Preface

This is the third report in MDRC’s multi-year evaluation of Florida’s Family Transition Program (FTP), one of the first welfare reform initiatives in the nation to impose a time limit on the receipt of cash assistance.

The report finds that FTP’s impacts are occurring in stages. In the first two years of the follow-up period, before participants could have reached FTP’s time limit (24 months for most recipients), the program increased employment rates and earnings, but did not affect the rate of welfare receipt. Thus, the program’s primary effect was to increase the proportion of people who were combining work and welfare. FTP also raised families’ combined income from public assistance and earnings. (Although the program did not reduce the number of people receiving welfare during this period, it did reduce the average amount of welfare payments per person.)

Findings for the first enrollees to enter the study suggest that the pattern of results began to change just after the two-year point, as small numbers of FTP participants began to reach the time limit and have their welfare benefits canceled. FTP began to generate significant reductions in the rate of welfare receipt at that point. Also, FTP began to increase the proportion of people who were working and not receiving cash assistance.

The report also describes the multi-stage process that occurs as FTP participants approach the time limit. To date, almost all those who used up their allotted months of benefit receipt had their benefits canceled. At the same time, only a small proportion of FTP participants have reached that point; most left welfare before reaching the time limit, and still had some time remaining on their "clocks."

Finally, the report provides contextual information that is critical to interpreting the impact results. For example, it illustrates that FTP involved much more than a time limit – the program has been generously funded, and has provided an unusually rich array of services and supports to its participants. In addition, the report notes that FTP has operated in a strong labor market, during a time when Florida’s statewide welfare caseload has dropped precipitously.

The unfolding story of FTP provides a preview of the issues and potential impacts of more recent welfare reform initiatives being implemented in Florida and other states under the 1996 federal welfare law. Although the story is far from over, the study is already providing valuable early data. Future reports in the study will continue to document the results of this important program, and will address critical open issues, such as how families fare after their welfare grants are canceled.

We owe a debt of gratitude to the Florida Department of Children and Families staff who have consistently supported and assisted the FTP evaluation. It is their unstinting commitment that makes the entire study possible, and with it crucial early information about the implementation and effects of major new strategies in social policy.

Judith M. Gueron
President

Introduction

The Family Transition Program (FTP) is a welfare reform pilot project that began operating in 1994 in two Florida counties. FTP was one of the first welfare reform initiatives in the nation to include a time limit on the receipt of cash assistance. It also includes an array of services, mandates, and financial work incentives designed to help welfare recipients prepare for, find, and hold jobs. FTP was implemented more than two years before the passage of the federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996 and it anticipated several elements of the new federal law. FTP also served as a model for Florida’s statewide welfare reform, known as Work and Gain Economic Self-Sufficiency (WAGES), which was implemented in late 1996. Thus, FTP provides important lessons on the implementation and potential effects of more recent welfare reform initiatives in Florida and elsewhere.

This is the third report in a multi-year evaluation of FTP being conducted by the Manpower Demonstration Research Corporation (MDRC) under a contract with the Florida Department of Children and Families, the agency that administers FTP. MDRC is a nonprofit, nonpartisan organization with more than two decades of experience designing and evaluating social policy initiatives.

The report focuses on one of the FTP pilot counties, Escambia, a mid-sized county in northwestern Florida that includes the city of Pensacola.¹ It describes FTP’s implementation and examines how the program is affecting rates of welfare receipt, employment, and family income, among other measures.

While the results presented here go considerably beyond those presented in the two prior reports, the full story of FTP is still unfolding. The report’s main analysis follows individuals for up to 33 months, long enough to see the results that were generated when small numbers of recipients started to reach FTP’s 24-month time limit (nearly 60 percent of FTP participants are subject to a 24-month time limit, but the vast majority of them did not receive welfare for 24 consecutive months after entering the program). Nevertheless, the post-time limit follow-up is still too short to assess how the families who reached the limit will fare over time. Moreover, over 40 percent of FTP participants — those facing greater barriers to employment — are subject to a 36-month time limit, and the report’s follow-up period is not long enough to track many of these people to the point when they could have reached the limit. Two additional reports over the next two years will continue to fill in the pieces of this important picture.

The Findings in Brief

This report examines FTP’s implementation and compares the experiences of two groups: the FTP group, whose members are eligible for FTP’s special services and financial incentives, and subject to its mandates and time limit; and the Aid to Families with Dependent Children (AFDC) group, whose members are subject to the welfare rules that were in place before FTP began. (Although AFDC group members are neither eligible for FTP’s services nor subject to its time limit, many of them are required to participate in employment-related activities, in accordance with prior welfare rules.) To ensure that the groups are comparable, welfare applicants and recipients were assigned to one or the other group at random. Thus, any differences in employment, welfare receipt, or other outcomes that emerge between the groups over time are attributable to FTP.

