Number A-7 in Series, Assessing New Federalism: Issues and Options for States
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A primary intent of the 1996 welfare reform legislation is to transform cash public assistance to poor families into a system of work. Prior to block grants, federal funds allocated to employment-related services for welfare recipients were kept separate from the funds going to Aid to Families with Dependent Children (AFDC) cash benefits. The Temporary Aid to Needy Families (TANF) block grants now give states authority to decide how much of their federal welfare funding will be devoted to cash assistance and how much to work-related services.
Paralleling this reform of welfare are federal legislative proposals and state initiatives to consolidate dozens of federal job training programs into a more streamlined workforce development system. 1
States, thus, have an unprecedented opportunity to reexamine the whole range of employment and training
resources available to their disadvantaged populations, including how many resources to allocate to moving welfare recipients into employment. How the pieces currently fit together to serve public assistance recipients is a complex picture that differs by state. Officials making their own decisions in individual states may benefit from understanding practices and patterns in other states.
To identify state patterns, this brief provides an overview of the employment and training resources states used to serve their welfare populations on the eve of TANF. 2 It also considers some potential scenarios that could emerge as states respond to their new block grant options. (The effectiveness of employment and training services in improving the employability and self-sufficiency of individuals will be considered in a future brief, as will the relationship between resources and the TANF work activity participation requirements.)
Federal Employment and Training Resources for AFDC Recipients
The major federal work and training programs through which AFDC recipients were served in the mid-1990s are shown in table 1.
Coverage of Individual Programs
The Job Opportunities and Basic Skills (JOBS) program, abolished along with AFDC by the 1996 legislation, was the largest of the programs, and the only one exclusively for the AFDC population. Federal spending on JOBS amounted to about $950 million annually in its final years. Although 100 percent of JOBS participants were AFDC recipients, JOBS served only 12.8 percent of the adult AFDC caseload in 1994 (the most recent year for which data are available). 3
The new law, as mentioned, no longer designates specific federal allocations for employment-related services for needy families. Still, states have reasons for allocating at least some of their TANF funds to employment-related services. In particular, the new law includes work-related goals, which all states must meet. All adults must be "engaged" in work by the time they have received 24 months of TANF assistance (which can include some education and training activities as well as employment in the regular labor market), and states have overall participation rate targets they must meet. Regardless of how easy or difficult these targets prove to be for states, states are likely to allocate at least some TANF funds to employment services. 4
While not focused exclusively on welfare recipients, the Job Training Partnership Act (JTPA) is the largest source of federal employment-related funds for the economically disadvantaged generally. Of its $5 billion annual authorization, about half is allocated to states specifically for job training for low-income adults (Title IIA) and youth (Title IIC), and dislocated workers (Title III). In the JTPA adult programs, AFDC recipients account for 35 percent of the participants. In the youth programs, AFDC recipients account for 27 percent of program participants. While 135,000 AFDC recipients in total are in JTPA activities annually, this represents only a small portion (2 percent) of the adult AFDC population.
The Employment Service (ES) is a general labor exchange system of over 2,000 local offices nationwide, where
anyone can request employment services and information about job openings, aptitude tests, and labor market
conditions. About 4 percent of ES applicants are AFDC recipients, a group that makes up 11 percent of the AFDC adult caseload.
The last three programs on the list provide education rather than employment-related services. These are not all directly under state control, but may play a role in state planning. Of the three, adult education enrolls the largest share of AFDC recipients 10 to 15 percent while each of the other programs serves 5 percent or less.
These figures, which come from federal program reports, give a good idea of the relative importance historically of the major federal programs available to AFDC recipients. They cannot be used directly to measure what proportion of the AFDC caseload received some kind of employment-related service, however, because they include a substantial number of persons officially registered in more than one program.
