WASHINGTON WATCH An update on federal action from The Center for Public Policy Priorities 900 Lydia Street Austin, Texas 78702 512-320-0222 voice 512-320-0227 fax December 15, 1995 No. 17 A Brief Update On All the Moving Parts Currently, there are two bills that contain provisions for reforming federal social services programs (including welfare, food stamps, child care, child protection and Supplemental Security Income): the Omnibus Budget Reconciliation Act (also referred to as the Balanced Budget Act) and the conference Welfare Reform bill (H.R. 4). The OBRA has been vetoed by President Clinton, and he has sent a counter-proposal to Congress. The conference agreement on H.R. 4 is stalled by a disagreement over provisions to convert child nutrition programs (particularly school lunch) to a block grant. The Conference Welfare Reform Bill Washington Watch #15 contained a brief summary of H.R. 4. Since then, more information on the welfare reform conference agreement has become available. This report contains additional detail on the conference agreement on welfare reform bill. (OBRA contains many - but not all - of the same provisions as H.R. 4. Excluded from OBRA are those provisions in H.R. 4 which are in violation of the Byrd rule, which prohibits provisions that do not have a budgetary impact from being included in the budget bill.) Cash Assistance, Work, and Child Care Provisions Under the welfare reform bill, the current Aid to Families with Dependent Children (AFDC), the JOBS program, and Emergency Assistance (EA) would be combined in a new Temporary Assistance for Needy Families (TANF) block grant. This block grant would include a requirement that by 2002, parents or caretakers in 50% of all families and in 90% of twoparent families receiving TANF funded services be engaged in work. However, the conference agreement reduces funding for the programs folded into the block grant and repeals the currently-existing guarantee that child care assistance be provided to participants in the JOBS and other job training programs. Design of the Temporary Assistance for Needy Families Block Grant Current Law: In FY 1995, AFDC served an average of 743,000 Texans per month, providing an average monthly benefit of $58.69 per person. Federal Funding Frozen. Funding to states would be frozen permanently, based on the state s recent federal spending for the programs in the block grant. States could elect to use as their base-year either their FY 94 federal spending level, an average of their FY 92-94 levels, or 133% of the first three quarters of their FY 95 spending. Annual 2.5% adjustments for FY 97-FY 2000 are available to high population growth, low benefit states. (Texas is a likely recipient of this An Office of the Benedictine Resource Center H:\From Old Server\PUBLIC\FEDERAL\WATCH\1995\WW121595.DOC adjustment). There is also a small contingency fund for states with high unemployment available only to states which continue to spend 100% of FY 94 state spending. Maintenance of Effort and Transferability. States would be required to continue spending at least 75% of their historic state expenditures for AFDC, JOBS and EA. The state s block grant would be reduced dollar-for-dollar if the state failed to meet the 75% requirement. States would be allowed to transfer up to 30% of their TANF block grant to other grants (e.g. to the Child Care and Development Block Grant, or the Child Protection Block Grant). States would receive bonuses for reducing their illegitimacy ratio. States would be penalized for noncompliance with new federal standards, including failure to meet the work participation requirements, or for failure to substantially comply with child support enforcement requirements, among others. States would be prohibited from spending TANF funding on: Any child born to a mother who received TANF assistance at any time during the 10 month period ending with the birth of the child (a state can opt out of this provision if its legislature votes to do so);
Families including an adult who received aid under the TANF block grant for a total of more than 5 years; Individuals who are not cooperating in establishing, modifying, or enforcing a child support order; Any unmarried parent under the age of 18 who has a minor child at least 12 weeks old, has not graduated from high school, and is not currently participating in an educational or training activity; Any unmarried parent under the age of 18 who is not residing with a parent, legal guardian or other adult relative; and Fugitive felons or people who are violating a condition of federal or state parole or probation. Time Frame for Implementation. Each state would have to submit a state plan for operation of its TANF block grant within three months of the enactment of the legislation. The effective date of the TANF provisions is October 1, 1995; however, states could elect to continue their AFDC programs until June 30, 1996. Work Requirements for TANF families Current Law: In FY 1995 35,000 Texas welfare recipients participated in the JOBS program, which was just 17% of the AFDC clients who were not exempt from participating in job training. Although the current JOBS program would be eliminated, states would be required to institute a more stringent work requirement. Under this provision, states must require a parent