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[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]

                             WELFARE REFORM

=======================================================================

                                HEARING

                               before the

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 14, 2000

                          Baltimore, Maryland

                               __________

                             Serial 106-87

                               __________

         Printed for the use of the Committee on Ways and Means

                    U.S. GOVERNMENT PRINTING OFFICE
67-486 CC                   WASHINGTON : 2001

_______________________________________________________________________
            For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 
                                 20402

                      COMMITTEE ON WAYS AND MEANS

                      BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
BILL THOMAS, California              FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida           ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut        WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana               JIM McDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania      KAREN L. THURMAN, Florida
WES WATKINS, Oklahoma                LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida

                     A.L. Singleton, Chief of Staff

                  Janice Mays, Minority Chief Counsel

                                 ______

                    Subcommittee on Human Resources

                NANCY L. JOHNSON, Connecticut, Chairman

PHILIP S. ENGLISH, Pennsylvania      BENJAMIN L. CARDIN, Maryland
WES WATKINS, Oklahoma                FORTNEY PETE STARK, California
RON LEWIS, Kentucky                  ROBERT T. MATSUI, California
MARK FOLEY, Florida                  WILLIAM J. COYNE, Pennsylvania
SCOTT McINNIS, Colorado              WILLIAM J. JEFFERSON, Louisiana
JIM McCRERY, Louisiana
DAVE CAMP, Michigan

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.

                            C O N T E N T S

                               __________

                                                                   Page

Advisory of February 7, 2000, announcing the hearing.............     2

                               WITNESSES

Born, Catherine E., School of Social Work, University of Maryland 
  at Baltimore...................................................    45
Catholic Charities, and Welfare Advocates Coalition, Lynda Meade.    31
Center for Public Justice, Stanley W. Carlson-Thies..............    54
Fox, Hon. Lynda G., Maryland Department of Human Resources.......    14
Madden, Hon. Martin G., Senator, Maryland Senate.................     9
Maryland Budget and Tax Policy Institute, Steve Bartolomei-Hill..    40
Park Heights Corridor Coalition, Inc., Sharon Duncan-Jones.......    37
Puddester, Hon. Frederick W., Maryland Department of Budget and 
  Management.....................................................    19
Rosenberg, Hon. Samuel I., Delegate, Maryland House of Delegates.    11

 
                             WELFARE REFORM

                              ----------                              

                       MONDAY, FEBRUARY 14, 2000

                  House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Human Resources,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 11 a.m., Living 
Classrooms Foundation, 802 South Caroline Street, Baltimore, 
Maryland, Hon. Nancy L. Johnson (Chairman of the Subcommittee) 
presiding.
    [The advisory announcing the hearing follows:]

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                                CONTACT: (202) 225-1025
FOR IMMEDIATE RELEASE

February 7, 2000

No. HR-14

           Johnson Announces Field Hearing on Welfare Reform

    Congresswoman Nancy L. Johnson (R-CT), Chairman, Subcommittee on 
Human Resources of the Committee on Ways and Means, today announced 
that the Subcommittee will hold a field hearing on welfare reform. The 
hearing will take place on Monday, February 14, 2000, at the Living 
Classrooms Foundation, 802 South Caroline Street, Baltimore, Maryland, 
beginning at 11:00 a.m.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. 
Witnesses will include State and local public and elected officials, 
program operators, advocates, and researchers. However, any individual 
or organization not scheduled for an oral appearance may submit a 
written statement for consideration by the Committee and for inclusion 
in the printed record of the hearing.
      

BACKGROUND:

      
    This hearing is the continuation of a series of field hearings on 
welfare reform being conducted by the Subcommittee. Previous field 
hearings have been conducted in Nevada, Arizona, Pennsylvania, and 
Florida.
      
    The Subcommittee's goal is to learn how welfare reform is being 
implemented in States and local communities across the nation. During 
this series of hearings, State and local witnesses are describing their 
programs and the impacts their programs are having on welfare 
caseloads, employment, the economic well being of families, and the 
local economy.
      
    In announcing the hearing, Chairman Johnson stated: ``Thanks to 
welfare reform, welfare rolls are down by more than 50 percent, 
employment of mothers who used to be on welfare is up, poverty is down, 
and more former welfare recipients are working and gaining 
independence. This is a great start. To build on this success, Congress 
is watching the progress of welfare reform very carefully--both in 
Washington and around the country--to ensure that our new approach is 
helping families improve their lives.''
      

FOCUS OF THE HEARING:

      
    The Subcommittee expects to learn details about the welfare reform 
programs being conducted both in Baltimore and the State of Maryland. 
Witnesses are expected to describe specific impacts on families, 
welfare dependency, employment, the welfare caseload, and communities. 
The hearing will also feature testimony on the role of churches in 
Maryland's welfare reform program.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Any person or organization wishing to submit a written statement 
for the printed record of the hearing should submit six (6) single-
spaced copies of their statement, along with an IBM compatible 3.5-inch 
diskette in WordPerfect or MS Word format, with their name, address, 
and hearing date noted on a label, by the close of business, Monday, 
February 28, 2000, to A.L. Singleton, Chief of Staff, Committee on Ways 
and Means, U.S. House of Representatives, 1102 Longworth House Office 
Building, Washington, D.C. 20515. If those filing written statements, 
other than invited witnesses, wish to have their statements distributed 
to the press and interested public at the hearing, they may deliver 50 
additional copies (2-sided) for this purpose to the Living Classrooms 
Foundation, 802 South Caroline Street, Baltimore, Maryland, by close of 
business on Thursday, February 10, 2000.
      

FORMATTING REQUIREMENTS:

      
    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.
      
    1. All statements and any accompanying exhibits for printing must 
be submitted on an IBM compatible 3.5-inch diskette WordPerfect or MS 
Word format, typed in single space and may not exceed a total of 10 
pages including attachments. Witnesses are advised that the Committee 
will rely on electronic submissions for printing the official hearing 
record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. A witness appearing at a public hearing, or submitting a 
statement for the record of a public hearing, or submitting written 
comments in response to a published request for comments by the 
Committee, must include on his statement or submission a list of all 
clients, persons, or organizations on whose behalf the witness appears.
      
    4. A supplemental sheet must accompany each statement listing the 
name, company, address, telephone and fax numbers where the witness or 
the designated representative may be reached. This supplemental sheet 
will not be included in the printed record.
      
    The above restrictions and limitations apply only to material being 
submitted for printing. Statements and exhibits or supplementary 
material submitted solely for distribution to the Members, the press, 
and the public during the course of a public hearing may be submitted 
in other forms.
      

    Note: All Committee advisories and news releases are available on 
the World Wide Web at ``http://waysandmeans.house.gov''.
      

    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.
      

                                

    Chairman Johnson of Connecticut. Good morning, everyone. I 
am Nancy Johnson. I represent the 6th District of the great 
State of Connecticut. And I chair the Human Resources 
Subcommittee of the Ways and Means Committee. We really are 
delighted to be here. We have had a very interesting tour this 
morning. And we are delighted to be here.
    We do more field hearings than most of the Subcommittees of 
the Congress, because we believe that getting out there and 
hearing from people who are implementing changes in Federal law 
and dealing on the frontlines with the real problems that 
people and kids and families face in America is very important, 
not only for the process of writing new legislation but for the 
constant process of adjusting and improving the law, so that it 
provides a better framework within which problems in the real 
world can be addressed.
    This is our fifth field hearing, but we have had dozens of 
hearings on the Welfare Reform bill that was passed a number of 
years ago in an effort to track the consequences of that really 
dramatic radical change in the law.
    It gave the States far more flexibility and control than 
they have ever had under any major Federal program, and we 
wanted to see whether it was worth it and how you are doing. 
The results to this point are spectacular--the number of people 
leaving the rolls, and the poverty figures associated with 
children and families. It is really unprecedented for those 
poverty figures to decline for several years running.
    And even during the big job expansion of the Reagan era, 
the number of people on welfare grew, and the poverty figures 
went up. So what we are seeing is something different, and I 
believe it is in part because the system is working 
differently, setting up different expectations for both 
participants and providers and is more responsive to the 
specific needs of regions, cities, counties, and towns in 
America.
    Probably the most exciting statistics associated with 
welfare reform are this decline in poverty and particularly the 
extraordinary third-year decline in poverty among black 
children. So we are very pleased with what we have seen 
happening. We are particularly pleased with the creativity that 
has been shown at the State and local levels in developing the 
program and responding to very local needs.
    We are very aware of some of the problems that are 
developing: Why is it people who are entitled to Medicaid 
aren't on Medicaid? Why is it people aren't getting hooked into 
food stamps the way they should be being hooked into food 
stamps? How is it that we are going to not only place people in 
jobs but help them advance in their careers and move up that 
earnings ladder?
    So we are far from complacent about what needs to be done. 
But we do look forward to your experience both with the 
opportunities that the new plan has given you and what you feel 
you have accomplished, as well as what you feel the next set of 
challenges are.
    I have had the privilege as the Republican chairwoman of 
the Human Resources Committee to have Ben Cardin as my Ranking 
Member. And while you read in the paper about all the partisan 
stuff that goes on in Washington, and this is particularly nice 
to say here because from reading the background, I know you 
work this way as well, this Committee--this Subcommittee works 
in an extremely nonpartisan fashion, and Ben's serious interest 
in these services over many years, not just since he has been 
on this Committee, has been an enormous asset to our work. And 
it is a pleasure to be with him in his district today.
    And I am going to turn the hearing over to Ben to chair it.
    Mr. Cardin [presiding]. Well, let me first thank Mrs. 
Johnson and welcome you to the 3d Congressional District of 
Maryland. It is a real honor to have the Ways and Means 
Subcommittee on Human Resources meet here in Baltimore.
    I want to just spend one moment in congratulating Nancy 
Johnson for her leadership on these issues. We have made 
tremendous progress in Washington on a bipartisan basis due to 
Mrs. Johnson's leadership. She has reached out to Democrats and 
Republicans to work together to put forward a constructive 
environment in Washington. The foster care bill that we were 
able to get enacted was due to her leadership and willingness 
to make sure that all sides were heard.
    And we are making progress on the fatherhood bill for the 
same reasons. It is a pleasure to have her here in Baltimore, 
but it is particularly a pleasure to serve as her Ranking 
Member on a Committee that is dedicated to try to get things 
done in a very positive way.
    I would also like to thank the people from Living 
Classrooms for opening up their facilities here today. We are 
very proud of Living Classrooms in Maryland. It has been an 
innovator in providing services for children at risk. And I 
think all of us are working to try to make it easier for 
children in our society, particularly those that are at risk.
    Before the hearing, we had a chance to tour the facilities. 
And I want to thank again the people from Living Classrooms.
    Mrs. Johnson, I am proud of what we have been able to do in 
the State of Maryland. I think the State of Maryland has been a 
real innovator on welfare reform issues and on human resource 
issues generally. And we are very proud of what we have been 
able to accomplish.
    This Subcommittee is charged with the responsibility of 
oversighting what is happening in welfare reform. And we all 
have good reason to be optimistic; the welfare rolls are 
dramatically reduced, and the number of children living in 
poverty has been dramatically reduced.
    These are certainly matters for us to be very encouraged 
about. On the other side, we all understand that there are 
issues that cry out for our attention. We look at what happens 
to people after they leave welfare, and we find in too many 
cases the jobs that they have are not producing very high 
income, that they still have poverty issues. And we need to 
take a look at that.
    We look at people who should be eligible for food stamps 
and Medicaid and find that they are not enrolled in the 
Medicaid Program or the Food Stamp Program. We look at 
childcare services and know that many families still cannot 
afford safe, affordable childcare. So we have concerns, even 
though we know that we have made a lot of progress.
    We have a strong economy. Now is the time for us to take a 
look at what we can do in order to shore up our programs. The 
strong economy has produced budget surpluses in Washington and 
in Annapolis. And we are very interested to see what we can do 
to make our system stronger.
    The whole concept of the Federal welfare reform is to give 
flexibility to the States, to give you maximum opportunity to 
look at ways that you could address the problems here locally. 
I think one of the things we want to concentrate in this 
hearing is what has Maryland done; what has the State chosen. 
Why did you choose one strategy over another strategy for 
welfare reform, and is it working or not?
    I just really want to call your attention to a couple of 
things that I noticed about the State of Maryland; some 
positive, some concern. And please put them on the table.
    One of our concerns, of course, is how do we deal with 
those leaving welfare to make sure that they are not living in 
poverty. A survey by the University of Maryland found after 
leaving welfare, workers earned roughly only $11,000 a year. 
Now to combat that, to Maryland's credit, you took the laudable 
step to make the earned income tax credit partially refundable. 
And I commend you on that.
    On the other hand, the State continues to implement a very 
miserly policy on how much earned income is disregarded for the 
purposes of welfare eligibility. Until very recently, only two 
States ended assistance payments sooner than Maryland for 
welfare recipients going to work. And I am sure that is not a 
statistic that we are proud of in the State of Maryland. Again 
considering our ability, we should, I think, be at a better 
place than that.
    On the issue of Medicaid and food stamps, I commend the 
State of Maryland for acknowledging this problem and sending 
temporary medical cards and simplified Medicaid applications 
for the 60,000 individuals who may have been inappropriately 
dropped from Medicaid when they left cash assistance. I am 
interested in learning how many of these 60,000 individuals 
retain Medicaid coverage today.
    To provide more resources for low-income families and to 
reconnect--noncustodial parents with their families, we are 
concerned about the fact that some States have allowed for 
pass-throughs of child support to families on public 
assistance, other States have not.
    I think we all agree that this is a valuable tool for 
reconnecting families. Regrettably, Maryland keeps every penny 
of child support collected on behalf of families on cash 
assistance. I hope there will be some consideration during this 
general assembly of legislation that is currently pending that 
would change that. I am curious as to the status of that 
particular bill.
    Of course, one of the biggest issues confronting mothers 
attempting to move off of welfare-to-work is to finding quality 
daycare. In this context, I worry that Maryland is eligibility 
levels for childcare assistance limited to families earning 
less than $22,000 a year leaves too many parents without access 
to affordable daycare.
    Maryland is one of the only a few states that have set 
childcare assistance eligibility levels at 40 percent of the 
State median income, which is far below the allowable Federal 
threshold of 85 percent of the State median income. Governor 
Glendening recognized this in his new budget and has provided 
the modest increase from 22,000 to 25,000. So I would again 
like to know what progress we are making on getting more 
families the daycare that they need.
    I am encouraged by the good work being done in Maryland and 
nationwide to overhaul the welfare system, but there is still 
much more that both the State and Federal Government must do.
    We during this last legislative session maintained our 
commitment of providing flexible funds to the states. There was 
an attempt made to try to reduce TANF funds. And on a 
bipartisan basis, we prevented that from happening living up to 
our commitments to the States. Well, we think this is a 
partnership and the States have a commitment to make sure that 
these funds aren't being used to supplant other funds that the 
States have made available to deal with children and families 
on welfare. And I would be interested on your views in that 
regard.
    And then, finally, if I might suggest, that I do think the 
Federal Government must be an active player; we just can't be a 
bystander. Our opportunities are also better right now because 
of our growing economy, and we need to be proactive. I would 
hope Congress would pass the minimum wage bill that I think 
would help in this regard and that we would increase Federal 
funding for childcare. I authored a bill to do just that.
    I have also introduced legislation to require the Federal 
Government to share with the States the costs of passing 
through more child support to low-income families. So I think 
we need to work together in a partnership in order to continue 
the progress that we have made.
    Let me conclude from where I started. We are very pleased 
with the way that the welfare rolls are being reduced and child 
poverty is being reduced and that we maintained our commitment 
of flexible funds to the States and the creative innovations 
the States have used. But we need to now reach further.
    The families that are remaining on cash assistance are more 
difficult than they were the families that we had a year ago on 
cash assistance, and we need to figure out strategies where the 
Federal Government and the State government working together 
can deal with those issues.
    [The opening statement of Hon. Benjamin L. Cardin follows:]

