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TANF at 20: The 1996 “Welfare Reform” and its Impact, Part 2

Issue Area: Public Benefits

Since 1973, some incarnation of Empire Justice Center has been fighting for low income and disenfranchised New Yorkers' rights.  We've seen many changes and weathered many storms, including the so-called "welfare reform" of 1996.  The advent of the federal Personal Responsibility and Work Opportunity Act of 1996 brought us the Temporary Assistance for Needy Families block grant, for better or for worse.  Twenty years later, New York families are still living in poverty.  We present to you our perspectives on TANF at 20.


Don Friedman, Senior Attorney in our Public Benefits Practice Group, continues his thoughts in this second installment.


My previous article in this series on TANF at 20 offered an overview of the main components of – and problems created by – the Personal Responsibility and Work Opportunity Act of 1996 (PRWORA), or what most of us call “welfare reform.”  I had intended to follow up with an assessment of the impact of welfare reform in the U.S., and in New York State, but it occurred to me that over these 20 years the law itself has been changed, significant new regulations have been adopted, there have been two presidencies, an increasingly deadlocked Congress, some important demographic trends, and a major recession.  In short, 20 years’ worth of change.   So instead, I offer something of a snapshot of the current state of affairs for the poorest Americans and poorest New Yorkers particularly in relation to welfare policy, from an advocate’s point of view.  In my third and final installment, we’ll explore how things might be improved by changing federal policy, and what New York State can do in the all-too-likely absence of federal change.


Three Observations


First, the more I researched welfare policies and benefits in the U.S. and in New York State, the more evident it became that New Yorkers in need of public assistance struggle with programs and practices that are flawed, punitive and inadequate, but welfare policies in most other states leave low income individuals and families in substantially worse shape.  On the other hand, we must remember that the exorbitantly high cost of living in many parts of the Empire State diminishes the value of New York State’s generosity relative to other states.


Second, we must acknowledge, in the context of our observance of TANF at 20, that New York is one of very few states that have a secondary, state-funded public assistance program that mitigates some of the harshest consequences of PRWORA: Safety Net Assistance.  Not only does SNA provide benefits to residents who are not eligible for TANF due to time limits or their immigration status, but also to needy single adults.  As with TANF, the program falls far short of meeting even the most basic of needs, but nevertheless provides some support for New Yorkers that is available in few other states.  We in New York should appreciate our standing relative to other states, but our advocacy for a true safety net that provides a decent, if modest, standard of living for those in need and a path out of poverty cannot be paused in the least.


Third, I will discuss further in my final installment the fact that a new administration in New York City has resulted in dramatic changes in welfare policy there, unlike anywhere else in the state.


TANF’s Role in Addressing Poverty


The block grant.  As I mentioned in my previous article, one of the most significant changes that PRWORA brought was the change from a matching grant to a block grant, so that the TANF block grant isn’t able to respond to increases in need, no longer serving as a buffer against economic fluctuations.  The block grant was a total of $16.57 billion in 1996.  It’s the same today, meaning that its real value has diminished by 33%.  71% of the TANF budget was used for basic monthly cash assistance in 1997; it was 27% in Fiscal Year 2014.  This is primarily attributable to a decline in caseloads during that period, the result of a booming economy, welfare reform and other factors.


Benefit levels.  In 2014, there was no state whose TANF benefits reached even 50% of the federal poverty level (FPL), [1] and in 34 states, they didn’t reach 30% of the FPL.  The most recent data suggests that New York State has the second highest TANF benefit level for a family of three in the country, but in 2014, this benefit brought the typical family to only 47% of the federal poverty level (FPL) - that’s just over $9,300.  Even with SNAP benefits added in, a family today would still not reach 70% of the FPL, or $14,063. [2]  And even these numbers are somewhat misleading because the cost of living in New York State, especially for housing, is among the highest in the nation. [3]


Nationwide, the value of cash assistance has decreased significantly since welfare reform.  In most states, the value of benefits since 1996 has decreased, in real terms, by 20 to more than 30%. [4]  It’s also worth noting, with TANF being a program that purportedly encourages employment, that in 43 states a family will typically lose all TANF eligibility when someone in the household has earnings equivalent to 75% of the FPL.  New York is one of the seven states that allows for higher earnings, but only up to the federal poverty level.


Response in times of economic distress.  Since the 1996 reforms, TANF has essentially abandoned its critical role as a cushion against complete destitution, a role it’s played since the Great Depression.  The TANF caseload has declined by 60% since its inception in 1996.  This includes a 30% decrease since 2000, a period during which the percentage of Americans living in poverty has increased by nearly a third.


In 2010, with the country still deep in recession, TANF lifted 600,000 children from deep poverty; [5] in contrast, the SNAP program brought 2.7 million children out of deep poverty.  SNAP, by definition a benefit designed to supplement other income for food purchases, is not intended or equipped to serve as a primary income source.