The report focuses on about 2,800 people (1,400 in each group) who were assigned to the groups between May 1994 (when FTP began) and February 1995. It uses surveys and administrative data to track each person for two years after he or she entered the study. A subset of people is tracked for a longer period. The key findings are as follows:

• Although FTP encountered some start-up delays, even early FTP enrollees experienced a much different welfare system than did members of the AFDC group. Florida has committed substantial resources to FTP, allowing the program to maintain low client-to-staff ratios and to offer an array of special services and supports. Although some of FTP’s enriched features were not in place when the program started, survey data indicate that members of the FTP group received more personal attention from staff, and were more likely to receive employment-related and other services, than were members of the AFDC group. FTP group members were also subject to more intensive mandates, and were much more likely to be sanctioned (i.e., to have their grants reduced) for failing to comply with program rules. FTP’s message, at least during its early operational period, was strongly focused on education and training: Most FTP group respondents reported that staff urged them to take time to build their skills, rather than encouraging them to leave welfare quickly in order to save or "bank" their remaining months of assistance.
• Few FTP group members have reached the time limit. However, almost everyone who has reached that point has had his or her benefits canceled. Of the 919 FTP group members who are part of the analysis, and who entered FTP early enough that they could have reached the time limit by June 1997, only 102 had actually exhausted their months of benefits. The vast majority of people subject to a 24-month time limit did not receive benefits continuously for 24 months after enrollment. The less employable participants who are assigned a 36-month time limit are accumulating months more quickly, but few of them entered FTP early enough that they could have reached the limit by June 1997. Of the 102 people who reached the limit, 98 had their benefits entirely canceled immediately and three others had their grants canceled after a brief extension; in the remaining case, the children’s portion of the grant was retained and diverted to a "protective payee" to administer on their behalf. Program records indicate that about half of those whose grants were canceled were earning at least as much as a standard welfare grant when they reached the limit; the others were either unemployed or earning less than a standard grant.
• During the first two years of the follow-up period, FTP’s main effect was to increase the percentage of people combining work and welfare. The program also raised family income while reducing the amount of cash assistance and Food Stamps people received. FTP has generated an increase in employment: Two years after entering the study, 52 percent of FTP group members were employed, compared with 44 percent of AFDC group members. However, FTP did not reduce the rate at which people accumulated months of benefit receipt, and members of the two groups were equally likely to be receiving welfare at the end of the two-year period. The pattern of employment gains without corresponding reductions in the rate of welfare receipt may be attributable in part to FTP’s expanded earnings disregard — a rule that allows FTP group members to earn more without losing eligibility for welfare.

Although FTP did not reduce the number of people receiving welfare during the first two years, it did reduce the amount of welfare people received during Year 2. This may have occurred because FTP group members were more likely to be sanctioned and/or because FTP’s expanded earnings disregard enabled employed people to continue receiving welfare, but at a lower amount. FTP also reduced average Food Stamp amounts during both years. Overall, however, the FTP group’s higher earnings offset their lower public assistance benefits; thus, on average, FTP group members had 5 percent more combined income from these sources during Year 2.

• FTP began to significantly reduce the rate of welfare receipt just after the second year of follow-up, when small numbers of FTP group members began to reach the time limit. Additional follow-up data are available for people who entered the study early. In Quarter 11 (the third quarter of Year 3 of the follow-up period), 23 percent of the FTP group members in this subsample, compared with 32 percent of AFDC group members, received cash assistance. This abrupt reduction in welfare receipt is consistent with the fact that about 8 percent of FTP group members had had their benefits canceled by Quarter 11. Although some FTP group members were not employed when their grants were canceled, on average, the full FTP group’s higher earnings continued to offset their lower public assistance benefits just after the two-year point.

Open questions. FTP has achieved several milestones: The program has delivered enhanced services and a new message encouraging self-sufficiency; increased employment, earnings, and income; and, after a small number of participants had their grants canceled at the time limit, it began to reduce the rate of welfare receipt. However, key questions about FTP’s impacts remain. As noted earlier, the follow-up period is still too short to assess how the families whose benefits were canceled will fare over time. Moreover, there are not enough data available to track the segment of the caseload facing the greatest barriers to employment — those assigned a 36-month time limit — to the point where many of them could have reached the limit. Future reports will address these issues.

FTP’s Policy Context

Although the 1996 federal welfare law fundamentally changed the structure and funding of cash assistance for needy families, many of the specific policies that the new law encourages states to adopt were already being implemented under waivers of federal AFDC rules that had been granted to 43 states prior to the bill’s passage. For example, while the new law restricts states from using federal funds to provide assistance to most families for more than 5 years, more than 30 states had previously received waivers to implement some form of time limit on welfare receipt in at least part of the state.

Florida’s Family Transition Program is one of the most significant initiatives implemented under waivers because it was one of the first to include a time limit on welfare benefits. Indeed, Escambia County was the first place in the United States where single-parent welfare recipients reached a time limit and had their benefits canceled. (The first recipients reached the limit in early 1996.)