Opening Statement of Hon. Benjamin L. Cardin, a Representative from the 
State of Maryland

    Madame Chairwoman I want to thank you for joining me in 
Baltimore today to oversee the progress of welfare reform in 
Maryland. There is much here to warrant optimism, including a 
rising number of individuals leaving welfare for work and a 
declining number of Maryland's children living in poverty.
    However, there are still a number a major obstacles to 
overcome, such as very low earnings for welfare leavers, 
problems with access to Medicaid and food stamps for low-income 
families, and financial barriers to quality day care. In short, 
welfare reform is working in Maryland, but the job is far from 
done.
    There can be little doubt that our strong economy combined 
with significant budget surpluses in both Washington and 
Annapolis present a once-in-a-lifetime opportunity to tackle 
many of the core problems leading to poverty. We should all 
hear the echo of the famous phase--``if not now, when?'' Now is 
certainly the time to make sure that recent employment gains 
turn into permanent poverty reductions.
    Today, I would like to focus on the choices Maryland has 
made under the Federal welfare reform legislation, which gave 
States broad discretion in designing their own programs. In 
other words, why did Maryland select some welfare reform 
strategies and not others, and how do these policies intersect 
with the overall State budget. Let me mention a few specific 
issues.
    One of the central problems that continues to vex welfare 
reform efforts here in Maryland and around the country is 
helping people leave poverty for a better life when they leave 
welfare for work. For example, a University of Maryland survey 
found that, a year after leaving welfare, workers were earning 
roughly only $11,000 a year.
    To combat this problem, Maryland took the laudable step of 
making its earned Income Tax Credit (EITC) partially refundable 
to increase the take-home pay of low-wage workers. However, the 
State continues to implement what can only be called a miserly 
policy for how much earned income is disregarded for the 
purposes of welfare eligibility. Until very recently, only two 
States ended assistance payments sooner than Maryland for 
welfare recipients going to work. Some improvements to 
Maryland's earnings disregard policy were implemented last 
year, but more needs to done to make work pay, not painful.
    On a related issue, too many individuals who are trading a 
welfare check for a pay check are losing other benefits to 
which they are entitled, such as Medicaid and food stamps. I 
was pleased that our State acknowledged this problem by sending 
temporary medical cards and simplified Medicaid applications to 
60,000 individuals who may have inappropriately lost health 
coverage when they left cash assistance. I am interested to 
learn how many of these 60,000 individuals retain Medicaid 
coverage today.
    Of course, one of the biggest issues confronting both 
mothers attempting to move from welfare to work, and those 
trying to stay off welfare, is finding quality day care for 
their children. In this context, I worry that Maryland's 
eligibility levels for child care assistance, limited to 
families earning less than $22,000 a year, leaves too many 
parents without access to affordable day care coverage.
    Maryland is one of only a few States that sets its child 
care assistance eligibility level at 40% of the State Median 
Income (SMI), which is far below the allowable Federal 
threshold of 85% of SMI. Governor Glendening's new budget 
begins to recognize the inadequacy of Maryland's child care 
budget by proposing to modestly increase the income eligibility 
thresholds from $22,000 a year for a family of three to $25,000 
for such a family.
    I am encouraged by the good work being done in Maryland and 
nationwide to overhaul our welfare system. But there is still 
much that Federal and State officials can do to improve 
outcomes for low-income families, especially considering the 
resources generated by a strong economy. Yet despite the needs 
of poor families for improved child care, health care and work 
rewards, some states are apparently using Federal TANF dollars 
to replace, rather than augment, State money dedicated to 
helping these families.
    This type of supplantation does not adhere to the spirit of 
the welfare reform agreement between the State and the Federal 
government. The Federal government has upheld its end of the 
agreement by maintaining the TANF grant's flexible funding at 
its statutory level. But the States must also continue to do 
their part--which means focusing Federal TANF funds on helping 
needy families, not on freeing up State dollars now dedicated 
to poverty programs.
    Finally, by focusing most of my comments on Maryland's 
welfare policies, I do not mean to suggest the Federal 
government should merely stand on the sidelines. While Congress 
should continue to give States broad flexibility in determining 
there welfare policies, there are other areas where the Federal 
government should be more proactive.
    For example, I hope and expect that Congress will increase 
the minimum wage to raise the earnings of low-income workers, 
especially those leaving welfare. I also believe we need to 
increase Federal funding for child care to help families 
balance the burdens of work and raising a family--and I have 
authored a bill to do just that. I have also introduced 
legislation to require the Federal government to share with the 
States the cost of passing through more child support to low-
income families.
    Madame Chairwoman, let me again thank you for bringing this 
Subcommittee to Maryland to oversee welfare reform in action. I 
know you share my desire to hear about both the promise and the 
problems of welfare reform here and around the Nation.
      

                                

    Madam Chair, I appreciate the honor that you allow me to 
introduce the first panel that we have. We have, I think, the 
two key legislators that have been responsible for the progress 
that we have made in the State of Maryland. Senator Madden 
comes from Howard County, a county that is one of our real 
growth counties in the State of Maryland, one in which the 
State senator can pick whatever priorities he wants to 
concentrate on.
    We are very, very proud that he has been a champion on 
welfare reform in our State. And I applaud him for those 
efforts. He has been a true champion on trying to make sure we 
do the right thing for families in our State.
    And Samuel Rosenberg, a member of the House of Delegates, 
which I consider to be the upper House, considering that I 
served as Speaker of that body, only because of the protocol, 
we will allow Senator Madden to go first. But Sandy Rosenberg, 
he and I came from the same legislative district. He chairs one 
of the Subcommittees on the Appropriations Committee.
    In Congressional terms, we would call you a cardinal. And I 
understand that may not go over well in your district, but I 
will see what happens. But he has been one of the real leaders 
in our State on progressive issues dealing with poverty and 
dealing with children.
    And then we have Lynda Fox, who is the secretary of the 
Maryland Department of Human Resources, the person charged on 
the executive side with implementing our human resource 
programs, including welfare reform and has been one of the real 
policy developers on the welfare issues in our State.
    And last, Fred Puddester, who is the secretary of the 
Maryland Department of Budget and Management. Fred has 
experiences on both the legislative and executive side. He is a 
person who has incredible credentials and credibility among 
legislators and in our entire State for running budget 
discipline, as well as using the budget in a creative way to 
deal with the problems with the people of our State.
    So welcome. Your entire statements will be put in our 
record. And we would appreciate it if you would try to limit 
your formal presentations to no more than 5 minutes.
    Senator Madden.

 STATEMENT OF HON. MARTIN G. MADDEN, SENATOR, MARYLAND SENATE, 
AND CO-CHAIRMAN, MARYLAND GENERAL ASSEMBLY, JOINT COMMITTEE ON 
                         WELFARE REFORM

