Welfare-Reform Legislation Since (1996) - The Personal Responsibility And Work Opportunity Reconciliation Act Of 1996 (prwora)

Signed into law on August 22, 1996, Public Law 104-193 gives states broad flexibility to design and operate their own welfare programs while at the same time holding them accountable to the proposed regulations. States were required to implement their block grant programs by July 1, 1997. The Congressional Budget Office (CBO) predicted that though welfare spending would continue to grow about 50 percent through 2002, the rate of growth would be reduced. The CBO claimed that this drop in the growth of welfare spending would reduce the federal budget deficit by nearly $55 billion. (See Figure 2.1.)

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

Average monthly AFDC/TANF families by state
State	FY96	FY97	FY98	FY99	FY00	FY01	FY021	Net change FY1996-FY20021
Mississippi	47,954	38,513	23,700	16,644	14,970	15,657	17,373	−30,582	−63.8%
Missouri	82,717	71,752	60,041	50,917	46,776	45,556	46,002	−36,715	−44.4%
Montana	10,836	8,886	6,356	4,828	4,555	4,934	5,728	−5,108	−47.1%
Nebraska	14,569	13,859	12,960	11,336	9,538	9,486	10,172	−4,397	−30.2%2
Nevada	14,827	11,918	10,383	8,034	6,274	7,439	10,174	−4,653	−31.4%
New Hampshire	9,538	8,120	6,857	6,324	5,841	5,659	5,979	−3,560	−37.3%
New Jersey	105,504	95,428	76,850	62,241	51,630	45,325	42,620	−62,883	−59.6%2
New Mexico	33,852	26,954	22,053	25,501	23,655	19,322	17,346	−16,506	−48.8%
New York	431,717	384,377	366,032	325,547	258,702	226,921	185,167	−246,551	−57.1%
North Carolina	113,127	98,904	77,961	59,328	45,725	43,497	44,031	−69,096	−61.1%
North Dakota	4,892	4,195	3,322	3,098	2,901	2,999	3,190	−1,702	−34.8%2
Ohio	206,722	186,206	140,286	108,635	97,969	85,005	84,790	−121,932	−59.0%
Oklahoma	38,809	30,336	24,462	19,990	14,364	14,051	14,570	−24,239	−62.5%
Oregon	33,444	24,076	18,242	16,870	17,058	16,270	17,884	−15,560	−46.5%
Pennsylvania	190,329	163,563	134,975	105,657	89,899	82,644	81,991	−108,338	−56.9%
Puerto Rico	50,888	47,726	41,933	36,155	31,812	26,212	24,941	−25,947	−51.0%2
Rhode Island	21,226	19,811	19,308	17,987	16,324	15,228	14,739	−6,488	−30.6%
South Carolina	45,770	34,214	25,291	18,366	17,502	16,938	19,831	−25,938	−56.7%
South Dakota	5,995	5,105	3,837	3,225	2,802	2,713	2,873	−3,122	−52.1%2
Tennessee	99,096	70,419	57,372	57,630	56,148	59,369	62,441	−36,655	−37.0%2
Texas	254,953	208,974	145,253	114,112	127,880	130,893	131,061	−123,892	−48.6%
Utah	14,767	12,250	10,712	9,801	8,410	7,487	7,787	−6,981	−47.3%2
Vermont	9,057	8,263	7,371	6,611	6,043	5,524	5,179	−3,878	−42.8%
Virgin Islands	1,399	1,278	1,106	970	936	724	660	−738	−52.8%2
Virginia	64,937	53,856	43,269	37,022	31,864	29,271	30,026	−34,911	−53.8%2
Washington	98,933	93,043	79,392	62,640	57,008	54,160	55,541	−43,392	−43.9%
West Virginia	36,562	33,639	19,674	11,447	12,146	14,732	16,221	−20,341	−55.6%
Wisconsin	60,058	38,874	12,777	19,140	16,719	17,680	18,669	−41,389	−68.9%
Wyoming	4,732	2,798	1,249	811	604	524	482	−4,251	−89.8%
U.S. totals	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%
1October 2001–March 2002
2Some portion of the decrease must be attributed to removal of two-parent families from the TANF program.
SOURCE: "Table 2.3. Change in Number of AFDC/TANF Families—Fiscal Years 1996–2002," in Temporary Assistance for Needy Families Program (TANF) Fifth Annual Report to Congress, U.S. Department of Health and Human Services, Administration for Children and Families, Office of Family Assistance, February 2003 [Online] http://www.acf.dhhs.gov/programs/ofa/annualreport5/ [accessed January 11, 2004]

A brief summary of the welfare-reform law, based primarily on information prepared by the U.S. Department of Health and Human Services, follows.