Because time limits are so new, very little is known about how they will be implemented or how they will affect welfare recipients, their families, or government spending. Proponents contend that time limits will motivate recipients and the welfare system to focus on self-sufficiency, and that curtailing long-term welfare receipt will help alleviate a range of social problems. Critics argue that many welfare recipients have low skills and other problems that will make it difficult for them to support their families over the long term without welfare. Thus, they argue, imposing time limits will harm many vulnerable families with children. The FTP evaluation — which uses a rigorous research design and a rich array of data sources — is providing vital early information on the implementation and impacts of this key change in welfare policy.

The Family Transition Program

All of the welfare applicants and recipients who were randomly assigned to the FTP group were required to enroll in the program.² Like many other state welfare reform initiatives, FTP is a multi-faceted program that includes several features designed to assist and require participants to move toward self-sufficiency. The program includes four major components:

• A time limit. Most recipients are limited to 24 months of cash assistance receipt in any 60-month period after entering FTP, although certain groups of particularly disadvantaged recipients have a limit of 36 months of receipt in any 72-month period.³ Temporary extensions of the time limit may be granted under certain circumstances, and the program model calls for post-time limit, publicly funded work opportunities for FTP participants who make a diligent effort but have not found a job on their own by the time they reach the time limit. A citizen Review Panel helps to determine whether participants have complied with program rules and makes recommendations regarding extensions and benefit terminations.
• Financial work incentives. FTP changes a number of welfare rules to encourage and reward work. Most important, the first $200 plus one-half of any remaining earnings is disregarded (that is, not counted) in calculating a family’s monthly welfare grant. In addition, FTP allows families to accumulate more assets than were previously allowed without losing eligibility for benefits. Finally, subsidized transitional child care is provided for two years after recipients leave welfare for work (as opposed to the one year of assistance provided under traditional AFDC).
• Enhanced services. FTP participants receive intensive case management, enhanced employment and training services (most FTP participants are required to participate in such services for at least 30 hours per week), social and health services, access to expanded funding for child care and support services, and other kinds of assistance. Many of FTP’s services are located together in the FTP program offices (known as "service centers") to make them more accessible. In addition, participants who find jobs and earn their way off welfare can obtain support for further education or training.
• Parental responsibility mandates. Under FTP, parents with schoolage children are required to ensure that their children are attending school regularly and to speak with their children’s teachers each grading period. Welfare applicants with pre-schoolage children must verify that their children have begun the necessary immunizations. Parents who fail to comply with these mandates — or the employment and training participation requirements described above — may be sanctioned (that is, their grants may be reduced).

FTP’s enhanced services and incentives involve a substantial upfront investment. The program’s designers hoped that this initial investment would be recouped when recipients moved off welfare and into jobs.

Data Sources, Samples, and Time Frame

As noted earlier, this report focuses primarily on about 2,800 people who were randomly assigned to the FTP and AFDC groups between May 1994 and February 1995; these individuals are known collectively as the report sample. Part of the analysis focuses on a subset of the report sample — people randomly assigned between May and September 1994; this group is referred to as the extended follow-up sample.

The report uses two main data sources:

• Computerized records of monthly AFDC/TANF payments,⁴ monthly Food Stamp benefits, and quarterly earnings for each member of the two groups. These data cover the first two years after random assignment for everyone in the report sample, and up to 33 months (11 quarters) for the extended follow-up sample.
• A survey that was administered to about 600 FTP and AFDC group members roughly two years after each person entered the study. The survey targeted a subset of the report sample — individuals randomly assigned between December 1994 and February 1995 — and achieved a completion rate of 80 percent.

FTP’s Services and Message

• Although FTP encountered start-up delays, even early enrollees experienced a much different welfare system from the one that AFDC group members encountered: FTP participants got more personal attention from staff, were subject to more intensive mandates, were more likely to receive employment-related services, and heard a stronger message about the importance of moving toward self-sufficiency.

This report focuses on people who entered FTP during its first 10 months of operations, and earlier reports have noted that some of the program’s special features were not fully implemented during this period. At the same time, some of FTP’s enhanced elements — such as its intensive case management and support services — were in place from its inception, and survey results suggest that the experiences of the FTP group members studied in the report were much different from those of their counterparts in the AFDC group. (Staff survey results, presented in the prior report, pointed to the same conclusion.)

First, FTP group members received more personal attention from staff. For example, on the two-year survey, nearly three-fourths of FTP group respondents agreed with the statements "the FTP staff took the time to get to know me and my particular situation" and "the FTP staff are really interested in helping me improve my life." Most AFDC group members (61 percent) agreed that welfare staff were interested in helping them, but only 42 percent agreed that staff took the time to get to know them. This difference is likely to be attributable to FTP’s low client-to-staff ratios.

Second, FTP participants were subject to a more intensive set of mandates to participate in activities designed to promote self-sufficiency. Data collected from program casefiles show that about one-third of FTP group members were sanctioned for failing to comply with program rules within two years after random assignment, compared with about 11 percent of AFDC group members. On the survey, less than one-fourth of FTP group members agreed that it was "easy to stay on welfare without participating in activities to prepare for work." (The figure was similar for the AFDC group.)

