Welfare Reform Showing Early Signs of Success

But some Catholic leaders worry about needy ‘falling through the cracks’

WASHINGTON— When federal welfare reform was signed into law in August 1996, most observers agreed that the United States was embarking on a bold experiment. For more than 60 years, welfare policy had been based on an open-ended system of income maintenance in which funding flowed to individuals based on set eligibility. That system is gone forever.

The Personal Responsibility and Work Opportunity Act of 1996, passed by the Republican Congress and signed by Bill Clinton, replaced the entitlement welfare system with a program of block grants and time limits geared to getting former welfare recipients into jobs and keeping them in the work force.

On the surface, things seems to be going well. The welfare rolls are down, dramatically so in some places. Overall, the welfare rolls nationally have declined from 14.1 million people (representing 4.9 million families) this time last year to 10.5 million people (representing 3.9 million families)-a reduction of a full 26%.

In many states, the reductions have been even more dramatic. States for years have been conducting welfare reform experiments since the late-1980s by securing waivers from the federal government, and many states have already discovered a formula for welfare reform success. Since federal law gave the states wide discretion to design and implement their own programs with little red tape, the long-term success of the reform effort will hinge in part on the innovations and efficiencies of state programs. In Wisconsin, where Governor Tommy Thompson has been a leader on welfare reform efforts for more than a decade, caseloads have declined by 55%. The caseloads in Massachusetts have dropped by 42%. Florida has seen decreases of 40%, and Ohio welfare cases have declined by 33%.

In fact, the block grant system that Congress put in place with the 1996 reform has yielded a windfall for many states. The block grants consist of several pre-1996 welfare funding streams that were combined and rationed out to states based on a fixed formula. The amount of the block grant was based on data that was available before the rolls began their swift decline. Therefore, the states have more funds available as the caseloads decline, while block grants remain the same.

The National Governors Association (NGA) published a white paper Dec. 4 that analyzed current trends in the welfare-to-work movement. The NGA found that states were using these “surplus” funds for a variety of purposes, including childcare, transportation, education and training, and the like. Many are establishing “rainy day” funds for times when the economy slows and more people are in need of assistance.

Even some of those who are concerned about the future of welfare reform seem to agree. “We are seeing some positive trends,” said Patricia King, policy advisor for health and welfare at the United States Catholic Conference. “States are increasing support for low-income working families. They are doing more to keep families off the rolls in the first place. Many states now treat income for working families more favorably than they did before.” By disregarding certain sources of income when determining eligibility for assistance programs and tax benefits, many states are able to help families stay above water and forestall the need for welfare assistance.

“In addition, more than half the states guarantee subsidies for families that need day care,” she continued, noting that the 1996 reform provided approximately $4 billion more in child care funding to the states. “These are all positive signs.”

At the same time that the states are being more creative and innovative than ever before, corporate America, too, is realizing that former welfare recipients are a new source of entry–level labor in a nearly full-employment economy. With two new federal tax credits&ndashthe Work Opportunity Tax Credit and the Welfare to Work Tax Credit-companies also are finding it increasingly cost-effective to rethink their hiring policies to access the full work force.

Major corporate citizens have also banded together to urge companies large and small to hire former welfare recipients moving into the work force. Last year, United Airlines, UPS, Sprint, Burger King, and Monsanto (at the request of the White House) founded The Welfare to Work Partnership, a non-partisan, not-for-profit organization designed to encourage companies to hire and retain former welfare recipients. Less than eight months in after its formation, the group already has commitments from more than 3,000 companies to hire and retain former welfare recipients.

Still, with all these positive developments and an economy growing steadily (unemployment is at 24-year low), there are some disturbing noises in the background. A recent survey by the U.S. Conference of Mayors found that soup kitchens saw an increase of more than 16% in requests for emergency assistance. This increase was higher than in previous years. At the same time, homeless shelters received 3% more requests for assistance than last year.

“This is disturbing given the strength of the economy and the low unemployment rates,” said King. “If these needs continue to persist even in good times, we remain concerned with what will happen when people begin to hit the time limits.” The 1996 reform called for a lifetime limit of five years on welfare, although many states have more restrictive policies.

“We are seeing an increase in demand, and many of these people have fallen through the cracks,” said Susan Gibbs, spokesperson for the Diocese of Camden, N.J. “Alot of people are facing the crunch and having a hard time moving into the work force. As they find jobs, they lose their eligibility for many programs. During the transition, they find that they still need heating or food assistance, and they come to us. This was one of our busiest Christmases in recent memory. We were overwhelmed.”

Keith Fournier, president of the Catholic Alliance, sees the current situation as a unique opportunity for Catholics. “We know we have an obligation to the poor. At the same time, we also understand and believe in the concept of subsidiarity. The Church teaches that the best government is closest to the people. That is why we need the faith-based community, local charitable groups, businesses, and the local government to take the lead. We need to make the case that this is the best way to help the poor–and that it is moral.”

Added George Forsyth, executive director of the Catholic Campaign for America: “Catholics have always felt a strong obligation to help those in need. They believe there is a role for the government in taking care of its neediest citizens. There seems to be a growing agreement among Catholic intellectuals and Catholics at the grassroots that not everything has to be direct from Washington. There needs to be a community-based approach to these issues.

“Of course,” he added, “Church officials at the local levels are finding it hard to meet the demand as the federal role is being scaled back. But the direction we are heading in is the right one.”

Forsyth noted that charitable giving is up, proof that individuals are willing to support local programs that work.

And the Catholic Alliance's Fournier pointed to the many efforts in religious circles and in the government to rethink long-term approaches to poverty issues. “Conservative and liberal are tired labels,” he said. “There are new coalitions being formed across religious and party lines. It is time for us to come to the table and find ways to meet this need. Welfare reform is a reality. That discussion is over. Now we must decide on the proper way to help, those who need us most.”

Michael Barbera, the Register's political affairs correspondent, is based in Washington.