Title I: Block Grants

The law combines AFDC, Emergency Assistance, and the Job Opportunities and Basic Skills Training (JOBS) program into a single block grant (a lump sum of money) for each state. Federal funding for this TANF block grant is capped at an estimated $16.4 billion per fiscal year 1996 through June 30, 2004. Each state's allotment is based on previous years' federal funding for AFDC benefits and administration, Emergency Assistance, and JOBS.

States have considerable control over how they will implement the programs covered by the block grant, but the act requires that:

• Families on welfare for five cumulative years no longer receive further cash assistance. States can set shorter time limits and can exempt up to 20 percent of their caseload from the time limits.
• To count toward meeting the work requirement, a state must require individuals to participate in employment (public or private), on-the-job training, community service, work experience, vocational training (up to twelve months), or child care for other workers for at least twenty hours per week. State and local communities are responsible for the development of work, whether by creating community service jobs or by providing income subsidies or hiring incentives for potential employers.
• As part of their state plans, states must require parents to work after two years of receiving benefits. In 2000 states were required to have 40 percent of all parents, and at least one adult in 90 percent of all two-parent families, engaged in a work activity for a minimum of twenty hours per week for single parents and thirty-five hours a week for at least one adult in two-parent families. The rates for all families started at 25 percent in 1997 and increased five percentage points each year to 50 percent in 2002. For two-parent families the rates started at 75 percent and increased in 1999 to 90 percent. In 2000 all states met the overall participation rate for all families, but eight states failed to meet the goal for two-parent families.
• Each state must maintain at least 80 percent of its fiscal year 1994 level of spending on these programs. If a state meets the work requirement percentages, the maintenance-of-effort level may be reduced to 75 percent of 1994 spending. States must maintain spending at 100 percent of 1994 levels for access to the $2 billion federal contingency fund. This contingency fund was designed to assist states affected by high population growth or severe economic conditions, such as increases in food stamp caseloads or high unemployment rates.
• Unmarried teenage parents (under age eighteen) must live with an adult or with adult supervision and must participate in educational or job training to receive benefits. In addition, the law encourages "second chance homes" to provide teen parents with the skills and support they need and provides $50 million a year in new funding for state abstinence education activities.

FIGURE 2.1
Projected growth of welfare spending under Public Law 104-193, 1996–2002

None of the block grant funds can be used for adults who have been on welfare for over five years or who do not work after receiving benefits for two years. However, states are offered some flexibility in how to spend their TANF funds.

Title II: Supplemental Social Security (SSI)

The act redefines "disability" for children who receive SSI. A child will be considered disabled if he or she has a medically determinable physical or mental impairment that results in marked and severe functional limitations that can be expected to cause death or has lasted or can be expected to last at least twelve months. Reference to "maladaptive behavior" as a medical criterion was removed from the listing of impairments used for evaluating mental disabilities in children.

Title III: Child Support

To be eligible for federal funds, each state must operate a Child Support Enforcement program that meets federal guidelines. The state must establish centralized registries of child-support orders and centers for collection and disbursement of child-support payments, and parents must sign their child-support rights over to the state in order to be eligible for TANF benefits. The state must also establish enforcement methods, such as revoking the driver's and professional licenses of delinquent parents. In 2000 the Child Support Enforcement program collected almost $18 billion, up 49 percent since 1996.

To receive full benefits, a mother must cooperate with state efforts to establish paternity. She may be denied assistance if she refuses to disclose the father. Paternity establishments rose to more than 1.6 million in 2000, an increase of over 47 percent since 1996.

Title IV: Restricting Welfare and Public Benefits for Noncitizens

The original law severely limited or banned benefits to most legal immigrants who entered the country on or after the date on which the bill became law. Ineligibility continued for a five-year period or until they attained citizenship. In addition, states had the option of withholding eligibility for Medicaid, TANF, and other social services from legal immigrants already residing in the United States. Refugees, including those who have come for political asylum or other sanctuary, veterans, and Cuban/Haitian immigrants were exempted from the five-year ban.

