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Few features of the 1990s welfare reforms have generated as
much attention and controversy as time limits on benefit receipt.
Time limits first emerged in state welfare reform programs
operated under federal waivers before 1996, and then they
became a central feature of federal welfare policy in the
Personal Responsibility and Work Opportunity Reconciliation
Act (PRWORA).
This report provides a comprehensive summary
of what has been learned to date about time limits: about
state policies, their implementation, the effects of time
limits on employment and welfare receipt, and the circumstances
of families whose welfare cases have been closed because they
reached a time limit. The report is designed to serve as a
resource as Congress considers reauthorization of PRWORA.
This study was conceived and funded by the
U.S. Department of Health and Human Services (HHS) and was
conducted under contract by the Manpower Demonstration Research
Corporation (MDRC) and The Lewin Group. HHS funded three activities:
(1) a survey of state welfare administrators to obtain information
on states’ time-limit policies and experiences to date; (2)
site visits to five states to examine the implementation of
time limits; and (3) a synthesis of research on time limits
conducted to date. The report describes the findings from
all three study components.
Key Findings
A central theme that emerges from all the
study components is that time limits are far more complex
than they seem. This complexity is evident in the states’
diverse policy choices, the way time limits are implemented
at the local level, and the difficulties in interpreting data
and studies about time limits.
The survey of states provides comprehensive,
up-to-date data on the states’ time-limit policies and their
experiences with time limits. Key findings include:
- Responding to the broad flexibility allowed under
the federal welfare law, states have developed widely varying
approaches to time limits.
PRWORA prohibits states from using federal
Temporary Assistance for Needy Families (TANF) block grant
funds to provide assistance to most families for more than
60 months, but it allows states broad flexibility in designing
time-limit policies. States can impose a 60-month time limit,
a shorter time limit, or no time limit. They can exempt certain
categories of recipients from their time limits or can grant
extensions to families who reach the limit. Such flexibility
exists in large part because time limits do not apply to assistance
that is paid for with state funds and because states are allowed
to extend assistance to up to 20 percent of their caseload
beyond the federal limit. In reality, the federal time limit
is not a limit on individual families but, rather, a fiscal
constraint that shapes state policy choices.
As of early 2002, most states had time limits
that result in termination of families’ welfare benefits:
23 states had a 60-month termination time limit, and 17 states
had a shorter termination time limit. In addition, 8 states
and the District of Columbia had a time limit that reduces
benefits or changes the form of benefits after the limit is
reached, and 2 states had no time limit. Because the latter
two categories include large states like California, Michigan,
and New York, they comprise nearly half of the national welfare
caseload.
- All states provide exemptions or extensions from their
time limits for certain groups of families, but the policies
differ dramatically from state to state.
The 60-month time limit on federal assistance
applies nationwide, but not all families on welfare are subject
to the limit. The survey of states found that about 55 percent
of all families currently on welfare are subject to the federal
60-month time limit. Of those not subject to the federal limit,
most are “child-only” cases, which now account for about one-third
of the national welfare caseload. (In such cases, children
are living with a parent or other relative who is not included
in the welfare grant.) Most of the other families not subject
to the federal time limit live in states that implemented
their own time limits before 1996 and received waivers allowing
them to delay implementation of the federal limit.
In addition, most states exempt certain categories
of families from their state time limit even though the families
are subject to the federal time limit. (There are also some
families who are exempt from the federal limit but subject
to state limits.) The most common exemptions are for recipients
who are incapacitated or are victims of domestic violence.
Finally, most states allow for time-limit extensions, usually
because the family faces a particular hardship or because
the parent was unable to find work despite diligent efforts.
The states will have to use their own funds to pay for families’
benefits if they receive more than 60 months of federally
funded assistance and exceed the 20 percent cap discussed
earlier.
- Nationally, about 231,000 families have reached either
the federal time limit or a shorter state time limit. At
least 93,000 families have had their case closed at a time
limit, and approximately 38,000 have had their benefits
reduced. Most of the case closures occurred in a few states
with time limits of fewer than 60 months.
The federal 60-month clock began “ticking”
when each state implemented its TANF program –– sometime between
September 1996 and July 1997. As of December 2001, families
had reached the 60-month federal time limit in 22 states.
The overall number of families who had reached the federal
limit in these states –– about 54,000 –– represents a very
small fraction of the families who could potentially have
reached the limit. In addition, more than 80 percent were
in New York State, where most families who receive 60 months
of federally funded benefits can move to a state and locally
funded program that provides the same benefits but only partly
in cash. As a result, only around 8,000 families nationwide
have had their case closed because of the 60-month time limit
and are not receiving other assistance.
Most states have found that a very small proportion
of recipients reach the time limit after 60 months of continuous
benefit receipt. There are several reasons for this pattern.
