Welfare Reform

Status of Awards and Selected States' Use of Welfare-to-Work Grants Gao ID: HEHS-99-40 February 5, 1999

Welfare reform at the federal and state levels has focused on moving welfare recipients to work and promoting economic self-sufficiency. Welfare-to-work grants are intended to help hard-to-employ persons receiving aid under the block grant program of Temporary Assistance for Needy Families to obtain work. The welfare-to-work grants total $3 billion--$1.5 billion to be awarded by the Department of Labor each year in fiscal years 1998 and 1999. About 75 percent of the money is for formula grants to states, and nearly 25 percent is for competitive grants to local groups for innovative approached to help move welfare recipients into permanent work. To receive a formula grant, states must pledge one dollar of state matching funds for every two dollars of federal welfare-to-work funds. States must also submit a plan describing how the formula funds will be used and ensure that the plan was developed in consultation with appropriate state and local agencies. This report discusses (1) the welfare-to-work formula and competitive grants awarded to, or declined by, states for fiscal year 1998; (2) how selected grantees are planning to use these funds; and (3) how selected grantees plan to meet welfare-to-work requirements to better integrate the states' workforce development services with other human services for welfare recipients.

GAO noted that: (1) The Department of Labor (DOL) awarded formula grants to 44 states plus the District of Columbia, Guam, Puerto Rico, and the Virgin Islands with welfare-to-work funding available for FY 1998, and, as of November 20, 1998, it had awarded competitive grants to 126 organizations with combined welfare-to-work funding available for fiscal years 1998 and 1999; (2) six states--Idaho, Mississippi, Ohio, South Dakota, Utah, and Wyoming--did not participate in the welfare-to-work formula grant program; (3) these states, which would have received a total of about $71 million, chose not to participate for various reasons, including concerns about their ability to provide state matching funds; (4) Arizona was the only state that applied for formula grant funds but did not pledge sufficient matching funds to receive its maximum federal allocation; (5) the competitive grant funds Labor awarded represented all welfare-to-work funds available for FY 1998 and about a third of the FY 1999 funds; (6) most states had at least one local service organization that received competitive grant funds; (7) three of the six states GAO reviewed--Massachusetts, Michigan, and Wisconsin--outlined very specific uses for formula funds, while plans for the other three states--Arizona, California, and New York--indicated that the use of these funds would be determined by the local service delivery areas; (8) Michigan's and Wisconsin's plans emphasized assistance to unemployed noncustodial parents--these parents, mostly fathers, often have child support payments in arrears and dependents who are receiving welfare cash assistance; (9) Massachusetts focused on serving Temporary Assistance for Needy Families recipients who are reaching their time limits on cash assistance; (10) in contrast, California's plan did not emphasize a specific welfare-to-work service strategy because state officials believed that no one service strategy could be applied effectively throughout the state; (11) similarly, Arizona and New York allowed local service delivery areas to decide on strategies for using formula grant funds; (12) state and local officials in the six states GAO reviewed noted that a stronger partnership was developing between the workforce development agencies and other human service agencies assisting welfare recipients, in part because of their joint involvement in the welfare-to-work planning process; and (13) the welfare-to-work competitive grantees also coordinated their plans with state and local officials.

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