Conclusion

Welfare reauthorization will likely set the agenda for at least the next five years and possibly for as long as ten. Thus, the revisions legislated today must be sturdy enough, flexible enough, and prescient enough to meet the safety-net needs of the nation's poor, not just through the current period of economic uncertainty but into the next economic recovery and beyond. It will be a daunting challenge, indeed, to ensure that the new law will be able to accommodate the states' efforts to respond to the changing nature of the low-income caseload and to redefine the mission and structure of welfare and related social services agencies accordingly. As welfare caseloads have fallen and employment has risen, the needs of the working poor and the hard-to-employ have come into sharper focus. And now new evidence showing that reform can also benefit younger school-aged children without sacrificing the employment gains of their parents has opened up a range of new options for states. As state agencies sort out these developments - and what priority to place on each - their choices will hinge largely on how much latitude a reauthorized act allows them in respondng to the new landscape they will face.

The Bush administration's proposed plan provides a constructive framework for addressing many of these issues, one that builds on the work focus that research shows has driven much of TANF's success. Notably, it adds the improvement of child well-being as a purpose of TANF, and it acknowledges the need for education and training and other services, including services for the hard-to-employ. From a child-outcome perspective, the research evidence confirms that the strategies states employ can play a vital role in improving child well-being. Nearly every state now has in place policies that would increase both employment and income and, thus, have the potential to benefit young children's school performance. Without additional efforts to resolve the inherent conflict between state incentive policies and time limits, that potential may not be realized. The reauthorization process could give states the tools to resolve this issue.

With respect to education and training, the trade-off the Bush administration proposes would toughen participation standards and eliminate the caseload reduction credit, while giving states increased flexibility to count education and training activities as satisfying program requirements. But available evidence urges caution. To meet the standards being proposed, the most successful state welfare programs that have been evaluated would have to be restructured radically. This restructuring could have the unintended effect of distorting priorities, diverting resources, and driving up costs for child care and work experience slots, with the potential consequence of undermining the very success that is now being celebrated. Focusing on universal engagement, broadening what counts, building better information systems, and establishing benchmarks on actual participation might be the best next steps.

Perhaps the greatest challenge facing TANF reauthorization is the dawning reality that the rare confluence of exceptional economic growth, supports for the working poor, and welfare reform that drove employment to new highs and caseloads to modern-day lows is unlikely to resume. Slower economic growth, higher rates of unemployment, and a persistent state fiscal crisis have created an entirely new context in which reform will have to drive further welfare caseload reductions and increases in employment on its own. To respond effectively in this new environment, states will need the flexibility, the resources, and the know-how that the TANF reauthorization process can provide.