INCOME MAINTENANCE PROGRAMS; TEMPORARY ASSISTANCE TO NEEDY FAMILIES; WORKFARE;

WELFARE - WORK PROGRAMS;

OLR Research Report


September 24, 2003

 

2003-R-0504

WELFARE TO WORK—STATE PROGRAMS

By: Robin K. Cohen, Principal Analyst

You asked for a summary of state programs that help families make the transition from welfare to work. You also wanted to know how much these programs cost.

This report highlights both the major state programs and the federal tax credits that are designed to help these families. It is not meant to serve as an exhaustive inventory of all services to which families might avail themselves.

SUMMARY

Jobs First is the state’s main program that helps families make the transition from welfare to work. It is run jointly by the departments of social services (DSS) and labor (DOL) and funded largely by the Temporary Assistance for Needy Families (TANF) block grant. The program consists of two primary parts: cash assistance and employment services.

The cash assistance portion of the program, Temporary Family Assistance (TFA), provides ongoing financial support for up to 21 months (or longer for people who qualify for extensions) to most families. It offers a strong work incentive by paying full cash benefits to people whose income from work is below the federal poverty level (FPL).

DSS refers time-limited TFA recipients to the program’s employment component run by DOL. The Jobs First Employment Services program, which is designed to get people into jobs quickly, emphasizes job searches and related activities over longer-term activities, such as education and training, to ensure that people can be employed before they reach the TFA time limits.

In addition to cash and employment services, all families receiving TFA can receive Medicaid benefits and most also qualify for federal Food Stamps. Working families and those in which an adult is engaged in an allowable work activity can receive child care assistance, as well as help defraying some of their transportation costs. A limited number of families whose lack of housing prevents employment can get subsidies under a new, temporary subsidy program, but broader-based housing assistance is generally unavailable due to the closure of the state’s premiere rental assistance program. Finally, the state helps families with their heating costs through a federally-funded energy assistance program.

Once eligibility for TFA has ended, families can continue to receive both child care and Medicaid, and some families who have lost their TFA eligibility but are working may qualify for time-limited rental assistance. The DOL also continues to provide some limited support to people who have left the TFA rolls. And low-income families who lose their eligibility due to the time limits and are not eligible for an extension because they have not complied with the Employment Services requirements may qualify for intensive case management services through a safety net program.

It is difficult to say with certainty how much the state spends on these programs. DSS reports that for the first two quarters of FFY 2002-03, the state spent about $ 113 million on programs beneficial to these families. In addition, it spent just over $ 62 million during this period on Medicaid benefits for families receiving TFA. More than half of the first figure paid for TFA benefits alone.

Although they are not state programs, federal tax credits are also available to help low-income families and the businesses that hire them. The federal Earned Income Tax Credit (EITC) provides extra cash to working families, including those making the transition from welfare to work. Businesses that hire welfare recipients can also get tax breaks. The state agencies that help these families provide information about these programs as well. We do not know what the federal revenue loss has been as a result of these credits.

MAKING THE TRANSITION FROM WELFARE TO WORK

DSS Assistance

When a family finds itself in need of assistance it can go to the nearest DSS office to apply for TFA, Food Stamps, and any other assistance for which it may qualify. Families who may not know about DSS can also call 211 (Infoline) or visit the nearest community action agency, both of which are there to help them determine whether they can benefit from the Jobs First program or any other assistance for which they might be eligible. These entities can also help families prepare documentation they may need when applying for state assistance.

Cash Assistance. When a family applies for TFA it is informed that (1) benefits are time limited (generally 21 months) and (2) the able-bodied adults in the family must participate in the Employment Services program, unless they meet one of the law’s exceptions (e. g. , a disabled adult or a child under age one resides in the household). The amount of assistance is based on the family’s size, where they live, and any other income they may have. Families can have up to $ 3,000 in liquid assets and own a motor vehicle, provided its equity value is no more than $ 9,500.

Perhaps the most important feature of the program is its earned income disregard. This essentially allows families to earn up to the FPL and still receive the full monthly TFA benefit. (Once income exceeds 100% of the FPL, the family loses TFA eligibility. ) Many believe this disregard provides a fairly significant work incentive to participants.

DSS also offers Diversion Assistance, an up-front lump sum payment equivalent to up to three months of TFA, to families with short-term needs.