receiving assistance under the TANF program to engage in work once the state determines the parent is ready to do so, or once the parent has been on the program for 24 months, whichever is earlier. States would have to meet annual work participation rates. Under this provision, states would have to ensure that 15% of their caretakers and parents in the TANF program were engaged in 20 hours of work activities per week in 1996. By 2002, 50% of parents/caretakers must be involved in 35 hours of work per week. For two-parent families, the rate would be 50% in 1996, rising to 90% in 2002 and beyond. Thirty-five hours of weekly work participation is required for parents/caretakers in two-parent families. States not meeting these rates would be subject to a penalty of 5% of their total TANF grant ( the penalty would be $25 million for Texas in the first year). Most states, including Texas, anticipate that they could not meet the targets for the current client caseload and would suffer this penalty. Work is defined differently under this bill than in the JOBS program (the work training program for AFDC clients under current law). There are restrictions on the percentage of a state s TANF caseload that can be counted towards the participation target, and for how long a person may be counted. Generally, to count towards the work participation rate, TANF recipients must be engaged in activities such as un-subsidized employment, subsidized private or public sector employment, on-the-job training, work experience, or community service programs. Vocational education training counts as work, but only for 12 months, and only for up to 20% of adult clients. Job search and job readiness are similarly restricted. Consolidation of Child Care Programs Current Law: In FY 1995, 27,000 poor and lowincome Texas children were on a waiting list for subsidized child care. A single child care block grant is created by adding other funding streams to the existing Child Care and Development Block Grant (CCDBG). States will receive a portion of child care block grant funds based on either their FY 94 federal spending in AFDC Child Care, Transitional Child Care, and At-Risk Child Care, or on the average of funding for those programs for FY 92 - FY 94. An additional amount will be available based on the formula currently used in the At-Risk Child Care grant only to states willing to provide matching funds. Discretionary funds will be apportioned based on the current CCDBG formula. Seventy percent of the child care funds are targeted for families receiving welfare, leaving welfare, or at risk of welfare. A substantial portion of the remaining amount is to be used to provide child care for low-income working families. Health and safety protections are weakened. The current-law requirement that all providers who receive public funds meet minimum federal health and safety standards is eliminated. Funding for child care under this revised CCDBG is projected to fall $14.6 billion short nationwide over the next seven years of the amount needed to provide child care services to all the families required to work if the state is to meet work participation targets in this bill. Washington Watch Page 2
Food Stamps Analysis by the national Center on Budget and Policy Priorities shows that Texas would have received $1.4 billion LESS than it did in food stamp benefits in 1994 if the state had implemented the proposed optional food stamp block grant in 1989. There are two primary components of the welfare reform legislation pertaining to the food stamp program: 1) a provision allowing certain states to convert their food stamps program to a block grant; and 2) provisions which reduce benefits and restrict eligibility in the current food stamp program. Optional Food Stamp Block Grant: The food stamp block grant would be an option for states which operate a statewide electronic benefits transfer (EBT) program (which Texas does) or have a quality control error rate below 6 percent (which Texas does not). States opting for a block grant would be forever frozen at a fixed level of funding (either their 1994 funding or the average of their 1992-94 federal funding for food stamps). Unlike the regular food stamp program, the block grant would not adjust with population growth or decline, the onset of difficult economic times or food price inflation. Because the food stamp block grant would not grow along with the state population, it would be very costly for Texas to convert its current food stamp program to a block grant. What Flexibility? The promise of increased flexibility may cause some states to consider a food stamp block grant. However, it appears that a state with a food stamp block grant would actually be subject to most of the same rules as states in the regular program. States could not transfer food stamp block grant money to fund work programs or to any other programs; the bill requires states to spend 94% of the block grant on food benefits and 6% on administration. In contrast, the bill allows states that retain the current food stamp program to be granted waivers from many of the current food stamp provisions. Therefore, it appears that the primary effects of electing a food stamp block grant would be the loss of substantial federal dollars and the elimination of the entitlement to food stamps for