent of women in their twenties who had given birth at age

17 or younger had completed high school, compared with over 90 percent

of those who delayed childbearing until after their teenage years.

Little has changed since then. While we are beginning to obtain more

knowledge of the types of programs that are successful in encouraging

and helping minor mothers finish high school, we need to know

considerably more about what works. Therefore, demonstrations testing

ways of helping minor parents complete schooling are extremely

important.

Congress already has recognized that one means of helping minor

parents complete school and meet the needs of their children is to have

these young parents live with their own families. States now have the

option of requiring minor parents to live at home, provided that this

is a safe environment for them. To facilitate these arrangements, and

to

[[Page 42576]]

ensure that AFDC benefits are spent in a manner that achieves the goals

of the Social Security Act, a number of states are experimenting with

programs that direct the AFDC payment to the responsible adult, rather

than to the minor mother. This strategy recognizes the importance of

promoting general family responsibility.

Another strategy that has had success in Ohio and several other

demonstration sites is setting up incentives and penalties for teen

parents designed to have them stay in school. The recently completed

study of Ohio LEAP found the program to be successful in increasing the

rate at which teens who were already enrolled in school remained

enrolled and in increasing the rate at which those who had already

dropped out of school returned to high school or an equivalent program.

Further testing of this type of strategy should enable us to determine

whether these results can be replicated, and improved upon, in other

settings and through variations in program design.

For these reasons, we are inviting demonstrations that require

minor mothers to live with parents or relatives or in a supervised

living situation, as long as the home is not dangerous to the physical

or emotional health or safety of the minor; that direct the AFDC

payment to the responsible adult, rather than to the minor mother; and

that require minor mothers to stay in school and utilize reasonable

sanctions and incentives tied to school attendance.

E. Paying the Cash Value of Welfare and Food Stamps to Private

Employers as Wage Subsidies When They Hire People Who Leave Welfare and

Go To Work

The effectiveness of subsidized employment in increasing

employment, earnings, and self-sufficiency has been studied over the

last 20 years. A number of rigorously evaluated programs have shown

positive effects on increasing the earnings of welfare recipients who

participated in them. This was also found to be true in the more recent

national evaluation of the Job Training Partnership Act program.

By combining AFDC and Food Stamp benefits, a state could create a

very substantial subsidy that encourages employers to hire AFDC

recipients. This form of wage subsidy has the potential of increasing

the number of recipients who are able to obtain unsubsidized

employment.

Subsidized employment has generally been a very small scale

activity within the JOBS program. Demonstrations using AFDC and Food

Stamp benefits would provide important information on the ability of

this approach, when applied on a larger scale, to increase the

employment, earnings, and self-sufficiency of AFDC recipients. They

also will provide important information regarding the degree to which

employers respond to wage subsidies.

Therefore, we are inviting demonstrations of systems where AFDC and

Food Stamps benefits become wages, paid by employers when recipients

work, as long as the jobs meet minimum standards, and families receive

at least as much total income as they would have from AFDC and Food

Stamps. States can choose to ask employers to pay into an account to

help the recipient make the transition into unsubsidized employment.

Information on Application

The Administration for Children and Families, will be mailing state

welfare departments a ``Welfare Reform Demonstration: Special

Application Form''. This form should facilitate requests for waivers in

the five specified areas. Requests for further information and/or forms

should be addressed to Howard Rolston at the address listed above.

Additionally, by August 21, 1995, states can obtain information on the

waiver process and on electronic filing of waiver applications on the

internet. On the world wide web, the URL (universal resource locator)

is http://www.acf.dhhs.gov. Gopher users can use gopher.acf.dhhs.gov.

(Catalog of Federal Domestic Assistance Program, No. 93562;

Assistance Payments--Research)

Dated: August 11, 1995.

Mary Jo Bane,

Assistant Secretary for Children and Families.

[FR Doc. 95-20294 Filed 8-15-95; 8:45 am]

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