Sacramento Head Start Alumni Association

The Next Step in Reforming Welfare Act

Jan 30, 2002

H.R. 3625, The Next Step in Reforming Welfare Act

Introduced by Representative Benjamin Cardin

January 24, 2002

Summary: The legislation would reauthorize and improve the Temporary Assistance for Needy Families (TANF) program by increasing resources for job placement and advancement and by enhancing the program's focus on reducing poverty. In addition, the measure would make improvements in several related programs, including those providing child care and other social services.

Maintaining the Funding and Flexibility for TANF
The legislation would maintain full funding for TANF, and it would continue to provide States with ample discretion in administering the program.

The current $16.5 billion annual TANF allocation would be increased for inflation in future years (this update would increase the annual block grant to $18.7 billion by FY 2007).
The current performance bonus for promoting work, job retention and employment advancement would be continued at $200 million per year.
The Supplemental Grants for States with low Federal funding per poor child and/or population increases would be extended at their current level ($319 million per year).
Additional Grants would be provided to States when their total TANF allocation divided by their number of children below the poverty level is less than 75% of the National average of TANF funding per poor child ($1 billion over five years).
The Contingency Fund would be improved and extended. The triggers would be updated, the maintenance-of-effort (MOE) requirement would be conformed to the regular TANF MOE, the match would be reduced to the lesser of 25% or FMAP, the fund's $2 billion cap would be lifted, and the provision limiting States to only a portion of their contingency allotment if they have not met the trigger for an entire year would be eliminated.
Reducing Poverty
The legislation would incorporate a series of changes to help and encourage States to make reducing poverty a primary goal of their TANF programs.

"Reducing the extent and severity of poverty and promoting self-sufficiency among families with children" would be added as a new explicit purpose for the use of TANF funds by the States.
States that reduce the number of children in poverty and the child poverty gap, would receive financial bonuses from the Federal government. As outlined in HR 2166 (introduced by Congressman Stark), $150 million per year would be provided for these new performance bonuses.
The bill would require States to provide a review and conciliation process before TANF benefits are sanctioned.
The current caseload reduction credit (which reduces a State's work participation requirement by the percentage point drop in its caseload since 1995) would be replaced by an employment credit, which would reduce a State's participation requirement by the number of employed welfare leavers in the first half of the prior year divided by the State's welfare caseload in the first half of the prior year. (No State's effective work participation rate could go up by more than 10 percentage points per year under this provision.)
The Social Services Block Grant, which supports a variety of services to disadvantaged Americans, would have its funding restored to $2.8 billion a year (from its current level of $1.7 billion a year)
Requiring and Rewarding Work
The bill would maintain the requirement that welfare recipients be enrolled in work activities (as defined by the State) within two years of receiving TANF, it would continue to require States to have half of their caseload involved in Federally-defined work-related activities (with new opportunities for education and training), and it would continue to limit the total length of time non-working individuals can receive TANF. However, the bill also would establish new incentives and rewards for TANF recipients who go to work.

TANF-funded wage subsidies would not count against the 5-year time limit.
Every TANF recipient's employability would be assessed -- considering such factors as physical or mental impairments, limited proficiency in English, child care needs, and domestic violence.
Funding for the Child Care and Development Block Grant (CCDBG), which provides day care assistance to welfare leavers and the working poor, would be increased by $11.25 billion over five years (with funding ramping up over time).
The quality set aside for the Child Care and Development Block Grant would be doubled from 4 to 12 percent of total funding. CCDBG health and safety standards would apply to TANF child care funding. The current-law provision preventing the sanctioning of parents who have a "demonstrated inability" to obtain child care would apply to parents with children under the age of 13 (rather than under age 6).
The bill would provide $100 million a year for a program of competitive grants to States and localities to improve access to food stamps, Medicaid and child care coverage for individuals leaving TANF for work (through simplified applications, improved outreach and other means).
Helping Welfare Leavers Climb the Employment Ladder
New resources would be provided to improve employment outcomes and Federal restrictions on promoting educational opportunities for welfare recipients would be relaxed to allow individuals to gain the skills and receive the services needed for employment advancement.

State TANF plans must include goals to improve initial earnings, job advancement, and employment retention for individuals on and leaving cash assistance.
A new "Employment Advancement Fund" would provide grants to States for research, evaluation, and demonstration projects that focus on improving wages for low-income workers (through training and other services) and enhancing employment prospects for welfare recipients with certain barriers, such as a disability or limited proficiency in English.) $150 million per year would be provided for these grants.
The bill would eliminate the 30% cap on the number of TANF recipients who can be enrolled in vocational education or high school and count towards a State's participation requirement.
Vocational education would count for two years (up from one).
The legislation would allow States to count rehabilitative services designed to improve future employment opportunities, including substance abuse treatment, domestic violence counseling, and physical rehabilitation, towards a State's work participation requirement for up to six months.
The measure would allow States to use TANF funds which are carried over from previous years to be used to fund non-assistance (ie. work supports).
Promoting Family Formation and Responsible Parenting
The legislation would establish a new program to promote family formation, it would encourage non-custodial parents to pay child support by ensuring that more of their payments actually go to their children, and it would remove barriers to serving two-parent families.

In place of the current out-of-wedlock birth bonus, the bill would establish a new Family Formation Fund, which would provide $100 million per year to conduct research, provide technical assistance, and promote and fund best practices in the following areas: (1) promoting the formation of two-parent families, (2) reducing teenage pregnancy, and (3) increasing the ability of non-custodial parents to support and be involved with their children.
The bill would allow States to pass through child support to current and former welfare families (without paying a Federal share on those collections), and it would improve the distribution of past-due support.
The percentage of two-parent families required to be in work activities would be conformed to the single-parent requirement (50%).
Unless they pass legislation to opt out, States would be prohibited from imposing stricter eligibility criteria for two-parent families.
Restoring Fairness for Immigrant Families
The legislation would repeal the 1996 law's ban on most non-citizens receiving assistance (the bill's provisions are limited to programs in the jurisdiction of the Committee on Ways and Means).

The bill would eliminate the ban on States serving legal immigrants with TANF funds (with a requirement that a sponsor's income be deemed available to the non-citizen for their first three years in the United States).
The measure would restore eligibility to legal immigrants for Supplemental Security Income (SSI) with a requirement that their sponsor's income be deemed for their first five years in the United States.
English-as-a-second-language instruction would count towards the Federal work participation requirements in the same way as "education directly related to employment," which under current law counts towards 10 of the 30 hours required.
Ensuring State Accountability
The bill would ensure that States are sharing the financial burden of helping low-income families.

The current TANF maintenance-of-effort (MOE) requirement for States would be continued, and (like Federal payments) the State MOE would be prospectively increased for inflation.
States would be prohibited from using Federal TANF funds to replace State funding in programs not counted toward the State's MOE.
Improving Information About TANF Recipients/Programs
The legislation would extend funding for TANF research and require information about the employment status of individuals who leave TANF.

$15 million per year would be provided to HHS for TANF-related evaluation and research.
HHS would be required to conduct longitudinal studies over a three- year period of the employment status of a segment of TANF leavers in every State.
States would be required to provide more detailed information on programs serving TANF recipients.