    Mr. Madden. We know the urgency of that message sitting in 
our own Committee for the last month and having another 2 
months to go.
    Madam Chairman, thank you very, very much for coming out 
here to the land of pleasant living. We appreciate your 
valuable time in doing so. We want to thank you for the 
opportunity to show you what the States can do when they get a 
chance to be closer to the people they are trying to serve. And 
we thank you for devolving this program down to us. We also 
particularly thank you keeping your word on maintaining the 5-
year level block grant. I think it would have been a terrible 
precedent on this first devolving of the Federal Government to 
the States to have to come back and break that word. It would 
have set a bad precedent for the next time we wanted to do 
another program.
    Maryland was determined not to duplicate the Federal one-
size-fits-all system. And so we granted our 24 local social 
services directors in the 23 counties and the City of Baltimore 
the flexibility, the funding, and the autonomy to make their 
own decisions on what is best to bring welfare--with what is 
best to bring people to self-sufficiency that we are trying to 
serve.
    We backed this promise up by guaranteeing the local social 
service directors that they would receive 45 percent of the 
savings generated from any caseload reduction in their 
jurisdiction. And this has generated numerous experiments and 
different programs; things that work in one county are quickly 
duplicated in others where they are applicable. Things that 
don't work, we move on.
    I, for one, adhere to the old saying there is no failure in 
trying and failing, only in failing to try. And we have never 
held anybody responsible for trying something that didn't work. 
One of the things that has happened is that Allegheny County, a 
county with one of our highest unemployment rates in the State, 
has the biggest caseload reduction in Maryland. They are down 
90 percent. It is not because the job market is better up 
there; it is not. They just tried new and more innovative 
approaches.
    We have given our local social service directors the 
individual authority to give education exemptions, rather than 
a blanket exemption for everyone. We think we are on the right 
track here in Maryland. We want more ability to do so.
    Two things I would ask you to do as we move forward. 
Maryland came out of the welfare reform effort very early. We 
had a Federal waiver prior to August the 22d of 1996 when the 
landmark legislation was passed and signed. So we kicked in 
right away in October 1996. I think your Department of HEW 
approved our plan on January 1997. So our clock is now 3 years 
and 1 month ticking.
    And as Congressman Cardin knows, we only go into session 
January through April. If you all don't tell us this session 
what you are going to do at the end of the 5-year time limit, 
we have no way to react to the changes because that means you 
won't do it until after our 2001 session. We will be out of 
session until 2002 when our time limit has already expired. 
From our perspective here in Maryland and the other early 
States, it is imperative that you tell us this year what is 
going to happen at the end of the 5-year block grant; 
otherwise, we don't have the time we need to react in a proper 
manner.
    The second thing I would urge you to do is please devolve 
more programs back to us. And, you know, right now, a year from 
now we are going to have a new President for sure and perhaps 
some new people sitting in certain seats. I think we should 
keep this bipartisan consensus that was started 3 years ago 
continuing, and if you are not ready to devolve back the 
Medicaid Program or the Food Stamp Program nationally, why not 
start some pilots? Start with six States, three with Democratic 
Governors, three with Republican Governors, one rural State, 
one urban State, one on the West Coast and one on the East 
Coast, whatever you think is fair and gives you a broad 
perspective. Give six or eight States a chance to show you what 
we can do on Medicaid and food stamp eligibility.
    I will guarantee you this, we will do it fairly and we will 
do it compassionately, and we will do it more efficiently. Now, 
I can't guarantee you a result, but I can almost predict that 
we will find results that far exceed your expectations, just 
what we found in welfare. Nobody would have predicted the 
success the welfare program had.
    So please, as you go about recertifying the welfare, why 
not try a pilot program in certain States? I only ask one 
request, make sure one of them is Maryland. And I think we will 
find this body of knowledge--it is transferrable. Maybe it is 
too big a step to do it on a national basis, I understand that. 
Try some pilots. Connecticut would also be a good one to start 
out, Madam Chairperson. Those are my two requests here.
    Congressman Cardin, to answer one of your questions, the 
issue you raised regarding Maryland cutting off benefits very 
early when somebody leaves welfare, that is a deliberate policy 
that I endorsed here in Maryland. The reason why is that the 
way the Federal law is set up, if you give even $10 of cash 
assistance to anyone, it counts as one of those 60 precious 
months of lifetime eligibility somebody on welfare has.
    I would much rather direct aid through tax credits or 
additional noncash assistance, because whether we give a full 
cash benefit to somebody for a month or whether we give them a 
$10 supplement while they are working, each of those cash 
payments eats up one of those 60 months of lifetime 
eligibility. I don't think it is a wise use of resources to do 
so.
    Thank you for your time.
    Mr. Cardin. Thank you very much, Senator Madden.
    Mr. Cardin. Dr. Rosenberg.

STATEMENT OF HON. SAMUEL I. ROSENBERG, DELEGATE, MARYLAND HOUSE 
OF DELEGATES, AND CO-CHAIRMAN, MARYLAND GENERAL ASSEMBLY, JOINT 
                  COMMITTEE ON WELFARE REFORM

    Mr. Rosenberg. Thank you. Welcome, Chairman Johnson, 
Ranking Member Cardin, Congressman English to Baltimore City, 
to the 3d Congressional district, not the 42d legislative 
district. It was my honor to serve my first term with 
Congressman Cardin's last term in the House Delegates of 
Maryland.
    I think one of the important things about how we have 
approached welfare reform is in one of the things that 
Congressman Cardin did not say about Senator Madden, that is, 
that he is a Republican; I am a Democrat. We have had a 
bipartisan approach to welfare from the outset in Maryland.
    We have also had I think an approach that is 
nonideological, in the sense the very first welfare innovation 
act that we did--we are now on our 5th or 6th annual acts--but 
the very first year the advocates came to us and said you 
should study what the impact is of what you are doing. And so 
we wrote into the law that there will would be funds for an 
annual study that Congressman Cardin cited as to what is the 
impact of what we have done.
    We have paid attention to that study in molding what we do. 
We have achieved a great deal of success, but we have only 
begun the process of welfare reform. There are people who 
remain on the rolls who will be more difficult to find work. 
But, more importantly, or equally as important, I think our 
priority now has to be helping people who have left the rolls 
begin to move up the economic ladder, so that their second or 
third job is one that pays a higher wage, and that involves a 
variety of factors on our part: Job skills, childcare, 
continued support, and things like Medicaid and food stamps.
    And I think that is our priority now as we move into the 
second phase of welfare. And we need the ability--we need to 
keep the ability to do that, to be innovative, to be flexible, 
and to retain the funds to do that. In Maryland, we have 
provided that the savings go into a dedicated-purpose account 
so that they can only be used for welfare-related purposes. 
This is--you know, so that it doesn't go into, you know, just 
the general funds so that Mr. Puddester can use it for a 
variety of purposes. It has to be used for welfare-related 
purposes. We have reinvested through the locals giving them 
flexibility. And I think that is something--that is the kind of 
flexibility that we should retain.
    When you decide--when you reauthorize the program when, you 
know, whether it is in this calendar year or the next calendar 
year, preferably sooner, so we know what we are doing, it is 
essential that we retain that flexibility, so that individually 
each State can address problems as it sees fit.
    And it is as Senator Madden said, we have said to the 
locals, it is not just do as we say; we have given them the 
flexibility to address problems. Congressman Cardin, you spoke 
specifically of the pass-through of child support. There is 
legislation before us this year--we haven't had a bill hearing 
on it yet. But I think what has motivated us throughout this 
process is a sense of giving people the opportunity to move off 
welfare, providing whether it is programs or incentives but 
also saying that there is a consequence for your children, for 
your family if you fail to take advantage of that opportunity.
    Most notably that has been the case with what we have been 
trying to do with substance abuse. Senator Madden took the 
initiative several years ago to say if parents are abusing, 
they are not going to be good parents, and their children are 
going to suffer. And we have--we are still working on that to 
make it work; but we have said that, you know, if we make drug 
treatment available to you and you fail to, you know, work--
remain in the program, there is a consequence for your children 
if we do nothing, so we are going to do something and deal with 
custody issues there.
    We are still trying to make sure that that treatment is 
made available. But I think that--I think that best epitomizes 
what we have tried to do here in welfare in Maryland, address 
the problem, not from an ideological approach but by saying 
there is a problem, here is how we think, here is the tools, 
the opportunities to address that problem and moving forward 
and constantly evolving so that we are, in fact, addressing 
that problem.
    So our bottom line is continue to give us that flexibility, 
continue to give us the resources so that we can address those 
problems. And we look forward to working with you as we have 
worked as a legislature, Democrat, Republican, legislative, as 
well as advocates and elected officials to giving people the 
opportunity to move not just out of welfare but up the economic 
ladder.
    Mr. Cardin. Thank you.
    [The prepared statement follows:]

Statement of Hon. Martin G. Madden, Senator, Maryland State Senate, and 
Hon. Samuel I. Rosenberg, Delegate, Maryland House of Delegates; Co-
Chairmen, Maryland's General Assembly's Joint Committee on Welfare 
Reform

Dear Chairman Johnson:
    Thank you for the opportunity to appear before the U.S. 
House of Representatives Ways and Means Committee's 
Subcommittee on Human Resources hearing in Baltimore on welfare 
reform. Congress and the President made the right decision in 
devolving welfare to the states.
    Maryland was determined not to duplicate the failed federal 
``one size fits all'' structure. Accordingly, we gave each of 
our 24 local social service directors (23 counties and 
Baltimore City) the flexibility, funding, and autonomy, to make 
their own decisions on how best to address the barriers to 
self-sufficiency faced by their residents. We backed this 
approach by providing that 45 percent of the savings realized 
because of caseload reductions is returned to the 24 local 
departments. This lead to the creation of many new approaches, 
such as a source of funds for innovative demonstration projects 
between local social service departments and nonprofit 
organizations, as well as other local entities. Welfare reform 
has succeeded beyond our most optimistic expectations. We 
certainly hope that this flexibility continues as the existing 
TANF block grant ends and discussions begin regarding its 
extension.
    As co-chairs of the Maryland's General Assembly's Joint 
Committee on Welfare Reform, we are proud of the State's 
efforts to implement welfare reform. Our efforts enjoy 
bipartisan support and could not have been accomplished without 
a high level of cooperation between the legislature and the 
Executive Branch. From January 1995 to December 1999, 
Maryland's welfare caseload has declined by more than 65 
percent. An on-going legislatively mandated study indicates 
that most of those people who left welfare found jobs, have 
stayed employed, increased their earnings, and have not 
returned to welfare.
    We are also proud of the fact that Maryland is an 
acknowledged leader in developing innovative approaches to 
helping welfare recipients achieve independence. For example:
     Maryland was the first State to implement a drug 
screening program for welfare recipients because we recognized 
that a significant barrier to independence is substance abuse;
     Maryland allows any program savings to stay with 
our State welfare agency and its local departments of social 
services;
     Maryland created a special account for State-only 
funds that can be used only if caseloads start increasing; and
     Maryland mandated that an ongoing study be 
conducted that follows former welfare recipients. This study 
has provided invaluable information regarding what happens to 
those people that leave welfare and is considered a model for 
other states.
    In spite of our success, we recognize that there is still 
much work to be done. Starting in January 2002, the first group 
of welfare recipients in Maryland will be subject to the 60 
month time limits. Unless exempted, these welfare recipients 
will no longer be eligible to receive any TANF benefits. While 
the caseload declines remain encouraging, the fact is that 
Baltimore City has well over one half (48,000 cases) of the 
State's remaining caseload, and most of these individuals fall 
into the ``hardest to place'' category. While we continue to 
endorse the autonomy and flexibility granted to the local 
departments, we aslo recognize that a regional approach may be 
necessary to assist Baltimore City in addressing its caseload. 
For example, transportation barriers prevent inner-city 
residents from obtaining access to well paying suburban jobs. 
We will have to devote more resources to removing these 
barriers.
    As we begin to focus on the ``hardest to place cases,'' we 
were pleased to see that the new TANF regulations afford the 
states much greater flexibility in the use of their funds to 
move welfare recipients to independence. We are also pleased 
that Congress has declined to take away the TANF surplus that 
the states have accumulated in the event caseloads start 
increasing. We encourage you to continue the TANF block grant 
and your support of state and local efforts.
    We have helped people move from welfare to work. Now we 
must give people the opportunity to move from unskilled, 
subsistence jobs to higher skilled, better paying jobs. We also 
would like you to consider devolving other programs to the 
states, such as Medicaid and Food Stamps. If you are not ready 
to devolve all of the major programs for the poor to the 
states, we would encourage you to establish a three year pilot 
program in 6 states and would like for Maryland to be included 
in the pilot. We promise to administer these new pilot programs 
fairly, compassionately, and efficiently. . . .we also expect 
to achieve positive results that exceed all our most optimistic 
expectations.
      

                                

    Mr. Cardin. Secretary Fox.