Third, FTP group members were much more likely to receive employment-related services and supports. As shown in Table 1, 72 percent of FTP group members and 45 percent of AFDC group members reported on the survey that they participated in at least one employment-related activity within two years after random assignment. This substantial difference is noteworthy because many AFDC group members were subject to a mandatory welfare-to-work program. (It is also notable that there were very few people in either group who neither participated nor worked during the two-year period.) Other survey data show that large proportions of FTP group members also received child care and transportation assistance and other support services from the program, and found these services to be valuable.

Finally, FTP group survey respondents were much more likely to report that staff urged them to take a variety of steps toward self-sufficiency, such as obtaining education and training, taking jobs, or leaving welfare quickly.

• The vast majority of FTP group members are aware of the time limit, although the time-limit message may not have been particularly strong in the program’s early operational period. Some AFDC group members also believe, incorrectly, that they are subject to a time limit.

Another key "treatment" difference between the FTP and AFDC groups involves the time limit. Survey data indicate that FTP has been successful in informing participants about this policy: Nearly 90 percent of FTP group respondents reported that they were (or had been) subject to a time limit on welfare receipt. The vast majority of these people knew the correct length of their time limit, although there is evidence that some of them may have incorrectly believed that the time limit referred to a calendar period, rather than to a cumulative number of months of welfare receipt.

Because FTP was one of the first programs in the nation to impose a time limit, some have argued that the evaluation’s results may understate the potential impact of the program; it might have had a larger impact had it been implemented in an environment in which recipients had observed that people’s benefits are indeed canceled at the end. Survey data show that just under half of the FTP group respondents believe that "nearly everyone" who reaches the time limit has his/her benefits canceled, while just over 40 percent believe that "only some" of those who reach the limit are cut off. Respondents who had heard about someone whose benefits were canceled were much more likely to believe that nearly everyone who reaches the limit loses their grant. However — perhaps because only a small number of people had reached the time limit when the survey was administered — only about one-fifth of survey respondents said they had heard about or knew someone whose benefits had been canceled.

Over one-fourth of AFDC group members reported, incorrectly, that they were subject to a time limit (although many of them did not know the specifics, such as the length of their limit). These individuals may have been influenced by media reports about FTP, WAGES, or federal welfare reform. Because the behavior of some AFDC group members may have been affected by their perception that they are subject to a time limit, the impacts measured in this report might have been larger — particularly during the pre-time limit period — if all AFDC group members understood that they are not subject to a time limit.

Just over half of survey respondents said that they believe it is fair to place a time limit on welfare receipt. A little more than one-fourth think it is unfair, while the rest gave mixed views. Responses were almost identical for the FTP and AFDC groups — indicating that actual exposure to a time limit has not affected people’s perceptions of its fairness — but long-term recipients were more likely to view the time limit as unfair.

• At least during the early operational period, FTP staff tended to encourage participants to use their available time on welfare to build their skills, rather than urging them to leave welfare quickly in order to "bank" their remaining months of welfare.

There are several possible messages that staff might transmit to welfare recipients facing a time limit. For example, staff might urge recipients to leave welfare as quickly as possible in order save their available months for a time when they might need assistance more. Alternatively, workers might urge recipients to use at least some of their available time to build their skills, in the hope that they might obtain better jobs that would keep them off welfare permanently.

Survey data indicate that FTP sent a message that focused on skills development. Nearly 80 percent of FTP group respondents reported that staff urged them to get education and training to improve their skills. A fairly large fraction (61 percent) said that staff urged them to get off welfare as quickly as possible, but this message was clearly tempered by an emphasis on job quality: Only 39 percent said that staff pushed them to get a job before they felt ready or a good job came along. On another question, only 31 percent said that staff urged them to save up their months of benefits for when they needed assistance most. (Staff report that FTP has shifted its focus over time; thus, participants who entered the program in 1996 might have heard a different message from the one given to those who were surveyed.)

FTP’s emphasis on skills-building is also reflected in Table 1, above, which shows that more than half of FTP group members — and 70 percent of those who participated in any activity — reported that they participated in at least one education or training activity during the follow-up period. (There was also a strong emphasis on job search activities, and many people participated both in education or training and in job search.)

Moreover, other data (not shown in the table) indicate that FTP generated a significant increase in the percentage of people who had earned a trade license — which may be the result of several special short-term training programs that were developed specifically for FTP participants. Trade licenses may give FTP participants access to certain types of jobs for which they might not otherwise qualify.

• When asked which FTP features had most influenced their decisions about work, FTP group members most often identified the program’s support services. They mentioned the time limit less often than other key program features.

The FTP research design does not allow the study to determine how much each of FTP’s components contribute to the program’s overall impact on clients’ behavior. However, a series of survey questions asked FTP group members to assess how much their decisions about working had been affected by five particular features of FTP: employment and training services, support services, advice and assistance from staff, the financial incentives, and the time limit. Overall, 65 percent of respondents reported that their decisions had been affected "a lot" by at least one of these aspects of FTP.