Child Care. When an adult TFA recipient works or engages in an ongoing work-related activity, DSS provides a childcare subsidy for children who live with the recipient and are under the age of 13 (or under age 19 if the child has special needs). These Care 4 Kids subsidies can be as much as $ 325 per month and can be used to pay either informal caregivers or for more formal settings, such as licensed centers. The subsidy rates differ based on the number of children receiving care, the type of care provided, the range of hours for which assistance is

provided, the existence of special needs, and the region of the state where the care is provided. When a family leaves the TFA rolls, it can continue to receive assistance, provided its income does not exceed 55% of the state’s median income. (PA 03-2 reduced this limit from 75% of the median. )

Transportation. TFA recipients who are working or are engaged in an approved, ongoing work-related activity can also receive bus fare (up to $ 10 daily), mileage reimbursement, or money to pay for private transportation in an automobile.

People for whom public transportation is not feasible can take advantage of a vehicle donation program. The state has used a portion of the TANF block grant to help subsidize the Good News Garage Program. In this program, TFA recipients who have to commute more than one hour to a job or a legitimate job offer may receive donated used cars. These individuals must have or expect to have sufficient income to pay for ongoing maintenance, repairs, insurance, and taxes on the vehicle. Car donors can receive tax breaks.

The state has also made funds available to expand bus services to ensure that TFA recipients can get to and from work.

Medical Assistance. TFA recipients are eligible for Medicaid through the Medicaid Managed Care program. State managed care organizations (MCO) contract with DSS to manage the family’s care. Up until now families have had no coinsurance requirements. But starting November 1, families will be required to pay $ 1. 50 for prescription drugs and $ 2 for medical services. In addition, if the federal government allows it, MCOs will begin charging families with incomes between 50% and 100% of the FPL a monthly fee of $ 10 per person (capped at $ 25 per family per month) (PA 03-3, June 30 Special Session).

Families transitioning off TFA are also eligible for Medicaid for up to two years provided an adult is working or becomes employed within six months of leaving the TFA rolls. These families could also be required to pay the co-payments and monthly cost-sharing. If family income goes higher than 100% of the FPL, the monthly cost-sharing amount could be $ 20 ($ 50 maximum per family per month), again pending federal approval.

After the two years of transitional assistance, children in families with incomes up to 185% of the FPL can continue receiving Medicaid under the HUSKY A program, or they may qualify for HUSKY B benefits if family income goes above this level. But parents and caretaker relatives can get these benefits only if their income is no more than 100% of the FPL.

Housing Assistance. There is little state housing assistance available to people who are currently receiving TFA because the state’s Rental Assistance Program is closed to new applicants. (Federal Section 8 housing may be available to families. ) However, the state has used some of federal High Performance Bonus funds to start a new Temporary Rental Subsidy program. In FY 2003-04, this program will provide subsidies to 140 families for whom homelessness or housing instability constitutes a significant barrier to employment.

Families transitioning off TFA may also be able to get help from the Transitionary Rental Assistance Program (T-RAP), which provides time-limited rental assistance to people who (1) have lost their eligibility for TFA due to the time limits, (2) have income greater than the TFA payment standard, and (3) live in privately owned rental housing. Families must apply within six months of leaving TFA and may not be receiving any other rental subsidy. The benefit is paid directly to the landlord.

Food Stamps. The federal Food Stamp program provides nutritional assistance to the state’s low income families, including those receiving or transitioning off welfare. As a family’s income rises, his Food Stamp benefit generally drops, although some earnings are disregarded. And although household assets are generally capped at $ 2,000, TFA families can qualify, even if their assets reach $ 3,000.

Child Support. As a way to prevent the need for ongoing state assistance DSS can help families obtain child support. In addition, DSS disregards the first $ 50 per month of current child support income for purposes of ongoing TFA eligibility.

All custodial parents, including TFA heads of household, can apply to DSS to enforce a child support order. DSS can also help determine the paternity of children in TFA families so support orders can be issued by judges or family support magistrates. And it can locate absent parents, among other things.

Energy Assistance. Families that are receiving TFA benefits are automatically income-eligible for heating benefits from the Connecticut Energy Assistance Program (CEAP). This federally-funded program, which DSS and local community action agencies administer, provides benefits to families who must pay their heating costs directly, as well as those households (renters) that do not make direct payments for their heat.

DOL Assistance—Jobs First Employment Services

The DOL’s Employment Services program is designed to help TFA families become employed during the 21-month period that they are receiving cash assistance.

DSS does an initial assessment of time-limited TFA families and then refers them to one of the several CT Works locations where a DOL case manager assesses them and together they develop an individualized employment plan. The case managers also help clients access the services they may need to successfully complete these plans as well as monitor their progress in finding and keeping jobs.