Even before the recent reforms, most people who received welfare
did not remain on the rolls continuously for long periods.
The strong economy, expanded financial supports for low-income
working families, and enhanced state welfare-to-work programs
increased the number of families who exited welfare in the
1990s. In addition, some states have shorter state time limits
and/or have imposed large numbers of sanctions that closed
the cases of recipients who were deemed noncompliant with
work requirements (or they have removed the adult from the
grant, creating a child-only case). Finally, as noted earlier,
some families are exempt from the federal limit.
A larger number of families –– about 176,000
–– have reached state time limits of fewer than 60 months.
Once again, however, states have found that few recipients
reach even short time limits after continuous benefit receipt.
State-to-state differences in definitions and data availability
make it difficult to get an accurate count of the families
whose cases have been closed because of these limits, but
the number appears to be at least 85,000, with most of the
total in five states (Connecticut, Louisiana, Massachusetts,
Ohio, and Virginia). In several of the states with shorter
time limits, a large proportion of the recipients whose cases
were closed were already employed (that is, were mixing work
and welfare) before they reached the time limits. Also, many
states allow families whose cases are closed to return to
welfare under certain conditions. Finally, approximately 38,000
families –– in Arizona, Indiana, and Texas –– have had their
benefits reduced because they reached state time limits.
The implementation of time limits is far more
complex than many might assume. The complexity arises because
states are seeking to identify and protect particularly vulnerable
families without diluting the overall message that welfare
is temporary. The states’ time-limit practices are as diverse
as their policy choices: Even time-limit policies that look
similar on paper may be implemented quite differently across
states or even across welfare offices within states. Key findings
from the survey and field visits include:
- In an effort to send a clear message to recipients,
welfare staff tend to ignore or gloss over the complexities
of their state’s time-limit policies.
Many states’ time-limit policies are complicated.
For example, rather than imposing lifetime limits, many states
limit recipients to a specific number of months of benefits
within a longer calendar period (for example, 24 months in
a 60-month period). These policies are intended to help recipients,
but welfare staff, eager to persuade recipients to take time
limits seriously, often ignore the nuances. Similarly, while
benefit extensions are possible in most states, staff seldom
mention extension policies until recipients are close to the
time limit; workers do not want to risk diluting the message
by giving recipients the impression that the time limit is
not firm. Of course, once people begin reaching a time limit,
the grapevine takes over, and recipients will form their views
based on what actually happens.
- The time-limit message can be complicated by earned
income disregards and other state welfare policies.
Many believe that welfare staff should urge
recipients to leave welfare quickly in order to save, or “bank,”
their months of assistance for future emergencies. However,
this message can be a hard sell because many recipients feel
that they have few alternatives in the short term. The banking
message is also complicated by the presences of expanded earned
income disregards and other policies that allow people to
continue receiving partial welfare benefits after they go
to work (such policies have been implemented in most states).
Because these supplemental welfare benefits almost always
count toward time limits, staff must choose whether to urge
working recipients to leave welfare quickly –– essentially
ignoring the disregards –– or to stay on assistance to benefit
from the disregards. Approaches vary depending on the generosity
of the disregards, the individual recipient’s situation (for
example, whether she is close to reaching the time limit and
whether she receives regular child support payments), and
the policy preferences of state and local administrators.
- Almost all states allow exemptions or extensions
for recipients with serious medical problems, but the processes
for identifying these recipients and verifying their condition
vary; some critics believe that recipients who should be
exempted often fall through the cracks.
States have long faced the challenge of identifying
recipients who are temporarily unable to work, but time limits
raise the stakes. Most states ask recipients to report health
problems that might lead to an exemption from work requirements
or time limits, but fear, stigma, or lack of knowledge may
prevent recipients from discussing mental health problems,
substance abuse, domestic violence, and other issues. Also,
once a recipient reports a problem, some states have developed
elaborate review processes to ensure consistency and prevent
abuse. But the same conditions that make work difficult may
also hinder some from navigating the review process. Finally,
given certain types of health problems, decisions about whether
someone is able to work are far from clear-cut.
Despite these challenges, states believe that
they identify most recipients facing serious barriers to employment;
client advocates argue that more proactive assessment efforts
are needed, noting, for example, that post-time-limit outreach
programs targeted to families whose cases are closed sometimes
find former recipients who should have qualified for an exemption.
- Many states grant time-limit extensions to recipients
who are unable to find jobs despite diligent efforts, but
there are key differences in how compliance is assessed
and defined and in how case closures are categorized.
In assessing a recipient’s level of compliance
with work-related requirements, some states examine the individual’s
entire case history, but many focus primarily on the individual’s
current willingness to comply. In many states, recipients
approaching the time limit are targeted for intensive monitoring
and services.