Illegal immigrants have no entitlement to benefit programs, such as TANF or Medicaid. They can receive emergency medical care, short-term disaster relief, immunizations, and treatment for communicable diseases (in the interest of public health). They can also get community services such as soup kitchens and shelters, some housing programs, and school lunches/breakfasts if their children are eligible for free public education. States have established programs to verify the legality of an immigrant before paying benefits and may elect to deny Women, Infants, and Children (WIC) benefits and other child nutrition programs to illegal aliens.

The Balanced Budget Act of 1997 and the Noncitizen Technical Amendment Act of 1998 invested $11.5 billion to restore disability and health benefits to 380,000 legal immigrants who were in the United States before welfare reform became law on August 22, 1996. The Balanced Budget Act also extended the SSI and Medicaid eligibility period for refugees and people seeking asylum from five years after entry to seven years to give these residents more time to naturalize.

Title V: Child Protection

The law gives states the authority to use current federal funds to pay for foster care for children in child-care institutions. It extended the enhanced federal match for statewide automated child-welfare information systems through 1997 and appropriated $6 million per year (fiscal years 1996–2002) for a national random sample study of abused and neglected children.

Title VI: Child Care

The law requires that states maintain spending for child care for low-income families at the level of fiscal years 1994 or 1995, whichever is greater, in order to be eligible for federally matched funds. Mandatory funding is set at $13.9 billion through June 30, 2004, with states receiving an estimated $1.2 billion per year before matching begins. The remainder of the funds is available for state matching at the Medicaid rate. Total federal and state expenditures on child care totaled $3.2 billion in 2000, an increase of 60 percent over 1999 ($2 billion).

As under prior law, states must establish standards for prevention and control of infectious diseases, such as immunization programs, and for building codes and physical safety in child-care institutions. Child-care workers must also receive minimal training in health and safety. However, many low-income persons rely on informal sources of child care, including relatives and friends.

As a result of more parents working while still on welfare or leaving welfare to work, the critical need for child care has become more pronounced. The Urban Institute reported that more than 1.9 million children received child care each month in 2000, compared to approximately one million per month in 1996. The child-care support system gives priority to families leaving welfare for work over other low-income families. However, a study conducted by Ann Collins and Jean Layzer in 1999, National Study of Child Care for Low-Income Families: State and Community Substudy Interim Report (Cambridge, MA: Abt Associates, 2000), found that none of the sixteen states examined in the study served more than 25 percent of the children eligible under federal guidelines. Some have expressed the view that the current system penalizes low-income families who are already working, who are less likely to receive child care than welfare-leavers (those making the transition from welfare to work).

Title VII: Child Nutrition Programs

The law continues the existing child nutrition programs, such as the school lunch and breakfast programs. Maximum reimbursement is reduced, however, for the Summer Food Service Program and for some institutional food programs. States may decide whether to include or exclude legal immigrants from these programs.

Title VIII: Food Stamps and Commodities

The law reduces maximum benefits to the level of the "Thrifty Food Plan," an index set by the U.S. Department of Agriculture that reflects the amount of money needed to purchase food to meet minimal nutrition requirements. Benefits are indexed to the rate of inflation so that they increase as inflation rises.

The law also restructures the way certain expenses and earnings are counted in establishing eligibility for food stamps. When recipients' benefits are calculated, their countable monthly income is reduced by several "deductions," including a "standard deduction" and a deduction for excessively high shelter expenses. These deductions raise food stamp allotments. The standard deduction is frozen at the current level, $134 (in the contiguous forty-eight states and Washington, D.C.). The cap (limit) on shelter expense deductions gradually increased from $247 per month in 1996 to $300 in 2001 and will be frozen at $300 per month thereafter. State and local energy assistance is counted as income.

By law, all food stamp recipients who are eighteen to fifty years old and without children (known as "able-bodied adults without dependents" or ABAWD) must work at least part-time or be limited to three months of assistance in a thirty-six-month period. Recipients who were in a workfare program for thirty days but lost their placement may qualify for an additional three months of food stamps. (This provision was revised to allow states to exempt 15 percent of ABAWD recipients from this restriction.

The law increases the penalties for recipients and retailers convicted of fraud or trafficking in food stamps. It also allows states to convert food stamp benefits to wage subsidies for employers who hire food stamp recipients; the workers then receive salaries rather than food stamps.