STATEMENT OF HON. LYNDA G. FOX, SECRETARY, MARYLAND DEPARTMENT 
                       OF HUMAN RESOURCES

    Ms. Fox. Good morning. I would like to thank Chairman 
Johnson and Congressman Cardin and Congressman English for 
coming to Baltimore today to allow us this time to talk about 
both the successes and challenges of welfare reform here in 
Maryland.
    As you can see from the panel, it has been a real team 
effort. The Governor and the General Assembly have collaborated 
together to have a unified, consistent, coherent approach to 
welfare reform; and we think it has worked very well. We have 
assisted many, many families; and at the same time, we have 
protected children and protected those with disabilities and 
other vulnerabilities.
    Certainly one measure of our success has been our caseload 
decline. Since January 1995, our caseload has decreased by over 
66 percent. It has ranged from place to place around the State, 
going as high as about 90 percent in some counties, but 
remaining at about a 55 percent decrease in Baltimore City. As 
in other parts of the country, the welfare caseload is becoming 
more of an urban phenomenon.
    At this point, about six in 10 of those who are receiving 
Temporary Cash Assistance do reside here in Baltimore City. We 
think that the caseload decline is one measure of our success, 
but clearly not the only measure of our success. Dr. Catherine 
Born will talk a little bit about the work she has done. 
Basically we found people have become employed, stayed 
employed, had wage gains and maintained their families.
    We believe that we are using the flexibility that you have 
given us through the devolution of welfare reform to the 
advantage of Maryland families. At this point we appreciate 
that we can serve not only those who are receiving cash 
assistance but also those that have left our rolls and those 
who are only one paycheck away from needing our assistance.
    We also have used this opportunity to do a lot more in 
terms of programming for fathers so that we are serving both 
parents whether or not they reside in the same household. We 
have been able to expand our childcare resources. We have taken 
advantage of the transferability into the childcare development 
fund.
    We have done that for 2 years, and we are asking for 
permission in this year's state budget to do it a third year. 
That has enabled us, as Congressman Cardin pointed out, to 
increase our eligibility threshold. It has also enabled us to 
provide greater access to the program for children of teen 
parents and also children being cared for by kinship care 
providers.
    We also are embarking in July on an After School 
Opportunity Fund of $10 million that will enable private and 
nonprofits and traditional childcare providers to do after 
school activities. We are also expanding our Family Support 
network. They serve young vulnerable families with children 
birth to 3. We are expanding our Healthy Families Maryland 
program, which is a home visiting program aimed at reducing 
subsequent nonmarital births as well as preventing child abuse 
and neglect. And we are enhancing our activities to serve those 
that have left welfare.
    As we reach this point, we are really seeing a new set of 
emerging issues. We feel like we have entered into stage two of 
welfare reform. So job retention and job skills enhancement are 
now becoming increasingly important.
    We also appreciate the flexibility we have been given for 
the first time to really engage in prevention activities so 
that we ensure that the next generation need not be dependent 
on welfare. In the beginning, our goals were caseload reduction 
and customer satisfaction. Now, it is much more job retention, 
earnings gain, diversion and prevention.
    It has become increasingly clear that we are not going to 
succeed in the long run without coupling those leaving cash 
assistance with the other Federal and State supports that are 
available. We have been working very hard on ensuring that 
everyone who is entitled gets medical assistance, food stamps, 
childcare, both the State and the Federal earned income tax 
credits, and avail themselves of child support enforcement 
services as well.
    I think there are many ways that Congress can continue to 
help us as we continue this welfare reform journey. We 
certainly appreciate that you left our funding intact. We 
appreciate your respect for our bargain. I do think that the 
high balances may have given you a false impression. I think 
States like Maryland were prudent in their use of their funds. 
We wanted to be certain that the caseloads were going to fall 
and were going to remain low.
    We also were in a very uncertain regulatory environment. 
The initial HHS regulations really had a chilling effect, I 
believe, on the creativity in States in using the resources. So 
we are hoping to continue, but we have not yet any guarantee 
that the economy will remain as vigorous as it has been. The 
Regional Economic Studies Institute at Towson University tells 
us that about 9 percent of our 61 percent decrease can be 
attributed to the health of the economy. The rest is really 
attributable to policy change, which I think is interesting.
    But keeping that in mind, we do urge that you continue the 
sustained level of funding in the reauthorization.
    Mr. Cardin. Thank you very much.
    [The prepared statement follows:]

Statement of Hon. Lynda G. Fox, Secretary, Maryland Department of Human 
Resources

                              Introduction

    Good morning, my name is Lynda Fox. I am the Secretary of 
the Maryland Department of Human Resources. It is a privilege 
to be here today to discuss my views on the successes and 
challenges of welfare reform in Maryland. I would like to thank 
Chairman Johnson and the Committee for this opportunity. I 
would also like to thank our Congressman, Ben Cardin, for all 
of his hard work in getting as broad a possible range of views 
into the development of the original welfare reform legislation 
and in taking a leadership role in the development, where 
appropriate, of mid-course corrections to the Congressional 
vision of welfare reform. In Maryland, we think the Temporary 
Assistance to Needy Families program has had a dramatic and 
positive impact not only on welfare but the entire human 
services delivery system. In Maryland and across the nation, we 
are making great strides in assisting families to become 
independent of welfare and to enter the workforce. At the same 
time, we are safeguarding children, people with disabilities 
and other vulnerable populations by providing needed services.
    It is also a privilege to appear before you today as part 
of a panel that vividly demonstrates that, in Maryland, welfare 
reform is a team effort. Senator Madden and Delegate Rosenberg 
have provided a clear policy direction for Maryland's welfare 
reform efforts. Dr. Born has provided them and us with the 
facts and research necessary to make reasoned policy choices. 
Secretary Puddester has provided the budgetary guidance that is 
necessary to make our efforts successful. Because of the 
cooperation and foresight of Governor Parris Glendening and the 
Maryland General Assembly, Maryland is a leader in welfare 
reform -welfare reform that is firmly based on our research and 
the research of others and that takes maximum advantage of the 
fiscal flexibility you have given us to determine how to best 
serve low income families in Maryland. In the brief time that 
we have together, I would like to share with you some of our 
successes, point out some of the challenges that still lie 
ahead and enlist your support in facing those challenges.

                             Our Successes

    One measure, but only one, of our success is that of a 
caseload decline. We have built on the strengths of our 
customers and helped move them to independence. Since January 
1995, we have helped 150,547 Marylanders become independent of 
welfare. As of the January 2000, our cash assistance caseload 
has gone from 227,887 customers to 77,340 customers, a decline 
of 66.1%. Based on work done by the Regional Economic Studies 
Institute at Towson University, this decline in Maryland can be 
attributed largely to the implementation of our Family 
Investment Program. Towson Universty has been forecasting the 
state's welfare caseloads since 1992. They have projected the 
caseload in the current economic environment both with and 
without welfare reform. Their forecast estimates that without 
welfare reform, but with a booming economy, the caseload would 
have declined about 9%, rather than the 66.1% we have achieved. 
They have concluded that the dramatic difference in the rate of 
decline is at least partially due to the strong economy; but 
even more importantly, is a result of the sound policy 
decisions that have been made in Maryland.
    Maryland's caseload decline also mirrors a national trend 
in that the population remaining on cash assistance is 
disproportionately located in urban areas. While the state 
caseload has declined 66.1%, the caseload in Baltimore City has 
declined 55.3%. As a result of this difference in decline 
rates, Baltimore City now has 61.1% of the state's caseload.
    The more important question is not just how many people 
have left welfare caseloads but how well do they fare after 
they leave. I will leave it to Dr. Born to describe the details 
of her research work on this basic and important question. I 
think that we in Maryland have answered the basic questions 
that were asked at the beginning of the current welfare reform 
effort. We have found that people who leave welfare generally 
find work, preserve their families and do not return to the 
rolls.
    Another of our successes is that we have been able to 
understand more clearly and take advantage more fully of the 
true flexibility the Congress has given us and which we now 
see, years later, reflected in the final federal regulations. I 
will leave it Secretary Puddester to discuss more fully how we 
are taking advantage of this flexibility. Be assured that in 
Maryland we are using this flexibility to fund a host of 
activities that we think faithfully implement the purposes of 
the federal welfare reform law and serve low-income Maryland 
families who receive cash assistance, have received cash 
assistance or are but one paycheck away from receiving cash 
assistance. We have used in this flexibility on activities such 
as the following:

Child Care Expansion.

    We have transferred $92 million from the TANF block grant 
to the child care block grant in order to meet growing child 
care needs and to fund program expansions that will serve 
additional children.

The Maryland After School Opportunity Fund program.

    We will use $10 million in TANF funds to launch this 
program in July 2000. This program will provide funds to a 
myriad of after-school programs designed to enhance the 
motivation, performance and self-esteem of youth and thus meet 
the goals of the federal welfare reform legislation.

Expansion of Our Family Support Center Network.

    These centers were developed to establish preventive 
supports for families during the early formative years and to 
encourage the formation and maintenance of two-parent families. 
These centers are community-based programs that provide 
services to assist mothers and or fathers with children age 
birth through three, particularly in high-risk communities, to 
raise healthy families and build productive futures.

Expansion of the Healthy Families Program.

    This program provides home visitation and on-site services 
to families such as parenting education, family planning and 
employment services. This program's goals include the 
prevention of subsequent out-of-wedlock pregnancies as well as 
child abuse and neglect.

Expansion of Our Job Skills Enhancement Pilot Project.

    This program provides of participants with training to 
enhance existing skills, gain additional or alternative skills 
or to learn interpersonal communication and other related 
skills to retain their jobs and increase their potential for 
advancement beyond entry-level positions.

                       The Challenges That Remain

    Caseloads have declined. This is not the end of the story 
of welfare reform but rather the beginning of a new chapter. 
Those that remain tend to live in urban areas where there is a 
problem with the supply of jobs and also tend to have a greater 
number of barriers to independence. We also have to ensure that 
those who have left do not come back, unless absolutely 
necessary. Finally, we are faced with the issue of true welfare 
prevention not just diversion. In our diversion activities, we 
want to insure that people do not stay in our welfare offices 
very long. In our prevention activities, we want to ensure that 
they do not have to come to us for cash assistance in the first 
place. We faced the initial issues of welfare reform and are 
now facing new and more difficult issues. Among these are:

Job Retention and Job Skills Enhancement.

    Is important that those who leave welfare for a job keep 
that job and move on to a better job. With assistance from 
planning grants and input from advocates and members of the 
General Assembly we are devising a number of programs to ensure 
that those who leave welfare for a job keep that job and use it 
as a stepping stone for career.

Prevention Activities.

    The final federal regulations have more clearly articulated 
the flexibility in the federal welfare reform law. Maryland has 
enthusiastically grasped that flexibility to design and enhance 
programs that are preventive in nature. This continues a long 
tradition in Maryland of focusing on different kinds of 
preventive activities. For example, one of Maryland's very 
first of welfare reform activities was called the Primary 
Prevention Initiative that focused on child immunizations and 
school attendance as being preventive of welfare dependency. We 
are building on this tradition of prevention by funding after-
school programs, family preservation programs, family support 
centers, dropout prevention programs, out of wedlock pregnancy 
prevention programs, young fathers programs and other 
community-based initiatives.

Realigning the Major Welfare Reform Goals of the Department.

    At the beginning of our welfare reform effort, we 
developed, in concert with the Maryland General Assembly, a 
Reinvestment Strategy. Our major goals were caseload reduction 
and customer satisfaction with an overall objective of creating 
caseloads savings and reinvesting those savings back into 
programs that would help those with greater barriers to 
independence. The General Assembly gave the Department 
unprecedented fiscal flexibility to carry forward caseload 
savings into the future. Now, we are faced more squarely with 
the issues of job retention, earnings gain, diversion and 
prevention. Consequently, we are more clearly articulating a 
goal of the support of low-wage working families. The policy 
shift to welfare as a temporary support has accentuated the 
fact that other governmental means tested programs are supports 
to employment and eventual family independence. Taking the lead 
from David Ellwood, we view independence as a multi-legged 
stool with governmental means tested programs and private 
efforts working together to move the family eventually to 
independence. The programs we are providing and/or marketing to 
our customers include:
     Child Support.T1 We have included a Child Support 
First component to our program and are building a Child Support 
Last component to ensure that those exiting from the welfare 
rolls have the child support money to which they and their 
children are entitled.
     Child Care.
    As our welfare caseload projections go down, our child care 
projections increase as more people move to work and need this 
support.
     Medical Assistance. We have developed manual 
review mechanisms and are shortly going to turn on new computer 
programs to fully implement the provisions of Section 1931 of 
the federal welfare reform law regarding Medical Assistance. We 
are committed to insuring that all medical assistance 
applicants who are eligible are correctly determined to be 
eligible, regardless of their cash assistance status.
     Food Stamps. This program has taken on increased 
importance as part of the social safety net as cash assistance 
caseloads have declined. As I will discuss later, this program 
unfortunately does not have the flexibility that exists in TANF
     Earned Income Tax Credits. We continue to 
aggressively market both the federal EITC and Maryland's own 
refundable EITC.

                How You Can Help Us Meet the Challenges

    To meet the challenges I have described, the states cannot 
go it alone. Most certainly, they (along with Maryland) will 
not be able meet those challenges with reduced federal support. 
Consequently, I offer the following suggestions as being some 
of the more fruitful ways in which the federal state 
partnership in welfare reform can continue to grow along an 
exciting, devolved and research driven path.

Maintain Current Levels of Support.

    We understand the Committee's concern that some states have 
accumulated significant TANF reserves. I think this 
accumulation reflected an initial prudence on the part of the 
states and an uncertain federal regulatory climate. Now that we 
more fully understand the flexibility inherent in the federal 
welfare reform law, I believe that Maryland and other states 
will reduce those balances by spending on appropriate 
activities for low-income families.

Look Toward a Reauthorization of the TANF Program at Current 
Block Grant Levels.

    We have been led to understand that is it the opinion of 
many that upon reauthorization the TANF block grant to the 
states may be smaller. We would urge you to reject that kind of 
thinking. The federal welfare reform law was the result of the 
historic agreement between the states and the federal 
government regarding the risks of significant change in the 
area welfare reform. The states were willing to accept those 
risks and the burden of any unforeseen additional costs. The 
Congress needs to hold up its part of the bargain and continue 
funding at reauthorization at current levels. I would remind 
you and everyone listening that we have yet to see the repeal 
of the business cycle. We have yet to see how the progress we 
have made and the successes we have achieved will fare in a 
time of serious economic downturn.