Estimating Overall Caseload Coverage
There are no national data sources that provide direct counts of the number of persons simultaneously enrolled in two or more of the programs listed in table 1. But data from the national JTPA reporting system and the JOBS reports submitted by states to the federal government do allow estimating dual enrollment in JOBS and JTPA the two major programs that historically targeted AFDC recipients. 5 In 1994, according to these reporting systems, about 823,000 AFDC recipients nationwide participated in JOBS and/or JTPA. The vast majority (88 percent) were in JOBS only, 4 percent were enrolled in both programs, and 8 percent were in JTPA only. 6 Thus, of 101,000 AFDC recipients active in JTPA in 1994, 7 about 35 percent were also in JOBS.
This estimate of overlap can be applied to other programs by assuming that, as with JTPA, only 35 percent of AFDC participants in the other programs were also in JOBS. If one assumes, further, that there was no overlap between other programs and JTPA but that half of the non-JOBS, non-JTPA welfare recipients in other programs were served more than once (i.e., half as many people as transactions), we arrive at an estimated 559,000 AFDC adults who were in some non-JOBS, non-JTPA program nationwide in 1994. 8
The results of combining what is known about JOBS and JTPA participation with what one can estimate for the other programs are shown in figure 1. About 23 percent of all AFDC adults (1.4 million persons nationwide) were in one or more of the major federally funded education or work-related programs in 1994: 823,000 in JOBS and/or JTPA and about 559,000 in one or more of the other programs. 9
State Variation in JOBS and JTPA Activity and Funding
There is, of course, much variation across states in the extent to which AFDC recipients participated in work-related programs and in the funding available. State estimates of these factors are shown in
table 2, which presents the unduplicated counts of AFDC recipients in either JTPA or JOBS in 1994, by state. While about 14 percent of all AFDC adults nationwide were reported to be in either JOBS, JTPA, or both that year, rates ranged from a high of over 40 percent in Arkansas, Nebraska, and Utah to a low of less than 10 percent in nine other states: Alaska, Arizona, California, the District of Columbia, Hawaii, Missouri, Nevada, Oregon, and Tennessee.
The combined federal and state funding for JTPA and JOBS for AFDC recipients in 1994 is shown in table 3. Nationwide, about $1.8 billion under JTPA Titles IIA, IIC, and III and JOBS was spent for employment- and training-related services for the 823,000 AFDC recipients who were in one or both of these programs. This translates into about $2,200 per participant $1,700 per participant in JOBS and $5,200 per participant in JTPA. Not surprisingly, those states that had lower percentages of their AFDC caseloads in JOBS and JTPA had relatively higher spending per participant than states with higher participation levels.
The importance of JTPA resources is a striking finding. Over half a billion dollars in JTPA funds (Titles IIA, IIC, and III) were spent in 1994 on AFDC recipients nationwide, about one-quarter of all JTPA expenditures. Thus, JTPA spending nationally raised the total spent on employment-related services for AFDC clients by 41 percent above the JOBS level. In some states, JTPA expenditures were even more significant. In California, for example, JTPA spending added 59 percent above what was available under JOBS. In Florida and Nevada, JTPA added over 100 percent.
Possible Scenarios under TANF
As policymakers decide how, and how much, states will fund work-related services for TANF recipients, a variety of viewpoints emerge. Many welfare administrators claim they will be hard-pressed to increase the numbers of welfare recipients beyond the level already in work-related programs.
10 Some in the job training community feel that states have already shifted many of their JTPAfunds to welfare recipients, possibly crowding out non-welfare poor. Others in the ES are worried that their reputation with employers their primary customers may be hurt if they have to serve large numbers of welfare recipients who may not be immediately job ready and, therefore, not attractive to the private sector. Advocates for the poor are concerned that states will not devote as much of their TANF funds to work activities as they did in the past under JOBS.
The information presented here provides insight into the extent to which AFDC recipients have already been
participating in various education, training, and employment programs, often outside the official domain of the welfare system. These data suggest several potential scenarios for how TANF could change the way states fund work activities for welfare clients.
