Welfare Reform

Welfare reform established a block grant program for which federal funds are capped at $16.4 billion annually through 2002. Through these block grants, the new law provides states with broad discretion in designing their welfare programs. However, the Department of Health and Human Services (HHS) is still required to fulfill many important mandates. Among them, HHS must reduce its staffing level by 245 full-time equivalent (FTE) positions for those programs converted to block grants and reduce its FTE levels for management jobs by 60. HHS remains the lead federal agency responsible for overseeing states' welfare programs. HHS is also required to develop a formula to reward "high-performing" states--those that achieve the goals of the law. GAO found that HHS has reduced its FTE levels and is pursuing its research and evaluation mandates. However, the Department is having difficulty developing and issuing the regulations for the Temporary Assistance for Needy Families Program and the high-performance bonus.

GAO noted that: (1) between August 1995 and July 1997, HHS reduced by 245 its authorized FTE level for programs that were connected to block grants, and it reduced its authorized FTE level for managerial positions by more than 60 within the Department; (2) HHS achieved the 245 FTE reductions by reassigning almost three-quarters of them to other programs; (3) through GAO's survey, it found that states are generally satisfied with HHS' guidance but are concerned about the delay in TANF regulations, which HHS plans to issue in spring 1998; (4) HHS concedes that its rulemaking process to issue the regulations is lengthy because it requires the Department to obtain comments from many interested groups; (5) in the absence of regulations, states reported difficulties in designing and implementing their programs; (6) HHS missed the statutory deadline for implementing the high-performance bonus program; (7) while the law requires HHS to have implemented this program by August 1997, HHS is still writing regulations that will define the specific measures against which states are to be assessed; (8) HHS does not expect to issue final rules for the high-performance bonus program until the end of fiscal year (FY) 1998; (9) HHS attributes the delay to the inherent difficulties in developing performance measures; the large number of groups with whom HHS consulted, including advocacy and local government groups; and its limited number of staff with which to develop both TANF and bonus program regulations; (10) however, to be eligible for FY 1999 bonus money--the first year bonuses will be distributed--states are required to submit FY 1998 data; (11) HHS' funding for its welfare research generally follows the mandates outlined in the law; (12) a key effort for HHS in meeting these mandates is continuing the evaluations of state programs that were granted waivers from requirements that applied under the Aid to Families with Dependent Children program; (13) of the $44 million appropriated to Administration for Children and Families in FY 1997 for research, approximately $9 million has been awarded to 17 states for waiver evaluations; (14) several of these states will be evaluating the effect of time limits and mandatory work requirements on their programs, as well as other topics; (15) in addition to the waiver evaluations, HHS has awarded approximately $12 million for studies of employment issues focused on welfare and former welfare clients; and (16) technical assistance to states and child impact studies are other areas of research that were funded.