Continue the Principle of Maximum State Flexibility in the 
Design of Their Welfare Programs.

    Now that states have had some experience with welfare 
reform, you will see even greater experimentation and a greater 
drift away from welfare the way it was. There are some who are 
troubled by this, despite the results of studies such as we 
have done in Maryland concerning welfare leavers and other 
aspects of our program. I urge you to resist the 
recommendations those who would attempt to reestablish aspects 
of welfare as we knew it by placing controls on state 
flexibility and creativity and otherwise attempting to unravel 
the historic welfare reform agreement.

Continue to Work toward Granting the States the Flexibility 
They Have in the TANF Program to Other Federally Funded Means 
Tested Programs, Particularly Food Stamps.

    I offer the following suggestions:
     Substantially reform the Food Stamp Program to 
simplify it and conform it to the goals of welfare reform while 
preserving its role as a significant part of the social safety 
net. There needs to be a radical simplification of this 
program's complex income, asset and deduction rules, which 
continue to mystify staff and customers. In themselves, they 
constitute a considerable barrier to participation in the 
program.
     If the above cannot be done or seems too big a 
step, the Congress should grant increased waiver authority to 
United States Department of Agriculture to allow state 
experiments in the Food Stamp Program. This would be similar to 
the waiver demonstration projects that gave states the 
experience and the information to craft successful welfare 
reform programs. States are the great laboratories of 
democracy. While we are well aware of the fact that this 
Committee does not have jurisdiction over the Food Stamp 
Program, we urge you to constantly work with your colleagues 
that have direct responsibility for that program to grant the 
state's a measure of the flexibility that was contained in the 
federal welfare reform law. As you know, the states have 
responded appropriately to that flexibility and would do the 
same with regard to the Food Stamp Program.

Full federal participation in the pass-through and disregard in 
the calculation of the grant of any child support collected on 
behalf of families who receive TANF cash assistance.

    There is growing support in Maryland and across the nation 
for passing through and disregarding at least a portion of the 
child support collected on behalf of children receiving cash 
assistance. There are many good reasons to do this. Among these 
are the extra income it gives the family while they receive 
cash assistance, but more importantly the tie that this creates 
between the non-custodial parent and the children that will 
continue long after the family has left welfare. The problem 
with this strategy is that current law governing the 
distribution of child support collections requires that we give 
to the federal government half of what we collect for these 
families. Thus, we can pass through and disregard only the 
state share of the collection unless we choose the extra 
expense of paying the family the federal share.
    We are supportive of any legislation that would have the 
federal government participate in the cost of passing through 
and disregarding child-support collections to current TANF cash 
assistance recipients. We would also suggest that this passed 
through and disregarded income be excluded from the income that 
is counted to determine the family's Food Stamp benefit. 
Otherwise, the family would be giving back to about one dollar 
from every three it got. Finally, we note that this passing 
through and disregarding of the child support collection will 
require significant computer programming for a state such as 
Maryland. Should the Congress mandate such a pass through, we 
suggest that the states be given ample time to properly adjust 
their automated systems to properly execute such a policy.

Giving states assistance in our continuing program improvement 
and research efforts.

    We have demonstrated that Maryland's welfare reform effort 
is firmly based on continuing program improvement and using our 
research results. Our program will continue to develop and 
improve to better serve low-income Maryland families only to 
the extent that we can gather enough meaningful data to 
evaluate our programs and find out where people who have left 
our programs are or are working. There are several databases 
that have been constructed or are under construction that fall 
under the jurisdiction of your committee. Access to either of 
them would significantly assist Maryland in evaluating its 
program, seeking a federal High Performance Bonus in the area 
of TANF and improving the services we offer to our low-income 
families. We would request legislation to allow us and our 
researchers access and receive match information including 
identifiers for TANF purposes from both of the following 
databases:
     The Expanded Federal Parent Locator Service 
database, which holds employment information from all of the 
states as well as the federal government. Maryland is a small 
state surrounded by others with a large number of federal 
employees. Access to this database, properly restricted to 
preserve confidentiality and the proper use of the data, would 
be of significant help to us in designing future enhancements 
to our program and in targeting services.
     The database being created under the authority of 
Section 136(f)(2) of the Workforce Investment Act. While not as 
powerful as the above database, we would say that cross-state 
information is as valuable in designing and evaluating programs 
to implement TANF as to implement WIA.
    Thank you for your attention. I will be happy to answer any 
questions you may have.
      

                                

    Mr. Cardin. Secretary Puddester.

 STATEMENT OF HON. FREDERICK W. PUDDESTER, SECRETARY, MARYLAND 
              DEPARTMENT OF BUDGET AND MANAGEMENT

    Mr. Puddester. Thank you. Chairman Johnson, Congressman 
Cardin, Congressman English, I want to thank you for coming to 
Baltimore, and joining us here. And Chairman Johnson, it is 
sort of old home week for me. When I came to Maryland 21 years 
ago, I had a little more hair. And as a legislative analyst, 
Congressman Cardin was the Speaker of the House. It was sort of 
like an old home week for me to come here.
    I am going to repeat, I guess, a lot of what my colleagues 
said here. But I think what you have at the table shows you the 
commitment to welfare reform we have here in Maryland. But as 
Delegate Rosenberg said, it is executive branch, legislative 
branch, Republicans and Democrats before you.
    My testimony comes from the perspective of the budget guy. 
We have had a lot of success in welfare reform in this State. 
Lynda talked to you a little bit about the reduction and the 
caseload. But we also had a lot of challenges before us. We 
have guided our program by one of local option, local answers 
to these issues as part of an overall strategy the State has in 
terms of outcome-based budgeting. What we have done is handed 
these decisions, if you will, over to the local Department of 
Social Services. And I think the results speak for themselves.
    We do have some innovative stuff going on at the State 
level. Congressman Cardin mentioned the $22 million increase in 
child daycare in this budget the Governor has placed before us. 
And there is $10 million for an afterschool program, which was 
part of a piece of legislation that came out of the general 
assembly last session. We both at the State and the local level 
have some innovative programs that I think are contributing to 
the success we have.
    That is not to say we don't have challenges. You heard a 
lot about sort of the next level in getting people more 
independent and getting wages up for those people that leave 
welfare. As Lynda's staff deals with the folks that are left on 
the welfare rolls, you see average caseload costs going up. And 
you see they are dealing with a more difficult client to place 
out in the work force. And I think that is going to continue, 
that her staff will continue to have more challenges as they 
seek to continue to reduce the workload.
    I want to thank this Committee, this Subcommittee, Members 
of Congress for keeping the deal--that is very important to 
us--in terms of selling this throughout the State. I want to 
commit today that from the executive branch side, we are going 
to keep our part of the deal, too.
    We are trying to draw down our TANF funds. We are not going 
to be supplanting general funds in their place. Delegate 
Rosenberg talked a little bit about our dedicated-purpose 
account. What we have set up in Maryland is an account to 
capture the savings that we get from the reduction of the 
caseload; that account is set aside and cannot be used for 
anything other than activities related to this population.
    Hopefully by the end of fiscal year 2001, we can get as 
much as $70 million in that account. But the concept is that it 
is there to help Lynda and her staff and the local departments 
to deal with the issues that face us. And we will not be here 
in Maryland siphoning off money that we are saving for other 
purposes.
    I want to thank all for the opportunity to come here today 
and the help you have given us in making welfare reform a 
reality here in Maryland. Thank you.
    [The prepared statement follows:]

Statement of Hon. Frederick W. Puddester, Secretary, Maryland 
Department of Budget and Management

    Good morning, my name is Frederick W. Puddester, Secretary 
of the Maryland Department of Budget and Management. It is a 
great privilege to be here today to discuss the status of 
welfare reform in Maryland. I would like to thank Chairman 
Johnson for this opportunity and on behalf of the citizens of 
Maryland express our gratitude for holding this hearing here in 
Baltimore. I am honored to be here today with my colleague from 
the cabinet Secretary Lynda Fox from the Department of Human 
Resources, Dr. Cathy Born from the University of Maryland, as 
well as the chairs of the Maryland Legislature Joint Committee 
on Welfare Reform, Senator Martin Madden and Delegate Sandy 
Rosenberg. This panel reflects the widespread commitment to 
welfare reform in Maryland government as evidenced by the 
presence to executive branch, the university community and the 
legislative branch. We are all partners in making welfare 
reform a success.
    My testimony today is from the perspective of the Secretary 
of Budget and Management. As a part of my duties, I am 
responsible for the development and execution of the Maryland 
State budget. The activities of welfare reform are a 
significant activity for the Maryland Department of Human 
Resources, itself one of the largest state agencies.
    You have asked for my views on both the successes and 
challenges of welfare reform in Maryland. Clearly the most 
significant success has been the 66.1% reduction since January 
1995 in the number of individuals receiving Temporary Cash 
Assistance. This reduction in the number of individuals 
receiving assistance is good for the individuals, their 
families, and their community. As the Budget Secretary, I 
clearly look forward to individuals transitioning from 
receiving assistance to becoming taxpayers, their transition 
from the expenditure to the revenue side of the appropriation 
is always welcome.
    One of the key components of welfare reform is the 
requirement for work or work related activities as a condition 
of assistance. The State of Maryland has been spending 
approximately $40 million in locally driven reinvestment 
strategies. We are allowing the local departments of social 
services the opportunity to develop work related and training 
activities which reflect both the needs and resources of their 
communities. This flexibility is matched with performance 
requirements as defined in outcome measures of our strategic 
planning process known as Managing for Results.
    Another significant development for Maryland is the 
flexibility to utilize funds for support services beyond the 
traditional assistance programs. Secretary Fox and her staff 
have long advocated that it is insufficient to merely direct 
individuals receiving assistance to find a job. Support 
services are necessary to make both job training and continuing 
employment a reality. Under welfare reform, Maryland has been 
able to increase the support of childcare purchase of care by 
approximately $28 million. The Governor's budget currently 
under consideration by the state legislature will provide an 
increase of 2100 slots for child care and bring the total 
number of slots to almost 29,000. This effort will permit 
individuals receiving assistance to provide care for their 
children while attending work related activities and while 
working. Similarly, a new initiative in Maryland called the 
After School Opportunity Fund is being implemented under 
welfare reform. Experts tell us that a significant portion of 
inappropriate juvenile behavior occurs during the late 
afternoon, after the conclusion of the school day, and before 
the parents return from work. Our new program will assist in 
providing quality programs for our children during these 
critical hours and is anticipated to help reduce the number of 
teenage out of wedlock births.
    The road to welfare reform is not complete and there are 
challenges remaining to be addressed. In Maryland, we have been 
successful in reducing the assistance caseloads by 66.1% since 
January 1995. A concern remains for those individuals who 
remain on the caseload. We understand that these customers 
often have multiple barriers to independence. These may include 
lack of basic educational levels, poor basic job skills, few 
job specific skills, possible substance abuse, and the lack of 
family role models and mentors to be a successful employee. In 
short, these individuals will be far more challenging and 
expensive to return to work then those returned to date. We can 
reasonably expect that some portion of these individuals will 
not transition to employment within the five year time frame 
and may ultimately require some level of state only support, if 
they cannot be excluded from the time limitations under a 
hardship exclusion.
    The changes under welfare reform have had a significant 
impact of other supporting services as well. While our 
assistance caseloads has significantly declined, the 
participation in the medical assistance program has continued 
to grow. This growth has resulted from both revised eligibility 
requirements as well as the ability to continue individuals in 
these programs for a period of time after they transition to 
employment With respect to the medicaid program additional 
state resources are being utilized to meet the required federal 
matching component.
    From the beginning of welfare reform there was a 
congressional commitment to maintaining the constant level of 
funding for five years. It will be critical to continue this 
level funding stream into the future. While the caseload may 
have declined it has become apparent that the average costs per 
recipient have been rising. As a greater portion of the 
caseload represents the more challenging customers this trend 
can be expected to continue. In addition, post welfare support 
services such as childcare and after school programs are 
critical to the program's long term success.
    I believe that Secretary Fox and her staff have been 
successful in transitioning individuals from the assistance 
rolls to the employment rolls. However it is critical to note 
that the initial job placement does not represent the end of 
the story. Support will be necessary to assist individuals in 
retaining their new found employment and perhaps more 
importantly in developing the skills necessary to advance their 
individual career path. We must continue the efforts to assist 
individuals in not just obtaining a first job but being able to 
eventually move in a career path to support their families 
without government assistance.
    It has been noted that Maryland has embarked on a strategy 
to effectively and fully use available TANF dollars. I must say 
this strategy has not resulted in supplanting of State funds in 
any way. The State of Maryland has not, and I repeat has not, 
realigned State funds previously allocated to the poor for 
other governmental functions. We have not supplanted State 
general funds with TANF Federal Funds. We have in some 
instances elected to utilize TANF funds for allowable 
activities in area of family support centers, dropout 
prevention activities, and a healthy families program. The 
state general funds which supported these activities have been 
placed in a dedicated purpose or reserve account for family 
investment programs. Their future use is restricted to 
requirements as a result of an economic downturn or mild 
recession. Both of these items are events which we have not 
experienced since the beginning of welfare reform.
    States such as Maryland will require the continued 
Congressional assistance in the implementation of welfare 
reform. The TANF program comes up for reauthorization in 
federal fiscal year 2002 and needs to be reauthorized at the 
current level. States need the continued flexibility to develop 
and implement locally driven programs. We would hope that the 
successes of the flexibility in welfare reform can be extended 
to the medicaid program and food stamps as well.
    Thank You for the opportunity to appear before the 
Committee today and for your continued support and flexibility 
to make welfare reform a reality.
      