Status Quo Maintenance of Effort. One option for states is to continue to use the same amount of federal and state funds for TANF work activities as they have for JOBS in prior years. They could also continue to use JTPA and other education and employment programs for TANF clients as they have for AFDC recipients in the past.
If the same level of funding and outside program support continues, the same number of TANF clients can be
expected to be in work-related programs as had been the case under AFDC: about 800,000 in welfare- and/or
JTPA-funded programs and possibly another 500,000 in other programs. Reducing any of the funding streams would decrease the number of TANF clients who could be served unless service costs are also reduced (for example, by using lower intensity service strategies such as immediate job search).
Maximize JTPA. States could, instead, shift more of their JTPA resources to welfare recipients, thereby decreasing the amount of services that could be provided to the non-welfare poor. JTPA is a very limited resource, however, since with current funding only about 500,000 persons nationwide are served under Titles IIA, IIC, and III combined. Even if the number of AFDC or TANF participants in JTPA were increased fourfold over historic participation rates (i.e., enough to use all current JTPA funds), that would accommodate only about 10 percent of the adults in a TANF program the size of AFDC in 1994. It would also preclude any other disadvantaged or dislocated workers from receiving any JTPA job training services, not a likely outcome politically.
State Expansion. Finally, states could continue to use the same amount of funds under TANF for work activity as they had spent in prior years under JOBS and continue to use other programs as in the past, but allocate new state funds for further investment in job activities for TANF recipients. The net additional state funds could be used to either increase the number of persons served or expand the types of activities available such as more costly work approaches like long-term training, or additional community service jobs for those not yet on TANF.
Implications and Opportunities
The analysis presented here has several broader implications for state policymakers:
- There are already considerable amounts of work-related resources being devoted to welfare recipients. About 1 in 4 adults receiving AFDC drew on these resources prior to welfare reform, once all sources of federal funds are taken into account. Yet a substantial number of those individuals were not recorded as enrolled in education and training programs by the welfare agency. This suggests that some states may be able to raise their TANF work participation rates simply by continuing the participation and spending patterns set in the pre-TANF period, as long as TANF recipients who participate in various education and training programs can be identified and tracked.
- To accurately identify all work-related participation and spending on TANF recipients would require changes in how the major non-TANF and non-JTPA programs (e.g., adult education, Pell grants, and the ES) define and report information about service levels, participant characteristics, and service expenditures. These changes may be worthwhile, for both reporting and case management purposes.
- States vary greatly in the extent to which AFDC clients have been served through JTPA. This seems likely to continue under TANF. But policymakers need to recognize that at current funding levels, JTPA could in no way serve as the primary work-related funding stream for a TANF program that sought to deliver employment services to the majority of those previously supported by AFDC.
The future dynamics of TANF funding are also important for planning work-related services. In the early years of TANF, the fixed block grants are set at relatively generous levels compared to pre-TANF funding for AFDC and JOBS. So some expansion of employment-related services may be possible. As noted above, if states simply maintain the same levels of combined federal and state funding as they had in 1994 for JOBS, JTPA, and other programs, they will be able to provide employment-related services to about 1.4 million welfare recipients nationwide on the assumption that they do not change the mix, and therefore cost, of services.
As the years go by, though, the challenge to states will grow as they are required to increase the proportion of TANF recipients who are in work activities. To the extent this can be done by moving TANF recipients directly and permanently into the labor market, states may face little fiscal strain. But if the unassisted transition of recipients into jobs proceeds more slowly, additional state and/or federal resources for employment-related services may be needed if TANF is indeed to succeed in replacing welfare with work.
Notes
Programming and research assistance by Steven Trost contributed importantly to this analysis.
1. Federal legislative proposals to consolidate workforce and employment programs were not enacted by Congress last year, but similar proposals are being considered in 1997. Many states have been moving in this direction even in the absence of federal legislation.