eligible people, with no real gain in flexibility. Provisions applying to the Regular Food Stamp Program: There are many provisions in the bill related to the regular food stamp program that will reduce future food stamp benefits, prohibit certain people from receiving food stamps and restrict what is counted towards an applicant s income in determining his/her eligibility. For example, this bill would: Reduce food stamp benefits from 103% to 100% of the Thrifty Food Plan (but benefits could not dip below FY 1995 levels). Eliminate several of the deductions and exclusions currently considered in determining an applicant s income and subsequently their monthly food stamp benefit level. This bill eliminates the scheduled increase in the excludable value of vehicle, the benefit adjustment for families that spend over half their income on housing, the increase in standard deduction, and the exclusion from income of energy assistance, among other provisions. Give states the option of prohibiting people delinquent on child support obligations from receiving food stamp benefits. Disqualify any 18-50 year old able-bodied, nonpregnant recipient with no dependent children after 4 months of benefit receipt in a given year unless the recipient works or participates in a work program for a least 20 hours a week. With a few exceptions, bar legal immigrants from receiving food stamps. Those currently on the program could receive benefits until January 1997. There are also flexibility provisions only available to states that retain the current Food Stamp program. For example, States can choose to create a Simplified Food Stamp Program for households in which all members are also receiving cash assistance under the new Temporary Assistance for Needy Families (TANF) block grant. Under this program, a state could use the rules and procedures it set for its TANF block grant as an alternative to using regular food stamp rules. However, the state would have to continue to operate under a separate set of rules for those Food Stamp recipients not receiving TANF services. States can choose to do work supplementation projects in which food stamp benefits are cashed out and given to employers as subsidies to hire recipients. Washington Watch Page 3
Supplemental Security Income (SSI) for Children with Disabilities In Texas, 8,000 children with disabilities would lose their SSI benefits completely in January 1997 under this proposal. Between 1997 and 2002, another 9,000 Texas children who would have been eligible under current law would be denied benefits. Another 41,000 Texas children would have their SSI grant cut by 25% by 2002. Currently, 934,000 low-income children with disabilities qualify for SSI if (1) they have a condition included on SSI s listing of impairments; or (2) they are given an individual functional assessment and are found to have functional limitations. Children on SSI receive a $458 monthly benefit which helps to pay for their special child care needs, equipment, special nutritional supplements, etc. Without any changes to the law, 1.3 million children would have received SSI benefits in 2002. The welfare reform legislation, in cutting $13.2 billion from SSI, narrows the type of disabilities which would enable a child to qualify for SSI and creates a tiered benefit system which cuts benefits by 25% for twothirds of the remaining children on SSI. The new law would: 1. Eliminate the individual functional assessment. This would result in 158,000 low-income disabled children being dropped immediately from the program, and in another 176,000 future applicants being denied SSI benefits by 2002. This 335,000 children would have represented 25% of the program recipients by 2002. 2. Create a two-tiered benefit system depending on a child s disability. It is estimated that by 2002, benefits for 658,000 children would be reduced by 25% under this proposed system. Child Nutrition At this writing, there is still debate among House and Senate welfare conferees about child nutrition programs, particularly school lunch and breakfast. Senator Lugar (R-IN), with support from Senator Jeffords (R-VT), refused to sign the welfare reform conference bill unless the child nutrition block grants are removed. Representative Goodling (R-PA) continues to press for the inclusion of such block grants. (OBRA did not include child nutrition block grants). Whether the final bill will include a school lunch block grant is unknown. However, other decisions concerning child nutrition programs are likely to remain in the final bill sent to the president. For example: The bill reduces funding for child nutrition by $5.7 billion over 7 years when compared to current law. There is no block grant for the Women, Infants and Children (WIC) program. There will be lower reimbursements to providers for child nutrition programs (except WIC). The maximum allowable price for a reduced-price lunch is raised to $.40 in 2000, and to $.50 each school year thereafter. Child Protection The number of child abuse investigations in Texas increased by 33% from 1990 to 1995. Title IV-E foster care maintenance (room and board) payments and adoption assistance subsidies are retained as entitlements. Most of the federal protections for abused and neglected children appear to remain intact, including case planning, review, and reasonable effort requirements. However, two block grants for child protection will be put in place. The primary block grant, the Child Protection Block Grant, will cut funding by 23% ($4.6 billion over the next 7 years) for essential services and administration to respond to reports of abuse and neglect, train potential foster and adoptive parents, and help place children in foster care and adoptive homes. 