Welfare Reform

Recent legislation ends the individual entitlement to federally supported cash assistance to needy families with children and provides for terminating benefits to families failing to comply with program rules or after a specified time period. So far, states have seldom used benefit termination provisions. Moreover, of the 18,000 families whose benefits were terminated under waivers through December 1996, more than 99 percent failed to comply with program requirements. Most terminations took place in Iowa, Massachusetts, and Wisconsin. Through June 1996, prior recipients' failure to comply with new enrollment requirements accounted for more than half of the terminations nationwide. By the end of December 1996, failure to comply with work requirements increased by one-third and became the most significant reason for termination. Recipients' explanations for noncompliance included wanting to stay at home with their children and an unwillingness to do community service or work for low wages. Terminating a family's welfare benefit amounts to the loss of a significant source of monthly income. Although more than 80 percent of the families in the cases GAO studied in Iowa, Massachusetts, and Wisconsin were later found to have a source of support or had returned to welfare, the percentages of such families receiving food stamps and Medicaid declined significantly after termination. Officials in the three states GAO studied generally believed that their benefit termination provisions had improved program effectiveness by increasing work activity, job placements, and families moving off welfare more quickly.

GAO noted that: (1) so far, states have seldom used benefit termination provisions; (2) moreover, of the 18,000 families whose benefits were terminated under waivers through December 1996, more than 99 percent failed to comply with program requirements; (3) most terminations took place in Iowa, Massachusetts, and Wisconsin; (4) through June 1996, prior recipients' failure to comply with new enrollment requirements accounted for over half of the terminations nationwide; (5) by the end of December 1996, failure to comply with work requirements increased by one-third and became the most significant reason for termination; (6) recipients' explanations for this noncompliance included wanting to stay at home with their children and an unwillingness to do community service or work for low wages; (7) terminating a family's AFDC benefit represented the loss of a significant source of monthly income; (8) although more than 80 percent of the cases GAO studied in Iowa, Massachusetts, and Wisconsin were subsequently found to have some source of support or had returned to welfare, the percentages of such families receiving food stamps and Medicaid declined significantly after termination; (9) before termination, the percentage of cases receiving these benefits ranged from 84 to 100 percent; after termination it ranged from 26 to 61 percent; (10) many families did not take the steps necessary to continue to receive these program benefits after losing AFDC, even though the waivers provided for program eligibility to be unaffected unless other family circumstances changed; (11) officials in the three states generally believed their benefit termination program effectiveness by contributing to increases in work activity, job placements, and families moving off welfare more quickly; (12) these officials emphasized that only a small percentage of cases had been terminated; (13) nevertheless, they acknowledged that implementing these provisions had been challenging; (14) for example, states had to develop systems to accurately track hours worked to monitor compliance and to correctly and adequately notify recipients of pending termination actions; (15) in addition, states had to provide certain activities and services before they could terminate a family's benefits; and (16) these states' experiences with benefit termination provisions under waivers highlight the challenges all states may face in implementing similar provisions of the new welfare reform law.