Set Reasonable Participation Standards

The states' dramatic success in reducing caseloads has made the question of how to set participation standards in welfare reform's next phase potentially one of the most contentious issues related to TANF reauthorization. Some observers would like to end the point-for-point caseload reduction credit because it sends the message that caseload reductions are the main goal of TANF. The administration wants to end the credit to keep the states under pressure to perform. Not surprisingly, states would like to remain free of the participation standard and therefore would prefer to keep the caseload reduction credit in force.

As has already been noted, how Congress defines "participation" - the rate, how it is calculated, what activities count, and the number of hours of activity required - is one of several signaling mechanisms it can use to communicate to states what it wants. In an attempt to strike a balance between reinforcing the act's original focus on work and the need to broaden the range of allowable activities to include more education and training as well as other services, the House-passed bill would make several important changes to the framework established in 1996. Notably, it would:

increase the required participation rate to 70 percent and gradually eliminate the caseload reduction credit; increase the number of hours of required participation to 40 per week; after three months, 24 hours per week must be work; and allow education and training activities to count but only toward the remaining 16 hours of required activity each week - a more restrictive role for education and training than exists in current law.

In assessing these proposed changes, it is important to address the following questions:

Are the new standards achievable? Whether meeting a particular participation standard is feasible depends on what counts as participation (the numerator) and who gets counted (the denominator) in rate calculations. None of the welfare-to-work programs evaluated by MDRC to date - even the most effective ones - would have met the standards currently in place (that is, had states received no credit for caseload reductions), primarily because too few people participated in them for at least the minimum number of hours per week. This finding does not mean that the new, higher participation rates codified in the House-passed bill cannot be met. But it does suggest that the weekly hours requirement would have to be relaxed and that the rules would need to take account of several practical realities involving people's changing status (for example, some will be sick, others will be between activities, and so forth), the slots and services required, and the administrative difficulty of monitoring participation.

States will have to confront a number of administrative challenges as well. The unsubsidized jobs open to recipients often do not provide 40 hours of work each week, and it is often impractical to try to add 5 or 10 hours of activities to a nearly full-time workweek. In addition, because most program services are not designed to last for 40 hours per week, participants would have to be enrolled in multiple activities. To satisfy a "work only" participation standard for 24 hours per week would probably require states to develop large numbers of work experience or community service slots, a potentially expensive undertaking. And satisfying 40-hour participation standards would require major increases in child care funding. All of these challenges are magnified in rural areas. Few states will be able to meet the reporting requirements. It is extraordinarily difficult and expensive to monitor hours of attendance for large numbers of welfare recipients being served by multiple providers.

In short, these considerations suggest that to achieve very high participation rates, there will have to be a very broad range of countable activities, flexibility in the number of hours required per week, and a measurement system that accounts for inevitable periods of downtime and incomplete attendance.

Are the standards likely to generate more effective state TANF programs? While the ends the House-passed bill attempts to accomplish are laudable - that is, seeking a balance between allowing some education and training while retaining a focus on work - the means entail what appear to be unnecessary risks. Essentially, the bill's provisions would force states to increase the use of work experience programs, possibly at the expense of the successful job-search programs that have been most state programs' first line of action. Instead of focusing on getting people off of welfare, states may become preoccupied with keeping everyone busy while they are on welfare. Careful evaluations of work experience programs revealed that recipients thought the requirement was fair and supervisors thought the work accomplished was valuable, but there was no evidence that workfare led to increases in unsubsidized private sector employment, and little support for the notion that recipients learned new skills. Thus, requiring states to meet the proposed participation standards courts a substantial risk that programs will end up being less effective as states radically shift program direction to increase their use of work experience.

Can the balance that the Bush administration-backed reform bill is seeking be struck without risking unintended effects on state programs? If the focus on work and the emphasis on welfare as a temporary source of support are the primary messages policymaker's want to send, then retaining TANF's time limit on benefits ensures those messages will continue to dominate. Allowing participants to fulfill their participation requirements through activities like education and training or by participating in services designed to address the employment barriers faced by the hard-to-employ will not appreciably alter the overall message.

Various strategies to reinforce - and even strengthen - the work message without in-curring the same risk of unintended consequences include the following:

Establish a 100 percent engagement goal, wherein states aim to reach every adult recipient, establish a self-sufficiency plan, and show that the recipient is making progress relative to that plan. Engaging all recipients in this way - which is a precondition for, but not equivalent to, getting them to participate for a fixed number of hours per month - will be key to reducing caseloads and raising employment in the future. Moreover, ensuring that states make repeated good-faith efforts to reach every family facing a time limit avoids imposing an unattainable requirement that fails to recognize changing family circumstances. In other words, whereas 100 percent participation is not real-istic, 100 percent engagement is. Retain the current 50 percent and 30-hour requirements in the current law or, alternatively, increase the participation rate to 70 percent and retain the 30-hour requirement but count a wide range of activities including education and training, substance abuse, and mental health treatment as fulfilling the 30-hour requirement. States should also be allowed to count at least four months' participation in job search per year, a change that would facilitate state efforts to continue their work-first emphasis. Broadening what counts and holding the line on the hours requirements decreases the likelihood that states will have to revamp substantially their existing programs, further reducing the likelihood of unintended consequences. Gradually reduce the caseload reduction credit. Effective participation rates of less than 10 percent - the case in most states now - do not send the right message to states. But ending the credit while ratcheting up participation standards would force states to go from about 20 percent participation today to 70 percent tomorrow. Changes like this cannot be made overnight; programs need time to adjust and expand. Rhetoric to the contrary, there is no evidence suggesting that states can meet either the current participation standards or the new ones without some offsetting caseload reduction credit to bring the effective rate down. One option would be to replace the caseload reduction credit with an employment credit that lowers the participation rate by the percentage of recipients who leave welfare for jobs. Another is to retain a partial caseload reduction credit. Back to summary of policy implications