Some states use clear-cut definitions of compliance,
while others use more subjective criteria that are open to
interpretation by individual workers. When definitions are
not clear-cut, decisions about time-limit extensions tend
to be subject to review, in an effort to ensure that cases
are handled consistently.
Overall, some states grant extensions to most
of the recipients who reach time limits without jobs, while
others grant few extensions. However, states use different
definitions and collect different types of data, making direct
comparisons difficult. For example, when a recipient’s case
is closed for noncompliance with program rules around the
time she or he reaches the time limit, or during an extension,
some states might categorize this as a time-limit exit, while
others might characterize it as a sanction. Also, in some
states, recipients whose cases are closed because of time
limits can easily return to welfare if they agree to comply;
in other states, there are few opportunities to return. It
is important to note that most of the experience with time
limits to date pertains to state time limits of fewer than
60 months. There are no restrictions on using federal funds
to assist families who are granted extensions to these short
time limits; thus, states may respond differently when families
reach the federal 60-month limit.
Time limits are not designed simply to reduce
long-term welfare receipt but also to change the behavior
of current or potential welfare recipients –– to encourage
them to get jobs or seek other income sources instead of welfare.
For example, the existence of a time limit might encourage
recipients to leave welfare faster, before reaching the limit,
in order to bank some of their months, or it might discourage
potential recipients from applying for benefits. And,
of course, individuals who have their welfare benefits canceled
might try harder to find or keep jobs. The pattern of these
effects may determine how time limits affect the income and
material well-being of families.
Because time limits have almost always been
implemented as part of a package of other welfare reforms,
it is very difficult to isolate their effects. Nevertheless,
the available data suggest several tentative conclusions:
- There is some evidence that time limits can cause
welfare recipients to find jobs and leave welfare more quickly,
even before reaching the limit; however, the magnitude of
this effect is not clear.
Several state welfare reform initiatives that
included time limits were started under waivers before 1996
and were evaluated using a rigorous, random assignment research
design; that is, families were assigned, by chance, to a program
group subject to the welfare reform (including the time limit)
or to a control group subject to the previous welfare policies,
and both groups were then followed over time to determine
what difference the reforms made. Results from the early phases
of these studies, before anyone reached the time limits, provide
evidence about the “anticipatory” effects of time limits (although
the study designs did not allow researchers to measure whether
time limits affect welfare applications).
The studies consistently found that program
group members were more likely to work than control group
members, even before anyone reached the time limits. However,
it is impossible to say whether these effects were driven
by the time limits, because the programs also included other
features that promoted employment (such as enhanced earned
income disregards and expanded work requirements and services).
In contrast, most of the studies found that
program group members were no more likely to leave welfare
in the period before people began reaching the time limits.
At first glance, this suggests that no “banking” was going
on, but the pattern is probably attributable to expanded earned
income disregards and similar policies that made it easier
for program group members to continue receiving benefits after
going to work. It is possible that the time limits encouraged
some people to leave welfare sooner while the work incentives
encouraged people to stay on welfare longer, with the overall
result being a wash.
A series of econometric “caseload” studies
used data on state policies, caseloads, and economic conditions
to try to isolate the effects of welfare reform. A few of
the studies sought to tease out the effects of individual
reform components, including time limits. Most of these studies
concluded that both welfare reform and the strong economy
contributed to the decline in welfare caseloads. Although
some studies did not find evidence that time limits per se
affected the caseload, one study using individual-level national
survey data estimated that time limits may have been responsible
for a substantial proportion of the welfare caseload decline,
with the strongest effects being seen for families with very
young children. These declines must have been anticipatory
effects, because few families had reached a time limit when
the analysis was conducted.
- It does not appear that the cancellation of welfare
benefits at a time limit induces many recipients to go to
work.
Two of the random assignment studies followed
program and control group members for four years — well beyond
the point when families began reaching the states’ time limits.
(The studies examined Connecticut’s statewide Jobs First program,
with a 21-month time limit, and a Florida pilot program, the
Family Transition Program [FTP], with 24- and 36-month time
limits.) In neither case did the program’s effects on employment
grow substantially when people began reaching the time limit
and having their benefits canceled, suggesting that few people
were induced to work by benefit termination. In Connecticut,
most of the people whose cases were closed at the time limit
were already working, but that was not the case in Florida’s
FTP.
This pattern of effects appears to be consistent
with the results of a series of follow-up studies, discussed
below, which found that employment rates among people whose
benefits were canceled at time limits did not change much
over time.
- Two welfare reform initiatives with time limits have
been rigorously tested, and neither produced consistent
effects on family income or material hardship in the period
after families began reaching the limits; but it is difficult
to isolate the effects on families whose benefits were terminated.