                                

    Mr. Cardin. Thank you. Mrs. Johnson.
    Chairman Johnson of Connecticut. I thank the panel for your 
excellent testimony. There are so many questions. I will just 
ask about a couple of different things first.
    First of all, on this issue of daycare, your eligibility 
guidelines are really very stringent. And yet if you are going 
to succeed in the work force, and if your first job is entry-
level pay or even considerably above that, you simply can't pay 
rent and daycare.
    Now, do your eligibility guidelines look low because they 
are for a bigger grant? Do you have a big voucher program that 
helps the working poor? How is it you are getting people off 
welfare when you actually have a very stringent guideline for 
daycare subsidies?
    Ms. Fox. I think it is important, with respect to 
eligibility for childcare, to remember that we are basing it on 
State median income. Maryland has among the highest State 
median incomes. We will be increasing eligibility from 40 to 45 
percent of State median income, which is about $29,900 for a 
family of four.
    So I think that it is a bit misleading when you state it in 
terms of median income, and you compare it to the maximum 
Federal allowable. So there is that issue.
    Also we have certain dilemmas in childcare funding. If we 
don't pay adequate rates to our providers, then we bar freedom 
of choice of childcare from our families. We found that we 
reached a point where our rates became outmoded and many 
providers would not accept the children in our purchase-of-care 
programs.
    So we have increased the rates. We have also increased 
eligibility limits. We also reduced our copayments; at one 
point our copayments were higher. And we do have a cost-sharing 
system with parents who are working, but not with parents who 
are currently receiving cash assistance and on the way to work.
    We always had a dilemma of do we serve children at a higher 
level and serve a smaller proportion of the eligible 
population, or do we serve more of the eligible population at a 
somewhat lower rate? What we are really trying to do is 
encourage everyone to avail themselves not just of childcare, 
but of medical assistance. We have an eligibility limit of 200 
percent of poverty for the State Children's Health Insurance 
Program. So most of the children if they are not eligible for 
Medicaid are eligible for MCHIP.
    We also are encouraging use of food stamps. I guess one of 
the things I would mention here, recognizing that it is not 
within the jurisdiction of your Committee directly, that the 
complexity of the Food Stamp Program is a real deterrent to its 
use. Both our customers and our workers are confused by all of 
the asset, deduction and income rules. It is just so 
complicated for the size of the benefit that I think many 
working families decide to forego it.
    I think this unfortunate in many instances, but we are 
trying to encourage use of food stamps. We have also been 
heavily marketing the Earned Income Tax Credit (EITC), both 
Maryland's refundable credit and the Federal credit. Because we 
know if someone goes to work even at minimum wage, if they 
receive the food stamps they are entitled to and the EITC, then 
they have left poverty.
    Mr. Madden. Let me follow up very quickly. I believe we 
have about 31 percent of our people who have informal care, in 
other words, a relative or somebody watching them. But, 
Congressman Cardin, you urged the passage of an additional 
pass-through of child support benefits to the mothers there. 
One of the problems is that a pass-through doesn't affect their 
eligibility for TANF funds in the State of Maryland, but it 
does affect their eligibility for food stamps.
    And that is another reason why I am saying why not devolve 
food stamps back to the States here, let us cut through all 
these bureaucratic layers and put more dollars into the 
customers' hands. We can do it a lot simpler and clear up some 
of these complicated rules out there.
    Mr. Rosenberg. As Secretary Fox referred to the dilemmas in 
childcare, if you increase eligibility and you don't increase 
the amount of money available, fewer people get served. The 
other dilemma we have is with our limits on spending growth in 
Maryland on an annual basis that if we increased money for 
childcare, that means there is less available for job training.
    So that is the dilemma and the discussion we are going to 
have during our budget hearing in the next month.
    Chairman Johnson of Connecticut. I just have to say that 
dilemma is better reconciled at each State than at the Federal 
level, which is the way we used to do it.
    Let me ask also how your drug screening program is working. 
Do you have adequate drug treatment resources? Do you have 
adequate mental health services?
    Mr. Madden. We have adequate funds. One of our problems has 
been getting people to identify themselves as substance 
abusers. We make it very easy to do so. If you identify 
yourself as a substance or alcohol abuser, you do not have to 
comply with the work requirements or one of our work activities 
that exempts you from having to go out and get a job.
    We have funds available over and above the Medicaid 
package. The Medicaid package calls for comprehensive substance 
abuse treatment. Comprehensive is a deceiving word. It is not 
really the appropriate word; it doesn't cover your residential 
treatment. We put up $3 million for appropriate treatment for 
mothers with substance abuse problems. And we have had 
difficulty identifying enough people. Lynda can probably tell 
you what we are going to do to rectify that.
    Ms. Fox. When we began what we did, we had workers do a 
screening. They used a CAGE screen, which is a basic interview 
screen and then the Managed Care Organizations were to do a 
more comprehensive assessment. There was a lot of passing of 
paper back and forth. It simply didn't work very well.
    So we tried a pilot in Baltimore City and in Prince 
George's County, which is our other major urban jurisdiction, 
where we placed substance abuse specialists on-site at the 
local Department of Social Services, and they began to do all 
the screening. We found we identified twice as many customers 
having addiction problems. Thus, we were able to get at least 
twice as many people to enter treatment.
    So we found that that is working. There will be, we hope, 
legislation this Session that will eliminate some of our other 
screening mechanisms and substitute the placement of these 
addiction specialists in the local department offices.
    With the pilot program, we found that about 10 percent of 
our customers had some type of alcohol or drug problem.
    Chairman Johnson of Connecticut. How about mental health?
    Ms. Fox. Mental health, we have not had as much difficulty 
with. As part of the reform of Medicaid, we carved out the 
public mental health system, and there is a 1-800 number that 
anybody can call, either the customer or the customer's 
workers, to link them with publicly funded mental health 
services. So, if they get Medicaid, there is access. But if 
not, there is other public funding and still access.
    So access to those services has not seemingly been a 
problem. We do have many customers, though, who do have that as 
an issue.
    Chairman Johnson of Connecticut. Thank you.
    Mr. Cardin. Let me now recognize Congressman Phil English 
from Pennsylvania. He has been a very valuable member of the 
Human Resources Subcommittee and one of those individuals who 
again has really reached out to all Members of the Congress to 
move forward on a lot of progressive programs to help our 
children.
    Mr. English. Thank you, Mr. Chairman. And it is a real 
privilege to be on your home turf today. It is a great 
privilege to have an opportunity to hear some of the very 
interesting things that are happening in Maryland.
    Secretary Puddester, I was wondering. You state that 
Maryland has not supplanted State general funds with TANF 
funds, but that the general funds which supported these 
activities have been placed in a reserve account for family 
investment programs. I am intrigued by that. We have nothing 
like that in Pennsylvania. Tell me how it works.
    Mr. Puddester. The way it works, which we finally got the 
regulations last April, we sat down with Lynda's staff, and 
unfortunately the legislative session already ended, so we had 
to work on the next budget; and we identified programs that 
were eligible under the regulations that were currently funded 
with general funds.
    And what we have done in this budget, using drawing down 
TANF funds and appropriating those moneys for those programs, 
taking the general funds we had there and putting them in the 
reserve account, so they are there for us for whatever purpose 
and that reserve fund is in fact restricted. So it is a--there 
is a way of drawing down them and taking the general funds that 
were there and putting them in a special fund.
    Mr. English. How much of a TANF reserve does Maryland 
retain? Have you taken any special action to increase the TANF 
spending to reduce any reserves that you have? Is there any 
concern that you don't have rainy day funds and hence may not 
have funds available when a recession hits?
    Mr. Puddester. Yes. We actually are in very good shape in 
Maryland. I am sure, talking to the folks in Pennsylvania, they 
are in a similar position. We hope to have about $70 million in 
the special account for TANF alone. We maintained in Maryland a 
minimum, a statutory minimum 5 percent rainy day fund. We are 
currently at the end of this budget cycle going to have a 
number that is probably in excess of 10 percent of the budget. 
So I think in this stage we are in very good shape in Maryland, 
in terms of both TANF reserve and our rainy day funds in light 
of recession.
    Mr. English. Thank you very much. Secretary Fox, I am 
intrigued. One of the things that came up in a hearing we had 
in my hometown of Erie, Pennsylvania, is the difficulty that 
many people who now have eligibility for Medicaid are not 
actually on the program, because as they leave TANF, they are 
not continued automatically on it; and many of them are 
apparently unaware of their eligibility and hence are not 
ensured.
    Is that a problem here? Or can you suggest a way that other 
States can be avoiding this problem?
    Ms. Fox. We were very concerned about that last spring, and 
what we did was we imposed what we jokingly called the ``human 
moratorium,'' because our computer couldn't support completely 
what we wanted to do. We actually implemented a system whereby 
a worker who was either denying an application for cash 
assistance or closing a cash assistance case made a 
recommendation but couldn't close the case, if she thought it 
was supposed to be closed; then it was reviewed by her 
supervisor. And then there was a review at the central office 
of our department.
    It is only after three people have looked at the case that 
it could be closed. We have since then gone back and 
reprogrammed our computers so that this will be happening in an 
automated fashion now. What we have found is that we have 
increased enrollment. Maryland is, I think, one of the 
exception States in that our Medicaid caseload in total has 
increased fairly considerably since the advent of welfare 
reform. We believe that strategy helped us a lot.
    The other thing that we have done is outreach since the 
beginning of welfare reform about--not just medical assistance, 
but also food stamps and the EITC and childcare and child 
support. We have worked with the advocates and we have 
distributed a lot of written materials, posters and videos. We 
worked with an organization called the Southern Regional 
Institute that worked with several of the southeastern States.
    We are in the process now of updating all of those outreach 
materials. Every place I go when I speak, I always talk about 
the need to move from simply moving people off of the welfare 
rolls to supporting low-income working families. I try to make 
clear that some families are going to need these supports for 
sustained periods of time and that there is nothing wrong with 
accepting this kind of help. In fact, in our annual report we 
have a very nice quote from one of our customers, and she said, 
``I would be ashamed if I were too proud to take food stamps 
when my children need groceries.''.
    Mr. English. That is very impressive. And may I say if we 
Republicans in Pennsylvania tried to set up something called a 
human moratorium, it would be cause for alarm. But it sounds 
like a very positive policy.
    One last question, you have what we don't have in 
Pennsylvania, and that is your own refundable EITC. What 
experience have you had in marketing this? One of the 
criticisms of the EITC on the Federal level that, I think, 
sometimes honestly is overstated is the fraud problem. Have you 
dealt with the fraud problem at all at the State level? Has 
that in any way been a significant issue?
    Ms. Fox. To the best of my knowledge, it has not been a 
significant issue in Maryland. Our biggest challenges have been 
having people understand both the Federal and the state credits 
and knowing how to access them. Actually, one of our local 
departments is going to provide vouchers to customers who have 
left welfare for work so that they can get some tax preparation 
services. We are going to see if that helps people to access 
the credits.
    Mr. English. Thank you. Thank you, Mr. Chairman.
    Mr. Cardin. Thank you.
    First, Secretary Puddester, I want to go over some of the 
testimony that is going to come out later to give you a chance 
to comment on it. Your credibility is so high in my view that, 
if you tell me that you are not using TANF money for other than 
to supplant State, I believe you. And I know that you are--you 
have established a great deal of credibility over your career.