The results show that the largest proportion of respondents — nearly half — said that their decisions had been strongly influenced by support services such as child care and transportation. The time limit appears to have been the least influential of these five program elements: Only a little over one-fourth of the respondents said that the limit had affected their decisions a lot, and half said it had not affected their decisions at all. This result is consistent with the views expressed in group discussions with FTP participants who had used about half their allotted months. Many recipients were focused on day-to-day problems, and saw the time limit as a distant concern. Although many participants were working or preparing for work, most said that the time limit had not affected their decision to do so.

The Implementation of FTP’s Time Limit

• The vast majority of the FTP participants who were assigned a 24-month time limit left welfare, at least temporarily, within two years after entering FTP. Thus, relatively few people reached the time limit within the follow-up period for this report.

Figure 1 examines the status of the FTP group members in the report sample as of June 1997. More specifically, the figure focuses on the 919 people (776 with a 24-month limit and 143 with a 36-month limit) who entered FTP early enough to have potentially reached the time limit by that date. Of this group, only 102 people had reached the limit (that is, had received either 24 or 36 countable months of AFDC/TANF benefits). An additional 37 people had accumulated either 24 or 36 months of benefits, but some of the months did not count toward the time limit, usually because the client had received a temporary medical exemption that stopped her or his time-limit clock or because she or he moved to another county without an FTP program.

The small number of people reaching the time limit reflects the fact that the vast majority of the people subject to a 24-month time limit left welfare, at least temporarily, before using up all of their months. A separate analysis showed that only 9 percent of these participants received 24 consecutive months of AFDC/TANF benefits after entering FTP. Participants subject to a 36-month time limit are accumulating months more quickly, but only a small number of people in this group (143) entered the program early enough to have reached the time limit by June 1997.

These patterns appear to reflect normal welfare dynamics. As discussed below, until they began reaching the time limit, FTP participants were accumulating months of benefit receipt at the same rate as members of the AFDC group, who are not subject to a time limit.

• Although FTP’s policies include provisions for extensions, partial benefit cancellations, and post-time limit subsidized jobs for participants who comply with the program but cannot find jobs, nearly all of the FTP group members who have reached the time limit have had their benefits entirely canceled.

FTP’s policies allow for temporary extensions of the time limit under certain circumstances and mandate that the children’s portion of a family’s benefits is to be continued when full cancellation would place the children at risk of foster care placement. In addition, the program model calls for post-time limit, publicly funded work opportunities for participants who comply with FTP’s rules but are not earning at least "grant+$90" — the standard welfare grant for their family size plus a $90 per month allowance for work expenses — when they reach the time limit.

FTP has developed a multi-step review process to determine when these special circumstances should apply. This process includes initial meetings among staff and supervisors, hearings by a citizen Review Panel composed of volunteers from the community and, for cases scheduled to be terminated, an additional review by a child welfare worker to determine whether the children’s portion of the grant should be continued. Finally, the local Department of Children and Families District Administrator gives final approval on all benefit terminations and extensions.

In practice, very few cases have met the criteria for any of the special provisions described above. Of the 102 members of the report sample who reached the time limit by June 1997, 98 had their entire grant canceled immediately and 3 were terminated after a brief extension; the children’s portion of the grant was retained in the one remaining case. No one had been provided with a post-time limit, publicly funded job. According to program records, roughly half of the recipients who had their benefits terminated were earning grant+$90 when they reached the time limit. (Many of those people would have been ineligible for benefits — and might have left welfare earlier — had it not been for FTP’s expanded earnings disregard.) Recipients who were earning grant+$90 received an average of $153 in their final AFDC/TANF check; those who were not earning grant+$90 received an average of $224. (The maximum grant for a family of three is $303.)

The main reason why nearly everyone who has reached the time limit has had her or his grant canceled, and why no post-time limit subsidized jobs have been provided, is that very few clients who were deemed to have cooperated with FTP have reached the time limit without a job or some other source of income. About half of the 102 people who reached the time limit were considered "compliant." Compliant clients can receive intensive job placement help in their final months in the program, and most were earning at least grant+$90 when they reached the limit; thus, they needed neither an extension nor a subsidized job. A few of the compliant clients were not earning grant+$90 when their benefits were canceled, but program staff report that most of these individuals had other income sources and did not want a subsidized job. (A few others were reported to have stopped cooperating with job placement efforts shortly before reaching the limit.) Extension requests are quite rare, in part because staff do not discuss this policy much with clients; workers speculate that few participants are aware that extensions are possible. (Survey results confirm that most FTP group members heard little about extensions.)

The other half of the participants who reached the time limit — including most of the people who were not earning grant+$90 — were considered to be noncompliant with FTP. Participants who are deemed noncompliant are not eligible to receive post-time limit subsidized jobs and are unlikely to be granted extensions;⁵ their benefits are canceled, regardless of their employment status, unless the child welfare review finds that full cancellation would place the children at risk of foster care placement.⁶   In practice, few cases meet this criterion.

Compliance is assessed throughout a participant’s time in FTP, but the final decision about whether a client will be considered compliant or noncompliant is made roughly six months before he or she reaches the time limit; at that point, the staff who have worked with the participant meet to decide whether the case should be referred for a Review Panel hearing. (Cases are also sent to the Review Panel at earlier points, but their final status is not determined until they near the end.) Staff report that the vast majority of cases referred to the Review Panel at this point are officially deemed to be noncompliant, in essence making them ineligible for extensions or post-time limit jobs.