Similarly, in New York, from 2006 to 2014 unemployment increased by 37%.  During that same period, the number of SNAP recipients increased by 78%, but receipt of TANF actually decreased by 4%.  No plausible claim could be made that the level of need had diminished during that period.


One more crucial statistic highlights the extent to which TANF increasingly fails to protect low income families with a modicum of financial support.  In 1995, 68% of those in poverty received AFDC, TANF’s predecessor.  By 2013, TANF served only 23% of those in need.  Once again, New York State is better than most, though still not good enough:  The percentage of New Yorkers in poverty who received AFDC/TANF in 1995 was 79%; by 2013 it was 40%. 


Not everyone whose income is less than the FPL is necessarily eligible for welfare.  It’s therefore perhaps more telling and, frankly, sadder to note that across the nation in 1992, roughly 86% of those likely eligible for TANF received it, and by 2012, 32% of eligible Americans received TANF benefits. 


TANF and Work


The framers of welfare reform in 1996 were determined that TANF policy must adhere to a “work first” philosophy.  Two key features of the work rules were

  1. that the mandate to engage in work was strongly biased in favor of job-like activities and against participation in education, training or services, without regard to the individual’s needs, and
  2. that any failure to comply with the rules would result in onerous sanctions involving a reduction or termination of benefits for a designated period.

Work activities.  It has often been observed that the TANF work rules are much more about process than about outcomes.  The driving force behind the work rules isn’t a mission to enhance recipients’ employability or to ensure that they can secure decent-paying employment.  Rather, states are motivated by an obligation – on pain of substantial financial penalties – to have the required number of recipients engaged in a limited number of countable activities for at least the minimum number of hours.  Indeed, a study in one state revealed that state workers spend 53% of their “TANF time” on documenting, verifying, collecting and reporting data to demonstrate that the state is meeting its participation rate obligations.  Furthermore, there can be little doubt that workers have felt subtle if not explicit pressure to move recipients – particularly those with barriers to employment – off of the welfare rolls and out of the participation rate calculation.


Many of those who were able to obtain even the lowest paying employment left welfare in the years immediately after welfare reform.  One result is that the remaining TANF population includes disproportionate numbers of people facing serious obstacles in their path to employment, including mental and physical disabilities, domestic violence, limited skills and job experience, and significant education deficits.  It’s this population that must comply with welfare rules skewed heavily against training, skills enhancement, education and services.


In 2012, nationwide, less than 7% of individuals who were part of the participation rate count were engaged in education and training activities.  In New York, in June 2016, 134,025 public assistance recipients were subject to the work requirements; 3,249, or 2.4%, participated in some form of education or training.  This despite the fact that research consistently demonstrates that virtually every increment of additional education improves employability, job retention and compensation.


College:  There are many public assistance recipients who may not be ready for college, or don’t want to pursue higher education.  But, like the rest of America, many do dream of attending a two- or four-year college and would benefit immensely from the experience and the degree.  As is too often the case, research findings on a subject appear to have a limited impact on policy.  It has been persuasively found that “…a postsecondary education, particularly a degree or industry-recognized credential related to jobs in demand, is the most important determinant of differences in workers’ lifetime earnings and incomes.” [6]


Notwithstanding that research, securing a “college option” for TANF participants has been a long and torturous slog.  In the waning days of the Bush II administration, surprisingly enough, the federal Department of Health and Human Services issued regulations that would make college attendance feasible, at state discretion.  It took New York State on the order of ten years to adopt that rule, and when the state did act, it passed the discretion to the county level; it’s not clear how many counties are approving college participation. 


TANF, employment and income.  In the early years after welfare reform, there were significant increases in employment by current and former TANF recipients, particularly single mothers.  This was hailed as one of the chief successes of the new welfare regime.  It is true that between 1993 and 2000 – beginning well before PRWORA was enacted – the national employment rate for single mothers increased from 57.3% to 72.8%.  But the fact is that this occurred during one of the most robust and sustained periods of economic growth in recent American history, a period which also saw expanded work supports such as the Earned Income Tax Credit and child care subsidies.  How much of the change was attributable to welfare reform is very difficult to determine, but was clearly limited.


The trend in employment for single moms stalled after 2000, falling to 67.5% in 2014.  Furthermore, many of the single parents who took jobs after welfare reform tended to have limited skills and education, and often took jobs with low pay, no benefits and little job security.  In many cases, they were employed, but still living in poverty.  Furthermore, the Government Accountability Office has estimated that 83% of the TANF caseload decline from 1995 to 2005 was due to non-participation by families who were still eligible for benefits, not families whose earnings had made them ineligible.  Some might see this as a positive development, people choosing not to resort to a program so stigmatized and reviled.  But many of those in this category have disabilities that make employment difficult and put the daunting process of applying for public assistance out of reach.   


