Welfare Reform

Pursuant to a congressional request, GAO provided: (1) a summary of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996; (2) the views of the Department of Housing and Urban Development (HUD), researchers, and interest groups on the extent to which welfare reform will affect HUD's programs and tenants; and (3) a list and descriptions of the HUD programs that may be used to provide employment opportunities for low-income individuals.

GAO noted that: (1) the new welfare reform law takes a comprehensive approach to promoting self-sufficiency for families by making benefits time-limited and work-dependent; (2) as a part of this comprehensive approach, the welfare reform law eliminates the federal entitlement program of Aid to Families With Dependent Children (AFDC) and replaces it with Temporary Assistance for Needy Families (TANF), a block grant for the states to provide time-limited cash assistance to needy families; (3) the states have a great deal of discretion in determining how to utilize their block grants; (4) among other things, the states can set eligibility limits and benefit levels, deny additional assistance for any recipient who has another child while receiving benefits, and spend funds for services to families rather than for cash benefits; (5) the new law also abolishes the work and training program for welfare recipients, reduces the food stamp program, tightens Supplemental Security Income (SSI) eligibility criteria for children, eliminates SSI and food stamp benefits for most legal immigrants, expands child care funding, and strengthens child support enforcement; (6) one area not addressed by the welfare reform law is housing; (7) while it is too early to determine the extent to which welfare reform will affect HUD's programs and tenants, the welfare reform law will have implications for HUD because many participants in its programs receive AFDC (now TANF) benefits and SSI; (8) for example, HUD estimates that in 1995, public assistance was the primary source of income for almost half of the families with children assisted by HUD; (9) HUD believes that in some cases, welfare reform will be an incentive for families to become self-sufficient but that in other cases families may encounter increased financial hardship; (10) according to the agency, the incomes of families receiving assistance may decline because SSI payments will terminate for some, and benefits and eligibility may be reduced for others under TANF; (11) changes in food stamp benefits, limitations on assistance to legal immigrants, and the way that the states implement welfare reform are also expected to have additional impacts, according to HUD; (12) HUD stated that it has a strong commitment to providing employment opportunities, along with the necessary training and supportive services, for low-income persons; and (13) according to HUD, the department's economic development programs, such as the Community Development Block Grant program, can play a vital role in bringing jobs to communities.