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Explainer: What you should know about welfare reform

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 This month marks the 20th anniversary of welfare reform, a bipartisan measure that made important changes to our country’s welfare system. Here is what you should know about this milestone legislation.

What was “welfare reform”?

Welfare reform is the nickname given to the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). This 251-page federal law was introduced by Rep. E. Clay Shaw, Jr. (R-FL) in June 1996 as part of the Republican Contract with America and signed into law by President Bill Clinton on August 22, 1996.

Among other things, notes AEI’s Angela Rachidi, the law eliminated the cash welfare program Aid to Families with Dependent Children (AFDC) and replaced it with a block grant program that gave states flexibility to use federal funds to move people from welfare to work.

What does PRWORA require?

PRWORA contains requirements for both the states and welfare recipients.

Work requirements and time limits for individuals and families:

• Recipients must work after two years on assistance, with few exceptions.
• Since 2002, the law has required that 50 percent of all families in each state must be engaged in work activities or have left the welfare rolls.
• Since 2003, single parents are required to participate for at least 30 hours of work per week. Two-parent families must work 35 hours per week.
• Guarantees that women on welfare continue to receive health coverage for their families, including at least one year of transitional Medicaid when they leave welfare for work.
• Families who have received assistance for five cumulative years (or less at state option) are ineligible for cash aid.

Requirements of individual states:

• States are permitted to exempt up to 20 percent of their caseload from the time limit, and states have the option to provide non-cash assistance and vouchers to families that reach the time limit using Social Services Block Grant or state funds.
• States are required to make an initial assessment of recipients’ skills.
• States can develop personal responsibility plans for recipients identifying the education, training, and job placement services needed to move into the workforce.
• States must maintain their own spending on welfare at least 80 percent of FY 1994 levels.
• States must maintain spending at 100 percent of FY 1994 levels to access a $2 billion contingency fund designed to assist states affected by high population growth or economic downturn.
• States must maintain 100 percent of FY 1994 or FY 1995 spending on child care (whichever is greater) to access additional child care funds beyond their initial allotment.

The law also includes teen parent provisions and requires comprehensive child support enforcement:

Teen parent provisions:

• Unmarried minor parents are required to live with a responsible adult or in an adult-supervised setting and participate in educational and training activities in order to receive assistance.
• States are responsible for locating or assisting in locating adult-supervised settings for teens.
• Requires block grant funding be used for abstinence education.
• Requires the Secretary of HHS to establish and implement a strategy to (1) prevent non-marital teen births, and (2) assure that at least 25 percent of communities have teen pregnancy prevention programs.
• Requires the Attorney General to establish a program that studies the linkage between statutory rape and teen pregnancy, and that educates law enforcement officials on the prevention and prosecution of statutory rape. (The law includes the finding that, “Data indicates that at least half of the children born to teenage mothers are fathered by adult men. Available data suggests that almost 70 percent of births to teenage girls are fathered by men over age 20.)

Child support enforcement:

• Requires states to operate a child support enforcement program meeting federal requirements in order to be eligible for Temporary Assistance to Needy Families (TANF) block grants.
• Established a Federal Case Registry and National Directory of New Hires to track delinquent parents across state lines.
• Requires that employers report all new hires to state agencies for transmittal of new hire information to the National Directory of New Hires.
• Expanded and streamlined procedures for direct withholding of child support from wages.
• Streamlined the legal process for paternity establishment, making it easier and faster to establish paternities.
• Expanded the voluntary in-hospital paternity establishment program and requires a state form for voluntary paternity acknowledgment.
• Mandates that states publicize the availability and encourage the use of voluntary paternity establishment processes. Individuals who fail to cooperate with paternity establishment will have their monthly cash assistance reduced by at least 25 percent.
• Provides for uniform rules, procedures, and forms for interstate cases.
• Requires states to establish central registries of child support orders and centralized collection and disbursement units. It also requires expedited state procedures for child support enforcement.
• Allows states to expand wage garnishment, seize assets, and require community service in some cases.
• Enables states to revoke drivers and professional licenses for parents who owe delinquent child support.
• Families no longer receiving assistance will have priority in the distribution of child support arrears.
• Includes grants to help states establish programs that support and facilitate noncustodial parents’ visitation with and access to their children.

What welfare policy did the reform change?

The main change of PRWORA was the replacement of Aid to Families with Dependent Children (AFDC) with the Temporary Assistance for Needy Families (TANF) program. While other programs (food stamps, Medicaid) provided assistance to the poor, AFDC was the program most often referred to as “welfare.”

AFDC, part of the Social Security Act passed by the Roosevelt administration in 1935, was a federally mandated program that guaranteed cash assistance to families with needy children. Needy children were defined as having been “deprived of parental support or care because their father or mother is absent from the home continuously, is incapacitated, is deceased, or is unemployed.”

Because of the income eligibility requirements, most AFDC recipients were single mothers (only 7 percent included two adults in the home). The program also paid more for the number of children, which favored having larger families. This disincentive to marriage combined with an incentive to have numerous children was a primary criticism of the law and a key factor in driving welfare reform.

In addition to the cash grants of AFDC, many families prior to 1996 also received other benefits such as childcare assistance, food stamps, Medicaid, and subsidized housing.

Was the reform effective in helping families in poverty?

As with any major public policy change the effect of welfare reform has been subjective and controversial.

However, there is agreement among poverty scholars that the official poverty rate for children of single mothers—a key demographic who received AFDC—has decreased since the law’s passage in 1996. Poverty scholar Scott Winship notes that it’s impossible to isolate the effects of the PRWORA versus the state waivers that were already happening between 1993 and 1996.

Some advocates of welfare reform, however, say that the effect of the law is underestimated because the official poverty rate counts income rather than consumption, the use of goods and services. A household in poverty may have a low income but still have a modest consumption because of free housing, healthcare, etc. When consumption is taken into account Winship found that fewer than one in 1,500 children of single mothers in 2012 were living in what is called “extreme poverty.” He also found that, once the receipt of all government benefits are factored in, practically no children of single mothers were living on $2 a day in either 1996 or 2012 (the latest year for which we have reliable statistics).

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Joe Carter Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History's Greatest Communicator (Crossway).

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