Deep poverty.  One critical piece of information, sometimes overlooked, is the increasing number of Americans living in “deep poverty,” defined as having an income below one half of the federal poverty level.  In 2014, nearly 21 million people, or 6% of the population, were living in deep poverty, including more than 9% of children in this country.  Even more disturbing is a study that used the World Bank’s dramatically lower definition of deep poverty, families living on $2 a day per person or less.  Without necessarily suggesting that PRWORA was the sole cause, the study found, using the $2 a day standard, that deep poverty more than doubled to 1.46 million people in the years from 1996 to 2011. [7]  This data does not often make its way into the glowing reports of welfare reform’s success.


TANF and the Culture of the Welfare Bureaucracy


I’ll close this second article where I began the first, with the belief that an essential component of post-welfare reform can be characterized by the administration of welfare programs at the front lines.  That is, we know that PRWORA imposed mandatory time limits, more rigid funding, more restrictive and punitive work programs, and more.  But it also ushered in an era in which TANF program administration tended to divert and often intimidate applicants and to overwhelm them with inflexible bureaucratic demands. 


Single mothers and TANF.  This administrative tendency is revealed by the fact that there’s been a significant increase, to an estimated 20%, of single mothers who aren’t employed and aren’t receiving TANF or disability benefits.  There’s been a fair amount of research on why there are so many families in this situation, described strikingly in the recent book, $2 a Day:  Living on Almost Nothing in America, by Luke Shaefer and Kathryn Edin.  Principle among the reasons they found for non-receipt of welfare by needy moms were a lack of information or false information, difficulties in accessing or maintaining benefits, long wait times, multiple visits, lots of paperwork and intrusive questions.  Others reached the time limits, and simply couldn’t find work.


This administrative nightmare is also described in my first article, in the discussion of practices by the Human Resources Administration in New York City during the reign of Mayor Giuliani and HRA Commissioner Turner.  Until ordered to cease by a federal judge, they employed a tactic they called “diversion,” making it virtually impossible to receive benefits without repeated visits to the welfare center and multiple layers of documentation and verification.


Finally I close with some data from New York State that amply supports the notion that bureaucratic entanglements and processes result in barriers to benefits to many needy and eligible individuals and families.  During the period July 2014 through June 2015, there were 573,775 public assistance recipients (TANF and Safety Net).  During that same period, 31,298 cases were closed for alleged noncompliance with work requirements and 134,747 cases were closed for “other” compliance-related reasons.  This somewhat oversimplifies things, but it suggests that there was nearly one closing for every three cases.  Assuming many cases were eventually reopened because the households were still in need and eligible, this is a classic case of what we call “churning.”


Similarly, during that time frame, there were 633,237 applications for public assistance, 64,160 denials for failure to comply with employment rules, [8] and 132,370 denials for “other” compliance issues.   That means 44.6% of all applications were denied, with more than two-thirds of them because applicants failed to comply with one of the myriad rigid prerequisites of the application process, not because they weren't eligible.

 

This is an inordinate number of case closings and application denials, and is the result of a mix of factors:  the fact that many of those in need are people with mental and/or physical disabilities, victims of domestic violence, people with substance abuse issues, and people living under the tremendously debilitating effects of dire poverty, all navigating a system shaped by welfare policy in general, welfare law as modified by welfare reform, and the accompanying culture of obstructive welfare administration.


What to do?  I’ll share some thoughts in the final installment.


Sources:  I relied upon the following sources for most of the statistical data provided.  Feel free to contact me for additional information about sources.




End Notes:
 [1] In 2015, the FPL for a family of three was $19,790.
 [2] In 2016, the FPL for a family of three is $20,090.
 [3] New York State is the 3rd most expensive state to live in out of the 48 contiguous states.
 [4] In New York State, the value of the grant has decreased by 13% since 1997.  That’s shameful, but nationally only two states have experienced a smaller decrease.  It’s another case in which New York is simultaneously one of the better performing states and also seriously inadequate.
 [5] A family is considered to be living in deep poverty when household income is half of the federal poverty level or less.
 [6] What Works in Job Training: A Synthesis of the Evidence, U.S. Departments of Labor, Commerce, Education and HHS, 2014, http://www.dol.gov/asp/evaluation/jdt/jdt.pdf.
 [7] Center for Poverty Research, University of California, Davis, http://poverty.ucdavis.edu/faq/what-deep-poverty
 [8] Certain work assignments can be made even during the application process.






Tags: TANF | welfare | welfare reform | prwora | snap | food stamps | work first | work rules | poverty | #TANFat20




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