DOL use a “balanced work first” approach when helping families go from welfare to work. This means that people who can work are expected to do so and can generally engage in education or training activities only after working a certain number of hours per week, while those people with barriers that may prevent immediate employment are offered supports (e. g. , adult basic education, domestic violence counseling) that can help them overcome these barriers.

DOL partners with the state’s eight regional Workforce Investment Boards (WIB) to procure case management, employment, education, and training services for program participants. Funding for the WIBs is apportioned based on the number of clients within each workforce investment area. According to the DOL’s annual report for FY 2000-01, over 25% of the funds WIBs received were used to procure skill training for occupations in demand in those regions.

As described above, Employment Services participants engaged in an ongoing work-related activity can receive child care and transportation assistance. Alternatively, DOL pays up to $ 10 per day to families who have a very short-term need (e. g. , orientation) for which they may need a babysitter or help with transportation. These “special benefits” are capped at $ 50 per month and are limited to five consecutive days.

For those time-limited TFA families that appear to have multiple, up-front barriers to employment or some other characteristic (e. g. poor work history) that could prevent them from gaining self-sufficiency within 21 months, the new, Employment Success Program will provide early intervention and case management, including home visits, to as many as 1000 participants during FY 2003-04. Some of the High Performance Bonus funds are being used to pay a contractor to run this initiative.

Individuals who are engaged in an Employment Services activity when their TFA eligibility ends can generally continue the activity up to one year.

Other Assistance—Federal Tax Credits

Business Credits. Critical to the state’s success in moving welfare recipients into jobs is employer participation. In addition to the initiatives the WIBs have undertaken, the federal government offers two separate tax credits to businesses that hire welfare recipients. DOL provides information, including the applications, on these credits to interested employers.

The first is the Welfare to Work (WTW) credit. This offers businesses up to $ 8,500 over a two year period for each long-term family assistance recipient they hire to work at least 400 hours or 180 days in a 12-month period. The credit is 35% of the employee’s qualified wages for the first year and 50% for the second.

The other credit is the Work Opportunity Tax Credit. This program provides up to a $ 2,400 federal tax credit for each long-term family assistance recipient a business hires. Like the WTW credit, the employer must hire the employee to work for at least 400 hours during the first 12 months in order to receive the credit, which can represent up to 40% of the employee’s wages. Employers hiring individuals for more than 120 hours, but fewer than 400, can receive a credit of up to 25% of the paid wages.

Earned Income Tax Credit. Working low-income families and individuals may qualify for the federal EITC, even if they owe nothing in federal income taxes. For calendar year 2003, workers with two or more children can get a maximum credit of $ 4,204 if they have less than $ 33,692 in adjusted gross income. (The income limit rises or falls with the number of children in the family. ) The credit can be paid as either a lump sum payment or as an ongoing, advance payment, depending on the worker’s needs. TFA counts these credits as assets when they are paid as a lump sum or income.

STATE SPENDING ON WELFARE TO WORK ACTIVITIES

Table 1 provides a cumulative summary of expenditures reported by DSS to the federal government for July 1, 2002 through March 30, 2003 for those programs from which we believe families making the transition from welfare to work would benefit. Additionally, the state spent $ 62,053,342 during this period on Medicaid for these families. The table does not include state spending for child support enforcement.

While these figures represent the total amount the state spent, a significant portion of the expenditures were offset by federal funds. For example, nearly half of the TFA expenditures were paid for with the state’s TANF block grant, and the Medicaid expenditures were eligible for a 50% federal match. Likewise, a significant portion of the child care expenditures were paid for with the state’s federal Child Care Development Fund money and some Employment Services expenditures were paid from federal Welfare to Work funds.

Table 1: Cumulative 2nd Quarter Spending on

Welfare to Work Population (FFY 2002-03)

Program/Acct

State Expenditures

TFA

$ 62,685,345

Child Care—Employment Services

9,290,931

Safety Net

2,093,084

Transitionary RAP

1,929,759

DOL Direct Services

7,802,700

Office of Workforce Competitiveness—Job Funnel (1)

140,822

Transitional Child Care

14,693,531

Good News Garage

385,716

Transportation

1,148,208

TFA Diversion

11,544

Admin. -DSS and DOL

13,021,568

DOL Case Mgmt/IT

556,318

Total (does not include Medicaid)

$ 113,759,526

Source: Department of Social Services, TANF Expenditure Report, March 2003 (cumulative); Office of Fiscal Analysis.

(1) The Office of Workforce Development, through the Job Funnel, funds the Hartford Construction Jobs Initiative to provide Hartford residents wishing to pursue construction-related careers with recruitment, assessment, training, job placements, and support services.

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