2. This brief focuses on direct employment, training, and education resources. Other resources such as child care, tax credits, and family services also facilitate the transition from welfare to work.
3. This relates to the proportion of all AFDC adults in 1994 who were officially in JOBS. It is not based on the official JOBS definition of participation (i.e., average monthly number of persons in JOBS). The annualized number of JOBS participants in table 1 was obtained by multiplying the reported average monthly numbers for FY 1994 in HHS Report JOBS-ACF-IM-95-5 by an Urban Institute adjustment for annualizing AFDC caseloads based on analysis of spell duration.
4. A future brief in this series will focus on the participation rate issues facing states under TANF.
5. State JOBS data are from the HHS report for FY 1994 cited in note 3. JTPA data are from a special analysis of the U.S. Department of Labor's "PY94 Standardized Program Information Report (SPIR)" Public Use File, for Titles IIA, IIC, and III, and include only those individuals who received services beyond an initial objective assessment.
6. For a technical explanation of the estimates, see Demetra Smith Nightingale, "Dual Enrollment of AFDC Recipients in Various Employment, Training, and Education Programs," Washington, D.C., the Urban Institute, 1997.
7. These 101,000 AFDC recipients received JTPA services beyond the initial objective assessment. The 135,000 number in table 1 includes all AFDC recipients enrolled in JTPA regardless of service intensity.
8. This also assumes that the number of AFDCrecipients participating in adult education was at the low end of the range shown in table 1 (600,000). The overlap between JOBS and other programs in this scenario implies that 44 percent of JOBS participants were also in other programs, not a surprising figure given that many of those officially enrolled in JOBS were sent to (and enrolled in) other programs for service receipt.
9. These estimates are based on important assumptions about multiple program participation. They vary only a little, however, with substantial changes in those assumptions. For example, a "high overlap" scenario, in which 50 percent of those in non-JOBS, non-JTPA programs also participate in JOBS (rather than 35 percent) and 75 percent participate in multiple non-JOBS, non-JTPA programs (rather than 50 percent), still puts 18 percent of all AFDC adults in some work-related program (1.0 million individuals). Similarly, a "low overlap" scenario 20 percent JOBS overlap and 25 percent internal overlap among non-JOBS, non-JTPA programs puts only 31 percent of AFDC adults in some work-related program (1.9 million individuals). Thus, the finding that roughly 1 in 4 AFDC adults participated in some work-related program in 1994 is robust to alternative assumptions.
10. This point is consistent with substantial overlap in program enrollment, since many "dual enrollees" are actually served by only one program. Even those served by two programs may need both components to be served effectively.
Related Reading
Loprest, Pamela J., and Burt S. Barnow. October 1993. "Estimating the Universe of Eligibles for Selected ETA Programs." Prepared for the U.S. Department of Labor.
Nightingale, Demetra S., and Pamela Holcomb. Spring 1997 (forthcoming). "Alternative Strategies for Increasing Employment," in The Future of Children. The Center for the Future of Children, The David and Lucile Packard Foundation.
Orr, Larry L., Howard S. Bloom, Stephen H. Bell, Fred Doolittle, Winston Lin, and George Cave. 1996. Does Training for the Disadvantaged Work? Evidence from the National JTPA Study. Washington, D.C.: Urban Institute Press.
Pindus, Nancy, and Demetra S. Nightingale. December 1994. "Administrative Cost Savings Resulting from Federal Program Consolidation." Prepared for the U.S. Department of Labor (Task Order Report No. 9).
About the Author
Demetra Smith Nightingale is director of the Welfare and Training Research Program at the Urban Institute's Human Resources Policy Center. Her research interests lie in the areas of analysis and implementation of social welfare programs, especially employment and training programs. She is coauthor of Evaluation of the Massachusetts Employment and Training (ET) Choices Program (Urban Institute Press, 1994) and coeditor of The Work Alternative: Welfare Reform and the Realities of the Job Market (Urban Institute Press, 1995).
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