Although FTP has no specific definition of compliance, staff report that most of the cases sent to the Review Panel with six months remaining on their clocks clearly have not cooperated with FTP’s requirements (e.g., they missed numerous appointments or activities without a valid reason). However, staff also refer to the Review Panel clients who, in their view, have complied with FTP but who have not made sufficient progress to ensure that they will be earning grant+$90 when their time limit expires. Casefile reviews and discussions with staff indicate that these cases are often deemed noncompliant during their Review Panel hearing. This may occur because the Panel disagrees with the worker’s perception that the client had complied with the rules.

• Early results from a small-scale, in-depth study of people whose benefits were canceled indicate varying responses to the loss of welfare benefits.

MDRC is conducting an in-depth study of a small number of FTP participants who reached the time limit and had their benefits canceled. Individuals are interviewed around the time their benefits expire, and then 6 and 12 months later. This report includes data from the first two interviews for a group of 32 people who were subject to a 24-month time limit and whose benefits were canceled in late 1996 and early 1997 (25 of the 32 people had completed the six-month follow-up interview when the study period ended). Because this in-depth study does not include members of the AFDC group, it is impossible to directly attribute changes in people’s circumstances over time to the fact that their welfare grants were canceled.

About half of the sample members for this small study were employed during their last month on welfare. These individuals were relying mainly on their own earnings, supplemented with partial AFDC/TANF grants and Food Stamp benefits. The other sample members were unemployed during their last month of assistance; they were relying mainly on public assistance. (Many were also living with family members.)

Overall, sample members reported somewhat lower average income at the six-month follow-up point than during their last month receiving AFDC/TANF. However, the overall average masks the fact that some sample members lost income while others gained income. The group that lost income includes mostly the people who were employed during their last month on welfare. These individuals lost their welfare grants and, for reasons that are not entirely clear, several of them reported that they were not receiving Food Stamps at the six-month point. Their earnings did not increase enough to offset the lost public assistance. Nonetheless, it is important to note that most of these people still had monthly earnings that were greater than a standard welfare grant.

All of the sample members who gained income had not been employed during their last month of assistance. Several of them found jobs after their grants were canceled, while others reported receiving more child support at the six-month point. (It is not clear to what extent the increase in reported child support reflects the fact that the state keeps most of the child support paid on behalf of custodial parents receiving welfare, making it difficult for recipients to know how much is being paid.)

Despite the modest overall income loss, sample members were no more likely to be experiencing serious material hardship at the six-month point than during their last months on welfare.

FTP’s Impacts

• During the first two years of the follow-up period, FTP increased employment rates and earnings, but did not affect the rate of AFDC/TANF receipt. Thus, the program’s main effect was to increase the number of people combining work and welfare.

Table 2 summarizes FTP’s impacts during the first two years of the follow-up period. During this "pre-time limit" period, FTP generated an increase in both employment rates and earnings. In the last quarter of the second year, 51.7 percent of FTP group members were employed, compared with 43.5 percent of AFDC group members. On average, FTP group members had $1,058 in earned income during this quarter, which was $207 (24 percent) higher than the AFDC group average (these averages include both people who worked in the quarter and those who did not). Figure 2 shows that FTP’s impacts on earnings grew larger over time.

The welfare receipt patterns of FTP and AFDC group members looked nearly identical through the first two years of the follow-up period. As shown in Table 2, members of the two groups accumulated months of benefit receipt at the same rate and were about equally likely to be receiving AFDC/TANF benefits in the last quarter of the second year. There were also no differences in the rate of Food Stamp receipt during this period.

Although FTP did not reduce the rate of welfare receipt, it is interesting to note that only about one-third of the members of each group were still receiving welfare at the end of Year 2. This rapid decline in welfare receipt is consistent with a statewide trend: Florida’s statewide AFDC/TANF caseload declined by 37 percent between early 1994 and mid-1997, one of the largest drops recorded in any large state.⁷

The pattern of employment gains without corresponding reductions in the rate of AFDC/TANF receipt is probably attributable, in part, to FTP’s enhanced earned income disregard, which allows FTP group members to earn more while remaining eligible for assistance (although at a reduced level). Thus, as shown in Figure 3 (which focuses on the last quarter of the second year), FTP’s primary impact was to reduce the number of people who were not employed and receiving AFDC/TANF (the first set of bars), and to increase the number who were both working and receiving AFDC/TANF (the second set of bars).

• FTP reduced Food Stamp payment amounts during the first two years and AFDC/TANF payment amounts in Year 2. However, because the increase in average earnings was larger than the reductions in public assistance, FTP group members had higher combined income from these three sources in Year 2.