    But there is going to be testimony later that there is $100 
million of money that is being replaced, and there is another--
someone else is indicating that there is $22 million of the 
surplus Federal funds that are being used to supplant, they are 
using that money to supplant what the State was going to do on 
their own.
    I take it a lot of this has to do with this account you are 
talking about where you are placing the savings in the account? 
I guess my question to you is that, What are the restrictions 
on the use of this money? Can the State come in and use it for 
other purposes? I assume you can change the law. How certain 
are we that the money is going to actually be used to deal with 
the issues concerning welfare?
    Mr. Puddester. Congressman Cardin, the statute is very 
clear. When we set up what Delegate Rosenberg said, dedicated-
purpose accounts, there is budget statutory language when the 
money goes into the account that details the uses on which it 
can be utilized for. That language is in the budget this year. 
So it is tied back to the State Reserve Fund Law, which sets up 
the ability to set up these dedicated-purpose accounts.
    We have used them in the past, savings and loan dedicated-
purpose accounts. We have got one, quite frankly, Congressman 
Cardin, that is sitting there now, $50 million that we put in 
place back in 1995 when there was an anticipation there would 
be Federal cutbacks. Governor Glendening in his first budget 
said let us set aside $50 million in the event that these 
Federal cutbacks come in, and we will have a buffer.
    No cutbacks came. The $50 million still sits there. We 
could have grabbed off that $50 million if there was a lot more 
flexibility at any time in the last 5 years. But because that 
money was specifically put in that account to address cutbacks 
in Federal aid and there were no cutbacks in Federal aid, the 
money sits. And I think that is as good evidence as you can 
have that the money will be used for the TANF-type related 
programs.
    Mr. Cardin. Thank you. I appreciate that.
    Senator Madden, I appreciate also the point that you made 
about the food stamp eligibility and pass-through of child 
support. There is an offset; it is not dollar for dollar. I 
think it is 3 to 1. But I think individuals are still going to 
be better off financially with the pass-through, the families 
are going to be better off financially with the pass-through of 
child support.
    The point, I guess, I am raising goes beyond the dollars. 
We all want to connect families together; a child needs both a 
mother and father to pay for the support as well as for other 
purposes. And we want them to all at least be part of that 
child. And the pass-through of child support has a better 
chance for both parents to be involved in the raising of that 
child.
    I guess that is the main reason that I am concerned. And I 
guess my question to you is that if we do change Federal policy 
to help financially the States in paying for part of that, is 
it possible you all might move aggressively in this area?
    Mr. Madden. I think it would clear up a lot of our concerns 
about it. Because it is my understanding now if we pass through 
the child support, I think it costs us on our block grant also, 
as far as the dollars we are getting from the Federal 
Government.
    Ms. Fox. Right. At this point, as you know, we split with 
the Federal Government the child support that is collected on 
behalf of cash assistance beneficiaries. I think we would be 
willing to forego our side if the Federal Government were 
willing to forego its side. It would help, I think, if there 
were some disregard of that income for food stamp purposes, as 
well as cash assistance purposes. Because the State frankly 
would be foregoing $1 in $3 in Federal food stamp benefits if 
we were to do both a pass-through and a disregard.
    Mr. Cardin. That is fair enough. Let us see if we can't 
work out something on that, see if we can't improve the Federal 
law here.
    Ms. Fox. I would add one other thing. If you do legislation 
in that regard, if you would give States time to do the 
computer changes that would be necessary to implement it, that 
would also be very helpful.
    Mr. Cardin. Delegate Rosenberg, I noticed that there is at 
least proposals, tax proposals in the General Assembly to 
expand the refundability of the EITC. I applaud the State for 
what it has done. But it would be helpful if you could do more, 
particularly when you are looking at changes in your Tax Code.
    I have heard both the chairman of the Budget and Tax 
Committee and the chairman of the Ways and Means Committee 
indicate that they are looking at modifications of the EITC. Is 
it likely that is going to happen this year?
    Mr. Rosenberg. I think if those two chairmen are looking at 
it, it is very likely there will be some progress on that. 
Although we do have a question to what extent do we do things 
of that nature which are entitlements, and say at x level of 
dollars you are entitled to x sort of--whether it is a credit 
or the earned income disregard or to what extent do we invest 
in job training that will help people rise through the 
economic--rise up the economic ladder. Because of our spending 
affordability limits, which you are very familiar with, there 
is only so much that we can do in the operating budget in any 
fiscal year in terms of growth.
    So that is a continuing issue for us. To what extent is it, 
you know, investing, helping people earn more, to what extent 
should we be using our operating budget dollars, for things 
like income disregard, earned--the tax credit.
    Mr. Cardin. I think it is a very good point. I expect you 
are going to give the same political posture we are that you 
are going to be looking at a tax bill this session. And it 
would be helpful if part of that tax proposal deals with the 
problems we are dealing with. It is--I don't think it is an 
either/or, it seems to me that it is one in which you will have 
an opportunity to make progress in both areas.
    Mr. Rosenberg. I would hope we could, yes.
    Mr. Cardin. Secretary Fox, on the Medicaid eligibles who 
are not getting the benefits here, there is a little bit of 
suspicion by the Federal Government, the States generally, 
certainly not Maryland, that since you pay a good part of the 
Medicaid bill, you may not be as aggressive in trying to get 
people enrolled as otherwise you might. I was very much 
interested in the fact that you sent out these insurance cards 
and really working at the 60,000 that weren't enrolled in a 
program they were eligible for. What success are you having?
    Ms. Fox. We believe we have had considerable success. One 
of the things we did to track this particular issue was engage 
the Schaefer Center at the University of Baltimore to follow up 
on customers leaving each month since January 1999. We have 
been doing that now every month, and we will do it through the 
end of the State fiscal year. What we are finding is a very 
high proportion of those that leave for work are getting one or 
more benefits, with the most common benefit being medical 
assistance.
    The State has spent a lot of money expanding the CHIP 
program. I believe our enrollment strategy worked. We achieved 
in 1 year what we expected to get in 18 months. So the State 
has been making a considerable investment in medical 
assistance, and it has created a few headaches for Fred. I 
think those of us working in welfare reform really think that 
medical coverage is a key support needed by low-income working 
families, especially those with children.
    Mr. Cardin. It certainly is part of the overall picture. If 
you can keep us informed on that, I know that our Committee is 
very interested to get those who are eligible for Medicaid 
enrolled.
    Chairman Johnson of Connecticut. I would like to make a 
couple of comments. First of all, we are going to be holding a 
hearing on Medicaid and the problems and how States can do a 
better job, and perhaps you would be willing at that time to go 
through some of the detail of how you dealt with the problem of 
the fall-off in Medicaid participation.
    Second, I would like to put on the record two things. First 
of all, the national figures in terms of the number of people 
returning to the welfare rolls after having left are 
discouraging, high. One study recently described it as a 30 
percent return rate, and your low return rate is really a 
marvelous achievement, in my mind.
    Third, we looked very closely last year at including in a 
bill that we tried to help you with the welfare-to-work 
programs by making it easier to use some of that surplus that 
had not been drawn down for rainy day funds. If we do it from 
our end, then there is a new cost estimate, and we have to pay 
for it.
    I do want to point out that you have done it very, very 
well. By using the--by drawing down your TANF funds and using 
some of your match to have a rainy day fund, you have 
effectively achieved the goal that we wanted you to achieve but 
now cannot foster. You have done it perfectly legally, it is 
absolutely right, but it is concerning to me that some States 
were not prepared to draw down their funds for services for a 
rainy day fund. So again, you are really a model of successful 
effort in that area, and we commend you.
    I do want to urge you to work with us on this issue that 
you have brought of enlarging the block grant at least on a 
pilot basis. We have struggled with this many, many years. As 
you point out, if you change the food stamp eligibility 
criteria, you pay a lot more money, or you can put a lot of 
people out of the program. It would be interesting to get your 
thoughts on what you could do if you had a waiver.
    We need to think to have some better insight into how that 
would work so that we can trust that level of devolution. You 
do have two different Committees involved. I am very interested 
as we approach reauthorization, and, Senator Madden, I did not 
realize how urgent it was that we give you some direction this 
early.
    Mr. Cardin. Just to interrupt, you are on your own for at 
least 1 year.
    Mr. Madden. But you understand the situation?
    Mr. Cardin. I understand. I have been there in your 
position.
    Mr. Madden. Eighty percent of the people we cannot exempt.
    Chairman Johnson of Connecticut. Maybe we can do a 1-year 
extension with no changes in the law. But I do think that given 
the remarkable changes in the bureaucracy in the Federal and 
State and local levels that this reform has produced, it would 
be a shame to permanently reauthorize for another 5 years 
without understanding where we could go further. I think the 
coincidence of having developed the Work force Investment Act 
and the much greater flexibility in the use of job training 
funds at the same time we did welfare reform was really a lucky 
happenstance. But I think particularly in a State like this, 
where you have really used the flexibility and are doing 
different things in different areas, we would value your input 
as we approach reauthorization. And I think a pilot project 
under that reauthorization is the least we can do.
    So you will note or--I don't know why you would follow our 
business when you have plenty of your own. We have used what we 
have learned in welfare reform to amend the independent living 
program and try to replicate the services and supports to those 
young people leaving foster care and making the transition to 
work and independence. We are doing that in the fatherhood 
area, although we have much to do to create a national program, 
but we hope to support States like yours that are doing that so 
we can develop knowledge as to what a national program should 
look like, or whether that should be folded into the block 
grant.
    So there are many ways that we are trying to roll out what 
we have learned from welfare reform in other areas so we can 
move as a nation from a dependence model to a supportive work 
model across the board. And as we approach reauthorization, we 
really do invite you to recommend--make recommendations as to 
how we change that.
    Just one last question along that line: Do you have any 
comments about the new regulations that the administration has 
just published creating some new categories of awards to be 
added to measure State performance beginning October 1, 2000? 
Is this a good thing?
    Ms. Fox. We do have some concerns about some of the 
additional measures and whether they are really measuring the 
right thing. We have prepared written comments on those 
regulations that we are submitting to HHS, but we would be glad 
to send a copy to you.
    Chairman Johnson of Connecticut. Thank you very much. It 
was a very good panel, and we appreciate your input, and we 
look forward to working with you.
    Mr. Cardin. Let me compliment Chairman Johnson because I 
think these hearings will be very valuable as we reauthorize 
the TANF law. Your testimony today helps us in that process.
    Our second panel includes Lynda Meade, who is the Director 
of Social Concerns, Catholic Charities of the Archdiocese of 
Baltimore, and Chair of the Welfare Advocates Coalition; Sharon 
Duncan-Jones, Executive Director, Park Heights Corridor 
Coalition, Baltimore; Steve Bartolomei-Hill, Director of the 
Maryland Budget and Tax Policy Institute, Silver Spring, 
Maryland; Dr. Catherine Born, professor, School of Social Work, 
University of Maryland at Baltimore; Dr. Stanley Carlson-Thies, 
Director of Social Policy Studies, Center for Public Justice, 
Annapolis, Maryland.
    Without objection, your entire statements will be made part 
of our Committee record. You may proceed as you wish. We will 
ask that you try to limit your formal presentations to no more 
than 5 minutes.
    First it is a pleasure to call upon Lynda Meade, who has 
been a longtime advocate on behalf of welfare reform.

