Welfare Reform

Congress passed legislation in 1996 to transform the welfare system into a work-focused, temporary assistance program for needy families. The program established work requirements, set time limits on cash assistance, and provided enhanced services aimed at furthering self-sufficiency. Welfare offices in the seven states GAO reviewed were being transformed into job placement centers, and, in some instances, applicants were expected to start looking for work as soon as they applied for assistance. Adults with mental and physical impairments and those with small children were less likely than before to be exempt from participating in work activities, and adults who failed to participate as required were more likely to have their assistance terminated. In the states GAO reviewed, the average proportion of adult recipients required to participate in work activities rose from 44 percent in 1994 to 65 percent in 1997. In addition, states have set time limits on receiving cash assistance--in some cases shorter than five years--and have sought to make welfare recipients better off financially if they obtain jobs than if they do not. States also have modified their programs to better support welfare recipients who are trying to become more self-sufficient. For example, states have used some of the additional funding available under the welfare reform law to beef up support services, such as transportation and child care, for welfare recipients. States were also trying to improve their ability to treat physical and mental health problems. In Oregon, state officials estimated that about half of the welfare caseload required drug or alcohol treatment. Nationwide, welfare dependence has decreased. Welfare caseloads fell by 30 percent between January 1994 and September 1997--and decreased by a larger percentage each year during this period. In addition, the seven states GAO reviewed generally increased their job placement rates.

GAO noted that: (1) consistent with the thrust of the federal welfare reform law, states are moving away from a welfare system focused on entitlement to assistance to one that emphasizes finding employment as quickly as possible and becoming more self-sufficient; (2) in the seven states GAO visited, welfare offices are generally being transformed into job placement centers; (3) adults with mental and physical impairments and those caring for small children are less likely than before to be exempt from participating in work activities; (4) in the states GAO reviewed, the average proportion of adult recipients required to participate in work activities increased; (5) to reinforce the expectation that welfare is temporary, states have established time limits on receiving cash assistance and have modified various policies to help make welfare recipients financially better off if they obtain jobs than if they do not; (6) states also have devised strategies to reduce the need for monthly cash assistance; (7) states also have modified their programs to better support welfare recipients in becoming more self-sufficient; (8) in their efforts to change the culture of welfare offices, states are expanding welfare workers' roles by shifting their priorities from determining eligibility and cash assistance levels to helping recipients obtain work and become more self-sufficient; (9) at the same time, states plan to use some of the additional budgetary resources available under the welfare reform law to enhance support services; (10) moreover, some states have given local administrative entities greater flexibility to design welfare-to-work programs tailored to the needs of their recipients; (11) implementing all these changes has not been quick or easy: among the most challenging and widespread implementation issues reported by the states have been training staff to perform their new roles and finding ways to involve recipients with multiple barriers to participation in work activities; (12) it is too early to draw definitive conclusions about the success of states' programs because it is uncertain how states' programs will perform as more of the most job-ready recipients leave welfare and states face increasing proportions of recipients with multiple problems, or if the current strong economy undergoes a major downturn; (13) moreover, little is known about program impacts; and (14) future monitoring of states' programs will need to focus on areas such as job retention and earnings progression, children's welfare, and family stability.