Although FTP did not reduce the number of people receiving AFDC/TANF during the first two years, the program did reduce average payment amounts: FTP group members received about 11 percent less in total AFDC/TANF payments during the second year of the follow-up period. Table 2 shows that the program reduced average AFDC/TANF payments by nearly 20 percent in the last quarter of Year 2 alone. This may have occurred because FTP group members were more likely to be employed — and thus to receive only a partial welfare grant — and/or because they were more likely to be sanctioned for not complying with program requirements.

Table 2 also shows that FTP reduced Food Stamp payments by about 8 percent over the first two years. This occurred because both earnings and AFDC/TANF are counted as income in calculating Food Stamp benefits, and FTP group members had higher combined income from these sources.

Because the increase in average earnings, discussed above, was larger than the reductions in average Food Stamp and AFDC/TANF payments, FTP group members had more total income from these three sources during Year 2. Table 2 shows that they had $115 (8 percent) more income from these sources, on average, in the last quarter of Year 2.

• Survey data indicate that FTP group members were more likely than AFDC group members to obtain full-time jobs, and jobs that provided fringe benefits. There was little difference in the hourly wages of jobs obtained by FTP and AFDC group members.

Among FTP group members who reported that they had worked for pay since random assignment, 47 percent said they were working at least 40 hours per week in their most recent job. The comparable figure for the AFDC group was 38 percent. There was no comparable difference in hourly wages: Employed respondents in both groups reported that their most recent job paid, on average, just over $6 per hour. These figures suggest that FTP’s overall impact on average earnings was driven by two factors: FTP group members were more likely to work and, among those who worked, FTP group members worked more hours per week.

Although employed FTP group members did not earn higher wages, they were more likely to obtain jobs providing fringe benefits. For example, among FTP group members who reported that they had worked since random assignment, 43 percent said that their most recent job provided health benefits. The comparable figure for the AFDC group was 34 percent. Similarly, 36 percent of employed FTP group members reported that their most recent job provided paid sick days, compared with 23 percent of employed AFDC group members. Finally, FTP group members who had worked were more likely to report a high level of satisfaction with their most recent job.

• Data for early enrollees show that FTP began to substantially reduce AFDC/TANF receipt just after the two-year point, when small numbers of FTP group members started to reach the time limit and have their benefits canceled.

Table 3 summarizes FTP’s impacts after the two-year point for the extended follow-up sample: the 1,347 people who were randomly assigned to the FTP and AFDC groups between May and September 1994. Because they entered the study early, it is possible to track these people for more than two years. (The impacts for this subsample during the first two years of the follow-up period are similar to the impacts discussed above for the full report sample; thus, Table 3 shows only the results beyond the two-year point.)

Table 3 shows that FTP began to reduce AFDC/TANF receipt just after the two-year point; this is also illustrated in Figure 4. By Quarter 11, there was a substantial difference between the groups: 32 percent of AFDC group members were receiving AFDC/TANF, compared with 23 percent of FTP group members (this includes people subject to a 24-month time limit and those subject to a 36-month limit). This result is consistent with the fact that about 8 percent of FTP group members had reached the time limit and had their benefits terminated by the end of Quarter 11.

• After the two-year point, FTP began to increase the proportion of people who were working and not receiving welfare. On average, however, the income gains that emerged in the second year of the follow-up period were sustained beyond that point.

A total of 10 quarters of post-random assignment employment and earnings data are available for members of the extended follow-up sample. Thus, it is possible to examine both their combined income from AFDC/TANF, Food Stamps, and earnings, and their welfare and employment status just beyond the two-year point.

Figure 5 shows sample members’ combined welfare and employment status in Quarter 10. As noted earlier (and shown in Figure 3 above), FTP’s primary impact before the two-year point was to reduce the number of people who were receiving welfare and not working, and to increase the proportion who were doing both. In Quarter 10, there was a larger reduction in the proportion of people receiving welfare and not working but, by this point, the program had also started to increase the proportion of people who were working and not receiving AFDC/TANF (the third set of bars).

Table 3 shows that, for the extended follow-up sample, the FTP group continued to have higher combined income from AFDC/TANF, Food Stamps, and earnings after the two-year point. In Quarter 10, their average combined income from these three sources was $185 (13 percent) higher. It is important to note, however, that FTP’s impact on combined income during this period differed somewhat depending on the type of time limit sample members were likely to have. In short, the impact on combined income was somewhat smaller among those with characteristics that would give them a 24-month time limit than it was for those likely to have a 36-month limit.⁸ This is because those in the 24-month subgroup were more likely to have their benefits canceled and, thus, were less likely to be combining work and welfare after the second year of follow-up.

FTP’s Relevance to Other Time-Limit Programs

Because it is one of the earliest programs in the nation to include a time limit on welfare receipt, FTP’s results offer critical early data to inform welfare policy in Florida and in other states. Key results to date include the following:

• FTP’s combination of services, mandates, incentives, and time limits has generated increases in employment and earnings. It is not clear to what extent these increases were driven by the time limit, versus other program features; other programs without time limits have generated similar impacts in the past.
• FTP did not affect the rate of welfare receipt in the pre-time limit period, suggesting that its time limit did not induce many people to leave welfare earlier in order to "bank" their available months. (The welfare reduction that emerged after the two-year point may have been driven primarily by the benefit terminations that began to occur in that period.)
• In the second year of the follow-up period, FTP began to reduce the amount of cash assistance and Food Stamps families received. However, on average, families gained more in earnings than they lost in public assistance, resulting in an overall increase in income from these sources. It will be important to examine whether this trend continues over time, as more families reach the time limit and lose their welfare grants.