1. The Child Protection Block Grant will include the non-maintenance payment portion of IV-E foster care and adoption assistance (this funding is currently used for the removal of children from unsafe homes, placement in appropriate settings and recruitment, and training of foster care parents); independent living services and family support and preservation. States will be required to continue their current funding for block granted programs for the first two years and then could reduce state funding by 25% for the next three years. The block grant to each state will be based on either an average of the child protection federal funding received by the state from 1992 to 1994 or 1994. 2. The Child and Family Services Block Grant will combine several discretionary programs include CAPTA state grants, abandoned infants program, etc. Washington Watch Page 4
Exclusion of Legal and Undocumented Immigrants from Services Under this bill, in FY 1997 alone Texas would lose $223 million in Food Stamp dollars that would otherwise have gone to legal immigrants. The welfare reform conference committee agreement would dramatically reduce the services available to both legal and undocumented immigrants. Major exclusions for immigrants include: 1. Universal Food Stamp and SSI Bar: Almost all legal immigrants, including long-time permanent legal residents, would be barred from receiving Food Stamps and SSI. Current residents receiving Food Stamps and SSI now could continue to get benefits until January 1, 1997. A few categories of legal immigrants would be granted exceptions to this bar: refugees, asylees, and those granted withholding of deportation (but only for the first five years after this status is granted), veterans, active duty service members and their spouses and children, and people who have worked for 40 quarters (as defined by the Social Security law) without the receipt of means-tested benefits. 2. 5-Year Bar for New Legal Immigrants: All new legal immigrants would be barred from receiving federally funded, means-tested benefits (such as AFDC, Medicaid and services funding by the Title XX Social Services Block Grant) for five years after they arrive. A few programs would be exempted from this bar, including: emergency Medicaid, public health services, child nutrition programs, and Title IV Foster Care. After the fiveyear bar, new immigrants could only receive these services if the combined total of their income and the income of their sponsoring family still met income eligibility guidelines. 3. State Option to Bar Immigrants from Other Services: States would also be given the option once their five-year federal bar has expired (see #2) to bar most current legal residents and all new ones from nonemergency Medicaid, TANF, and services funded by the Title XX Social Services Block Grant funds (e.g. child protective, family violence, and family planning services) and to bar most future legal residents from these services 4. Complete Bar of Federal Aid for Some Immigrants: Legal immigrants in the Family Unity status and Temporary Protective status, as well as undocumented immigrants, would be barred from all federal benefits, including child nutrition, public health, school lunch (even from purchasing full-priced meals), maternal and child health, contracts, loans, health care, retirement, etc., regardless of whether the programs are means tested Welfare Bill Includes End Run on Medicaid The bulk of Medicaid reform provisions are included in OBRA. However, a brief provision in the conference welfare bill explicitly provides that states would no longer be required to make families receiving cash assistance or children in foster care eligible for Medicaid (all of whom are entitled to Medicaid under current law). In addition, the bill provides that states choosing to offer Medicaid to families receiving cash assistance could not adopt more generous eligibility standards than were in effect as of the date of enactment of the bill (probably retroactive to 10/1/95), or in any other way structure eligibility to result in greater Medicaid expenditures than would have occurred under current law. The existence of this provision may be evidence that the welfare conferees do not expect a Medicaid block grant to emerge from budget negotiations between Congress and the White House. Still, regardless of whether Medicaid is a block grant or an entitlement, this language seems to limit states true flexibility in implementing welfare reform. For example, this provision would prohibit states from streamlining eligibility procedures, or enhancing transitional Medicaid benefits for families leaving welfare for jobs that do not provide health benefits. It would seem to also prohibit states like Texas that are seeking to expand coverage to more children and poor adults from doing so. You are encouraged to copy and distribute this edition of Washington Watch Washington Watch Page 5