Welfare-Reform Legislation Since (1996) - A Time Of Radical Change

The summer of 1996 brought about profound and controversial changes in the way America handles its welfare programs. Much criticism had been directed toward the previous welfare system, based mainly on Aid to Families with Dependent Children (AFDC). This criticism centered on claims that the system produced welfare dependency rather than temporary assistance to help recipients move into a job and off welfare. According to the testimony of LaDonna Pavetti of the Urban Institute before the U.S. House of Representatives Ways and Means Committee in May 1996, about 70 percent of AFDC recipients had received AFDC for more than twenty-four months and 48 percent had received assistance for more than sixty months. In addition to limiting the length of time spent on welfare and requiring participation in work activities, issues addressed under welfare reform included child care, child support, teen pregnancy, assistance to immigrants, and welfare costs.

When earlier welfare-reform efforts stalled in the federal government, many states began to explore ways to modify their welfare programs. In President Bill Clinton's first term, forty-three states were granted federal waivers, allowing them to experiment with different approaches to welfare and work. State plans generally included stiffer work requirements and time limits as well as greater demands of parental responsibility. Many of the programs that developed from those waivers helped to lay the foundation for the new welfare-reform law.

After many proposals, much congressional discussion, and several presidential vetoes, a massive welfare-reform bill, the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA; PL 104-193), was signed into law in August 1996. Replacing AFDC with Temporary Assistance for Needy Families (TANF), the law required that a welfare recipient work in exchange for time-limited assistance. It provided $1 billion over five years for performance bonuses to reward states for moving welfare recipients into jobs. Public Law 104-193 also required state "maintenance of effort," a continuation of welfare spending at a level that is at least 80 percent of 1994 expenditures. The law contained comprehensive child-support enforcement and support for families moving from welfare to work, including increased funding for child care and guaranteed medical coverage.

Overall the welfare caseload fell from a monthly average of 4.5 million families during fiscal year 1996 to an average of 2.1 million families per month during fiscal year 2002, a drop of 53.8 percent. This represents the largest welfare caseload decline in history. (See Table 2.1.) Observers agree that some of the decline was the result of a strong economy in which unemployment was around 4 percent, an unprecedented low, rather than welfare reform. A study conducted by the City University of New York and cited by the U.S. Department of Health and Human Services in its 2001 TANF Annual Report to Congress, attributed 60 percent of the reductions in caseloads to welfare reform and 20 percent to the effects of a robust economy. The Council of Economic Advisers estimated that about one-third of the reduction in case-loads between 1996 and 1998 was due to changes in federal and state policies, approximately 10 percent to the strong economy, 10 percent to the higher minimum wage, and from 1 percent to 5 percent to the lower real value of welfare benefits.

Some wonder whether the new welfare system is recession-proof. Other critics of the new system question whether it is fair to everyone. Some are concerned that the new system causes former welfare recipients—without adequate health care, child care, and affordable housing—to slip through the cracks of the welfare system into destitution and homelessness. Under the reformed system, states that are unable to provide jobs

TABLE 2.1
Change in number of families receiving Aid to Families with Dependent Children (AFDC) or Temporary Assistance for Needy Families (TANF)—fiscal years 1996–2002¹