In drawing broader lessons from these results, it is important to consider several distinctive features of FTP. First, the program is operating in a mid-sized county with a strong labor market, during a period when Florida’s statewide welfare caseload has dropped precipitously. Moreover, despite some start-up delays, FTP has been generously funded and has delivered a broad range of services and supports to its participants. A time limit implemented in a large city, a weaker labor market, or with fewer complementary services and supports might produce different results.

Second, because it was one of the first programs in the United States to impose a time limit, FTP’s time limit message was new to its participants. They may have been skeptical about whether it would really be implemented. Individuals entering WAGES in Florida today might be more likely to believe that the time limit is real — and might respond differently.

Third, FTP’s time limit is combined with other program features — notably, a relatively strong focus on education and training, and a financial work incentive that allows more working families to retain eligibility for welfare — that are not designed to hasten welfare exits. A program that strongly urged participants to leave welfare quickly in order to "bank" their remaining months might generate larger changes in welfare receipt patterns in the pre-time limit period — although it might not lead to income gains and better jobs, as FTP seems to have done.

Finally, Florida provides low welfare grants relative to most other large states, which means that people whose grants are canceled do not lose as much income as they would in a higher-grant state. This has important implications for the post-time limit well-being of those whose grants are terminated, and for state-federal fiscal relations; Food Stamps — a federally funded program — plays a relatively larger role when cash assistance grants are low.

What Else Will We Learn from This Study?

Although few people have reached FTP’s time limit so far, the patterns observed to date suggest that a substantial number of individuals facing serious barriers to employment — those subject to a 36-month time limit — will reach the time limit in the coming months.

These individuals may drive the program’s long-term results. If current patterns hold, most of the people who reach the limit will have their grants canceled; some will be employed at that point, and some will not. But, while a participant’s status in the final month of benefit receipt is crucial from a programmatic perspective (because FTP must determine how to handle each case based on its status at that point), it may have little to do with how his or her family fares over time. Some people who are not employed on their termination date will find jobs shortly thereafter, and some who have jobs will lose them — but none of these individuals will be allowed to return to welfare for several years. Thus, long-term follow-up is critical.

The study will continue to follow the two groups over time and, as the number of people reaching the time limit grows, these families will begin to affect the FTP group’s overall average earnings and income, and the well-being of children in that group. If most people find other income and fare well after their grants are canceled, the FTP group will continue to have better outcomes than the AFDC group. On the other hand, if many people fail to replace what they lose from welfare over the long-term, the FTP group — or at least some subsets of it — may end up worse off than they would have been.

Finally, the study will assess the cost of FTP, and will determine whether the savings in public assistance spending that FTP generates are large enough to offset the substantial upfront costs associated with the program’s services and supports — as well as any other costs that are attributable to the program over time.

Notes:

1. The second pilot county, Alachua, operated a voluntary version of FTP. That pilot has been discontinued.

2. The following categories of people are exempt from FTP and did not go through the random assignment process: incapacitated or disabled adults; individuals under 18 years old who are attending school or working at least 30 hours per week; adults caring full-time for disabled dependents; parents caring for children six months old or younger who were conceived before the parent entered FTP; recipients 62 years old or older; and caretaker relatives whose needs are not included in the grant. In some cases, FTP group members were exempted (i.e., their time-limit clocks were stopped, at least temporarily) after random assignment.

3. Recipients are assigned a 36-month time limit if they (1) received welfare for at least 36 of the 60 months before entering FTP; or (2) are under 24 years old and have no high school diploma and little or no recent work history.

4. The term "AFDC/TANF payments" refers to cash assistance previously provided under AFDC and currently provided under the Temporary Assistance for Needy Families block grant. The FTP group is subject to rules that are consistent with TANF, while the AFDC group is subject to traditional AFDC rules.

5. Any participant may request an extension and have this request considered by the Review Panel. However, because extensions are intended for compliant clients, requests by noncompliant clients are unlikely to be supported by the staff or the panel. The local District Administrator must grant final approval for extensions.

6. According to program records, almost one-third of the noncompliant clients were earning grant+$90 when they reached the time limit.

7. It is not clear to what extent the statewide caseload decline was driven by welfare "exits" or a reduction in the number of new applicants. This study does not assess whether FTP has reduced the number of people applying for welfare.

8. Members of the AFDC group are not assigned a time limit. In order to conduct this analysis, MDRC determined which time limit would most likely have been assigned to each sample member, based on his or her characteristics upon entering the study.

MDRC's evaluation of Florida's Family Transition Program has been funded by a contract with the Florida Department of Children and Families and with support from the U.S. Department of Health and Human Services and the Ford Foundation.