Welfare Reform

In response to a congressional request, GAO reviewed: (1) available estimates of the cost of requiring states to adopt the optional Aid to Families with Dependent Children for Unemployed Parents Program (AFDC-UP); and (2) research on the effects of AFDC-UP on families.

GAO found that: (1) it could not determine the reliability of the cost estimates it reviewed because they used different assumptions; (2) the Congressional Budget Office's (CBO) and the Department of Health and Human Services' (HHS) 3-year AFDC-UP estimates were $945 million and $961 million, respectively, under one legislative proposal and $915 million and $1.09 billion under two other identical bills; (3) the HHS estimate included an increase of 20,000 single-parent AFDC families, since it believed that the expanded welfare programs would increase case loads in related programs, while CBO included only 2-parent families; (4) the HHS estimate of AFDC-UP and Medicaid costs were lower than the CBO estimate due to offsetting differences in benefits and inflation rates; (5) a private consulting firm estimated a $187-million increase in federal and state benefit costs and an increase of 52,000 cases; (6) the differences in the three estimates were due to the bills' differing provisions, the estimating periods, and the programs studied; and (7) the data it reviewed on the effects of AFDC-UP on family stability were sparse and irrelevant to the proposed legislation.