Welfare Reform

Recent welfare reform legislation puts time limits on welfare benefits and requires welfare recipients to participate in work and work-related activities. Moreover, the new law requires states to have a minimum percentage of their caseload participating in such activities to avoid a financial penalty. Even before passage of the law, many states were exploring ways to boost participation in work by reforming their welfare programs through waivers of welfare program rules, which allowed them to try innovative approaches. GAO reviewed welfare experiments in three states--Massachusetts, Michigan, and Utah--to get a sense of (1) the policies and programs the states initiated under waivers to increase participation in work and work-related activities and (2) whether states with statewide waivers achieved participation rates comparable to those specified by the new federal law.

GAO noted that: (1) the three states GAO reviewed, Massachusetts, Michigan, and Utah, initiated policy changes designed to increase the proportion of welfare recipients participating in activities intended to move them toward self-sufficiency; (2) the three states changed their requirements regarding who must participate and what constitutes participation; (3) Michigan and Utah eliminated prior exemptions, thereby requiring all recipients to participate in some activity, while Massachusetts exempted a substantial portion of the caseload, mandating only parents with school-age children to participate in a work-related activity; (4) Utah permitted a broad range of activities to count as participation, tailoring activity to client circumstances, while Massachusetts and Michigan limited the activities for recipients required to participate to job search, followed by a job or, in the case of Massachusetts, by community service if a job is not found after 60 days; (5) all three states reported being able to provide the services specified in their plans to support clients in their activities; (6) they accomplished this in different ways: (a) by increasing available services; (b) by limiting participation requirements to fit available resources; or (c) by providing lower cost services; (7) the three states had a common strategy of strengthening sanctions for noncompliance as a tool to increase participation; (8) Massachusetts, Michigan, and Utah were able to engage a substantial number of welfare recipients in work and work-oriented activities; (9) most recipients who counted as participating were working in unsubsidized jobs, which reflects the emphasis placed on work in all three programs as well as changes to the amount of income they can earn and continue to receive benefits; (10) on the basis of GAO's analysis of state participation data, it is almost certain that these three states will meet their all-families target participation rate in the first year; but according to state officials, future rates may prove more difficult to achieve; (11) furthermore, Massachusetts and Michigan are concerned about their ability to meet the higher two-parent families rates; (12) all three states are concerned about meeting the future all-families rates, which are not only higher but require more hours of participation; and (13) state officials expressed concern that as employable recipients find jobs, the remaining caseload will consist of individuals with substantial barriers to employment, making the higher future target rates difficult to achieve.