	FY96	FY97	FY98	FY99	FY00	FY01	FY02	Net change FY1996-FY20021
Average monthly familes	4,543,397	3,936,610	3,199,700	2,673,610	2,264,855	2,115,846	2,097,096	−2,446,301	−53.8%
	Percent change from prior years
	To:	FY97	FY98	FY99	FY00	FY01	FY021
	From: FY96	−13.4	−29.6	−41.2	−50.2	−53.4	−53.8
	FY97		−18.7	−32.1	−42.5	−46.3	−46.7
	FY98			−16.4	−29.2	−33.9	−34.5
	FY99				−15.3	−20.9	−21.6
	FY00					−6.6	−7.4
	FY01						−0.9
Average monthly AFDC/TANF families by state
State	FY96	FY97	FY98	FY99	FY00	FY01	FY021	Net change FY1996-FY20021
Alabama	42,393	34,519	23,309	20,268	19,083	18,367	18,385	−24,008	−56.6%
Alaska	12,253	12,023	10,159	8,461	7,347	5,847	6,042	−6,211	−50.7%
Arizona	63,404	54,744	39,572	34,108	33,723	33,194	38,578	−24,827	−39.2%
Arkansas	22,747	20,896	13,844	11,939	12,354	11,607	12,240	−10,507	−46.2%
California	895,960	815,913	707,023	624,096	498,414	468,747	464,890	−431,070	−48.1%2
Colorado	35,447	29,888	21,154	14,265	11,154	10,639	11,768	−23,679	−66.8%
Connecticut	58,117	55,796	48,089	33,932	28,095	25,943	24,535	−33,583	−57.8%2
Delaware	10,388	9,761	7,199	6,241	6,058	5,421	5,516	−4,873	−46.9%2
Dist. of Col.	25,721	24,119	21,148	19,062	17,439	16,241	16,340	−9,381	−36.5%
Florida	209,718	170,507	107,951	82,000	67,355	58,849	60,471	−149,247	−71.2%2
Georgia	130,387	105,919	74,836	61,813	52,928	50,531	54,617	−75,770	−58.1%2
Guam	2,137	2,309	2,098	2,533	2,743	2,807	3,072	−936	−43.8%
Hawaii	21,960	21,267	16,844	15,990	14,438	12,852	11,667	−10,293	−46.9%2
Idaho	9,008	6,465	1,918	1,380	1,275	1,290	1,358	−7,649	−84.9%
Illinois	224,148	198,923	169,735	122,775	83,917	62,030	51,932	−172,217	−76.8%2
Indiana	52,873	44,688	40,084	36,714	35,872	41,299	47,894	−4,979	−9.4%2
Iowa	32,785	28,843	25,191	21,952	20,025	20,195	20,339	−12,446	−38.0%
Kansas	25,148	20,218	14,136	12,845	12,585	13,035	13,744	−11,404	−45.3%
Kentucky	71,827	65,294	52,882	42,637	38,542	36,127	35,204	−36,623	−51.0%
Louisiana	70,581	56,535	48,228	39,372	27,820	25,176	24,464	−46,117	−65.3%
Maine	20,461	18,470	15,408	13,473	10,864	9,661	9,572	−10,889	−53.2%
Maryland	74,106	59,230	47,388	34,748	29,313	27,915	27,919	−46,187	−62.3%2
Massachusetts	88,365	77,989	66,490	54,463	44,189	42,570	46,991	−41,374	−46.8%
Michigan	178,002	151,620	123,693	95,208	74,231	70,725	76,756	−101,246	−56.9%
Minnesota	58,250	53,340	48,301	42,465	39,040	38,558	35,338	−22,912	−39.3%

with a living wage may merely move the poor population from welfare into low-wage work and deeper into poverty. As a result, modifications to welfare legislation continue to be proposed.

The Balanced Budget Act of 1997 (PL 105-33) made many modifications and additions to the 1996 welfare-reform law, including changes to the TANF block grant and funding for additional grants. An agriculture bill, which passed the U.S. Senate overwhelmingly in May 1998, included a provision to restore food stamps to 250,000 legal immigrants who were cut from the rolls under the 1996 law. Following its passage by the House of Representatives, the bill was signed into law on June 23, 1998, by President Clinton. New work requirements were implemented by the TANF reauthorization of October 1, 2003; the new law demanded increased hours of work participation of TANF recipients. The sharp decline in number of caseloads has been accompanied by a change in the composition of families served by TANF. In 1996 between 62 and 75.4 percent of AFDC recipients were children. In 2001 states found that between 64 and 84.5 percent of TANF recipients were children.