Neither Connecticut’s Jobs First program nor
Florida’s FTP generated consistent overall effects on family
income or material well-being in the post-time-limit period,
although there is evidence that small groups of families may
have lost income as a result of the programs. These results
do not mean that program group members lost no income when
their benefits were cut off but, rather, that the program
group, on average, had about the same income as the control
group. In addition, the programs had few effects on fertility,
on marital status, or on the well-being of elementary-school-age
children.
In both programs, only a fraction of program
group members actually reached the time limits (most left
welfare before reaching the limits), but it is difficult to
determine the direct effects on these families because there
is no way to know which members of the control group should
serve as the appropriate benchmark.
Some of the key questions about time limits
concern how families fare after their benefits are terminated.
Are they working? Are they receiving other forms of public
assistance? Do they experience severe hardships such as homelessness
or hunger?
Although it is too early to offer definitive
answers, eight state and federally funded post-time-limit
studies provide a wealth of data. The studies have the same
limitation as other studies of welfare leavers, however: Data
on the post-welfare circumstances of families do not necessarily
provide evidence about the effects of welfare reform. In addition,
none of the post-time-limit studies provide direct evidence
on the federal 60-month limit; they were all conducted in
states with limits of fewer than 60 months. Finally, all of
the studies were conducted during periods of low unemployment.
Keeping these limitations in mind, key findings include:
- Most studies found that individuals who lost benefits
because of time limits were more likely to have large families
and to live in public or subsidized housing, compared with
people who left welfare for reasons other than time limits.
Several studies also found that time-limit
leavers were more likely to lack a high school diploma and
to be African-American. These characteristics overlap, however,
and it is not clear which are independently associated with
reaching a time limit or with having one’s benefits canceled.
- The post-exit employment rates of time-limit leavers
vary widely across states, ranging from less than 50 percent
to more than 80 percent.
Most of the variation in employment rates
after leaving welfare is attributable to state policies that
shape who reaches the time limit or who is eligible for a
time-limit extension. For example, some states impose large
numbers of full-family sanctions, so that most of the people
who reach the time limit are either employed or complying
with program rules. Similarly, in states with relatively high
welfare grant levels and generous earnings disregards, many
people are mixing work and welfare when they reach the time
limit. Some states grant extensions to most recipients who
are not employed when they reach the time limit, while other
states are quite likely to close such cases.
As a consequence of these disparities, employment
rates in some states are lower for time-limit leavers than
for other leavers, and rates in other states are higher for
time-limit leavers. For the most part, however, post-exit
employment rates are similar to pre-exit employment rates.
In other words, although the overall rates can hide dynamic
employment patterns, there is little evidence that large numbers
of people responded to the termination of their benefits by
going to work.
- Large proportions of time-limit leavers continue to
receive Food Stamps, Medicaid, and other assistance after
exit.
There is wide variation in Food Stamp receipt
across states, largely tracking the differences in employment
rates (that is, the rates of Food Stamp receipt are lowest
in states where most time-limit leavers are working and thus
less likely to be eligible). However, time-limit leavers are
generally more likely than other welfare leavers to receive
Food Stamps, even in states where their post-exit employment
rate is higher.
- In most states where studies were conducted, time-limit
leavers reported lower income and more material hardships
after leaving welfare than before, but time-limit leavers
did not consistently report fewer or more hardships than
people who left welfare for other reasons.
In all states, some time-limit leavers reported
that their post-welfare income or standard of living was higher
than when they received welfare, whereas others reported being
worse off. Although the percentages vary, a greater proportion
of respondents in most states said that they were worse off
than better off. In general, employed respondents reported
higher household income than nonworking respondents.
Homelessness has been rare among time-limit
leavers, but levels of food insecurity and other hardships
(such as utility shutoffs) have been high. Again, however,
there is not a clear association between levels of hardship
and employment status, and there are few clear patterns of
hardships across states or categories of leavers.
Conclusions and Implications
Given the exceptional diversity in both policies
and implementation practices affecting time limits, the practical
meaning of “time limit” differs from state to state –– and
from welfare office to welfare office within some states.
Also, because time limits interact in complex ways with earned
income disregards, sanctions, and other state policies, it
is critical to consider the full set of policies before characterizing
a state’s overall approach to welfare reform or assessing
data on key outcomes, such as the employment rate of individuals
who left welfare because of time limits.
Moreover, the story of time limits is still
unfolding. Very few families have reached the federal 60-month
time limit, and it is too early to draw any broad conclusions
about how states will respond as more families reach the limits,
about how families will fare without benefits over the long
term, and about whether the 20 percent hardship exemption
in federal law will be adequate over time. There will be many
opportunities to obtain additional data over the next two
or three years, as a larger number of families reach time
limits under varying economic conditions.
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