STATEMENT OF LYNDA MEADE, DIRECTOR OF SOCIAL CONCERNS, CATHOLIC 
    CHARITIES, ARCHDIOCESE OF BALTIMORE, AND CHAIR, WELFARE 
                      ADVOCATES COALITION

    Ms. Meade. Thank you. It is a pleasure to be here today. 
What I wanted to talk to you about is a perspective that you 
may not have heard before. Let me tell you that Welfare 
Advocates is made up of about 500 groups, basically community-
based human service agencies, faith communities, consumers as 
well as advocate groups, and we are a statewide organization 
which has been in existence for 21 years.
    We decided to undertake a survey of consumers to see what 
they thought about the new welfare reform, and I think that you 
will be pleased to know that many said--we received 1,700 
responses from across the State, which is really a pretty 
significant number. Many folks said that welfare reform had 
really helped them get a new lease on life, and for those folks 
and for those who do feel that they have a new lease on life, 
that is very, very important.
    They did raise a number of concerns, and I would like to 
briefly talk about three of those concerns with you. First, the 
consumers who replied said that Maryland's policies, and I 
think we have talked about this a little bit, encourage entry-
level, low-wage jobs where it is difficult to make ends meet 
and where support after employment is minimal. And I would just 
like to make a couple of quotes because these folks actually 
said how they felt about what was good about welfare and what 
was bad. One said that, ``they cutoff benefits too soon after 
getting a job.'' Another said ``they are more serious about 
getting a job and not caring sometimes about the outcome;'' ``I 
feel more financially unsure''. Or, ``there is more pressure on 
me and my family''; or, ``the daycare does not pay enough for 
the care of my child''.
    These are some of the comments that address the issue of 
low wages and minimal support after employment, but we believe 
that Maryland is in a unique position to adopt some policies to 
address these issues, and examples would include at the State 
level increasing the refundable portion of the earned income 
tax credit, and we would endorse any expansion at the Federal 
level as well; the proposal to expand the Children's Health 
Insurance Program to higher-income families, and we think that 
is important; as well as expanding health benefits to low-
income working parents.
    You mentioned child care a number of times, and annually 
indexing the percent of median is important because a person 
might be eligible today, but if their salary goes up, they may 
not be eligible next year, as well as making sure that copays 
are affordable.
    Second, training and education was viewed by consumers as 
absolutely critical. Well over half said they needed education 
or training to obtain better employment, better paying jobs, 
and many said that they thought that their education and job 
training should count toward participation work activities. 
There is opportunity in Annapolis this year to open the door 
toward education and job skills training for low-income working 
parents and would allow folks on welfare who are participating 
at least 20 hours a week to be able to access this, and it is 
something that we would absolutely endorse. Employers say that 
they want to hire people with basic academic skills, and our 
folks say that they need literacy, and so we think that all of 
that is good.
    The third point I would like to make deals with the 
customers who responded said that assistance has declined not 
just once they leave welfare for work, but when they are 
applying or while they are on welfare. Welfare advocates would 
say that people need a basic safety net. Some comments from the 
surveys include, ``I can't make ends meet,'' and ``I am behind 
in rent''. There are a number of policies that Maryland enacted 
at the start that really were cost-saving measures until they 
were sure what was going to happen within the context of 
welfare reform. The feeling is that Maryland should rescind 
some of those policies. One is the child support pass-through, 
and the legislation here provides for a full pass-through, and 
we believe that it not only encourages the responsibility and 
the participation of the noncustodial parent, but is actually 
an incentive to participate in child support payments.
    The other thing that Maryland did was eliminate a 14-day--
instituted a 14-day delay in payment, so you apply for welfare, 
you are deemed eligible, but you only get 2 weeks' worth of 
benefit, and that is really placing families at dire hardship 
when they are already financially unstable. It means utilities 
arrearages, it means being behind in rent, and it is asking a 
family who is going to start to look for employment to try and 
really play catch-up.
    I am going to close. There are a couple of other policies 
that we think should be eliminated: The child-specific benefit 
and the $60 income counting against eligibility for subsidized 
housing. We attach the comment--a synopsis of comments. These 
are real people, 1,700 real people talking from the State of 
Maryland, and obviously some are doing well, and others 
continue to need more help, and still others are struggling in 
their quest.
    We would suggest that any additional welfare policies in 
Maryland assure that families fare well. Thank you very much.
    [The prepared statement follows:]

Statement of Lynda Meade, Director of Social Concerns, Catholic 
Charities, Archdiocese of Baltlimore, and Chair, Welfare Advocates 
Coalition

    Mr. Chairman and members of the U.S. House of 
Representatives Ways and Means Subcommittee on Human Resources, 
my name is Lynda Meade. I am Director of Social Concerns for 
Catholic Charities in the Archdiocese of Baltimore and am 
before you today as Chair of the Welfare Advocates coalition.
    Welfare Advocates is celebrating its 21st anniversary this 
year. We are a statewide coalition of 500 community-based human 
service agencies, faith-based organizations, advocacy groups 
and consumers. We strongly believe that the true measure of 
welfare reform is not the reduction in caseload, but whether 
families are ``faring well''.
    We think it is important for policy makers to know how 
current or former welfare recipients view welfare reform. To 
determine their views, we designed a simple questionnaire that 
we distributed across the state--in local social service 
offices and through our network of service providers.
    We had circulated a similar survey in the early 1990s and 
received nearly 1,300 responses. With welfare reform and the 
drop in caseload, we expected to receive about 800 or 900 
replies.
    We had more than 1,700 responses from across the state. The 
responses came from every jurisdiction in Maryland except 
Caroline County on Maryland's Eastern Shore. The results were 
analyzed by Dr. Daphne McClelland of the University of 
Maryland, Baltimore County.
    The five open-ended questions we asked were:
     1) What do you think is good about the new welfare 
program?
     2) What do think is bad about the new program?
     3) How have the welfare changes affected you and your 
family?
     4) What would help you get off of welfare?
     5) What changes would you make to the welfare program?
    The responses truly reflect consumers' views of the 
successes and challenges of welfare reform in Maryland. I would 
like to weave together the results of the survey, some actual 
quotes from those who responded together with policy directions 
we believe Maryland should adopt.
    By far, the number one response to what is good about 
welfare reform was the assistance. In the words of consumers:

         ``Helps people get a new lease on life.''
         ``Try to help you get on your feet.''
         ``Assistance in finding a job.''

    Other major response categories were improved policies--
``helps when you really need it'' and a better process--
``improved efficiency and accuracy''
    Slightly more than half responded that welfare reform had a 
positive effect on them and their family.

        ``I feel good about working for what my family has; it's 
        sometimes tough financially.''
        ``[It has] opened my eyes to a better life. And I'm determined 
        to make it.''
        ``We are still struggling but soon hope my independence will 
        surface.''
        And, the simple, yet meaningful statement: ``I learned to 
        drive.''

    Conversely, the number one answer to what is bad about the 
new program also was the new policies--specifically the policy 
requiring people to take any job at any wage and that once 
employed, support is minimal. ``[They] cut off benefits too 
soon after getting a job,'' wrote one person. Another said, 
``they are more serious about making you get a job and not 
caring sometimes about the outcome.'' Still another person 
wrote, ``I'm afraid of losing benefits if I work over my 
scheduled hours.''
    Time Limits and the lack of a safety net are other policies 
of concern to consumers. One person responded, ``anyone can 
fall on hard times and they may really need help again until 
they can get back on their feet.''
    The second most frequently stated answer to what is bad 
about welfare reform was the decline in the types and amounts 
of assistance. Concerns raised included providing Medical 
Assistance to adults for only one year, the lack of child care, 
job training and housing opportunities.
    At the same time, nearly half of those responding said that 
welfare reform had resulted in a negative effect.

        ``I feel more financially unsure.''
        ``There's more pressure on me and my family.''
        ``I cannot make ends meet''; ``I'm behind in rent.''
        ``The day care assistance doesn't pay enough for the care of my 
        child.''
        ``It has made us get 2 jobs to meet the criteria and then it 
        made us over income to receive MA.''

    We believe that Maryland has a unique opportunity to adopt 
various policies to address the issues of limited income and 
the need for post-employment support that were so eloquently 
cited by consumers. These policies include:
     Raise the refund amount for Maryland's Earned 
Income Tax Credit
     Expand Maryland's Children's Health Insurance 
Program to cover more children
     Extend health insurance to low-income working 
parents
     Raise and index the eligibility standard for Child 
Care so more families would be eligible and assure that co-
payments are affordable
     Raise our state's income disregard that is now 
pegged at 35%.
    In response to the question, what would help you get off of 
welfare, the overwhelming response was ``better'' employment--
better pay, a permanent job, benefits and more job 
opportunities, particularly on the Eastern Shore and Western 
Maryland.
    Training and education were considered critical components 
for consumers to leave welfare. Almost 50% of those responding 
spoke of the need to continue their education, to obtain a GED 
or to receive some training. And, they want their efforts to 
count toward requirements for work activities. Maryland should 
enact the Working Parents Opportunity Act currently before our 
legislature to allow parents working or in work activities at 
least 20 hours per week to be supported in their quest for 
education and training.
    Consumers also want a more individualized approach. ``See 
the uniqueness of each case,'' wrote one individual. To assist 
individuals currently on welfare, many of our members believe 
funds should be made available to work activity and job 
placement vendors to provide case management services. These 
service providers are in an excellent position to develop 
linkages for health, substance abuse treatment, mental health 
services, housing, transportation and other needs as they are 
working with individuals and families on a daily basis.
    For those who apply for assistance or who continue to 
receive welfare benefits, we believe that Maryland should 
rescind a number of policies adopted some years ago as 
primarily cost-cutting measures. Our recommendations include:
     Restore the Child Support pass-through provision 
and pass-through 100% of the payment.
     Eliminate the 14-day delay in benefits upon 
approval of eligibility
     Eliminate the Child-Specific Benefit provision 
that requires a 3rd-party payee.
    In conclusion, it is evident to us that some families are 
empowered by the opportunity to work and to leave welfare. 
Others face challenges and continue to need assistance and 
still others are working yet struggling to make ends meet. We 
believe that now Maryland is in an extraordinary position to 
meet the continuing needs of its citizens and to help families 
to ``fare well''.
    Thank you for the opportunity to testify before you today.

What Families on Welfare or Who Have Moved into Work Think About 
Welfare Reform

               The Responses of More than 1,700 Families

Profile of Those Responding:

     Slightly more than \2/3\rds said they were not 
receiving cash assistance
     Almost 2/3rds said they were receiving Food Stamps
     Slightly more than said they did receive Medical 
Assistance
     Almost 9 in 10 said they did not receive housing 
assistance
     Almost 95% said they did not receive energy 
assistance
     Responses are from every jurisdiction in Maryland 
except Caroline County.
     Almost \1/2\ of those responding were from 
Baltimore City. 

The Survey Results: 

    1. What Do You Think is Good About the New Welfare Program?

        The Assistance: (69%)
         ``Helps people get a new lease on life.''
         ``Has caused more people to be more responsible.''
         ``Assistance in finding a job.''
         ``Try to help you get on your feet.''

        Improved Policies (38%)

         ``Helps you when you really need it.''
         ``Pretty good for those who want to help themselves.''
         ``Helps in time of need.''

        Better Process: (15%)
         ``Improved efficiency/accuracy.''
         ``Workers more responsive.''

    2. What Do You Think is Bad About the New Welfare Program?

        The new Policies: (37%) Specifically:

        a. Forced to take any job/Low Wages & Little Support:
         ``People are taking jobs that they don't like which 
        will cause them to change jobs more;''
         ``Welfare is not patient with people having a hard 
        time finding and/or keeping a job.''
         ``Cut off benefits too soon after getting a job''
         ``Lack of good paying jobs' ``Not enough good jobs.''
         ``No transportation in rural areas''
         ``Low paying jobs won't support families''
         ``I'm afraid of losing benefits if I work over my 
        scheduled hours.''
         ``They are more serious about making you get a job and 
        not caring sometimes about the outcome.''

        b. Time Limits
         ``If you don't have a job by their deadline they cut 
        you off and if you start working they cut you off right away''
         ``Anyone can fall on hard times and they may really 
        need help again until they can get back on their feet.''

        c. Lack of a Safety net:
         ``Those who struggle to maintain independence can't 
        get help on medical or even food.''
         ``What about people who can't work'' ?

        Decline in the Types and Amounts of Assistance (25%)

         ``Only give MA for 1 year.''
         ``Doesn't give people enough child care and medical 
        assistance time''
         ``Need more money.''
         ``Training is lacking for employment''
         ``Not enough housing opportunities''

        ``The Process (23%)
         ``Long wait''; ``Unorganized.''
         ``Now takes longer (14 days) to get assistance''
         ``Child care vouchers are never on time.''

        3. How Have the Welfare Changes Affected You and Your Family?

        ``There has been a positive effect said nearly 55% of those who 
        responded

        A. On The Individual and Family:
         ``I feel good about working for what my family has; 
        it's sometimes tough financially.
         ``Made me responsible and independent.''
         ``Opened my eyes to a better life. And I'm determined 
        to make it.''
         ``It has made me try to get a job so that I don't have 
        to deal with welfare anymore.''
         ``We are still struggling but soon hope my 
        independence will surface.''

        B. The Assistance has Improved:
         ``I found a better doctor for my son.''
         ``I have more food each month, my bills are paid and 
        I'm thankful.''
         ``I learned to drive.''

        ``There has been a negative effect said nearly 45% of those who 
        responded

        A. On the Individual and Family:
         ``I feel more financially unsure.''
         ``I worry a lot ``I'm afraid.''
         ``There's no hope for help in the future if needed.''
         ``There's more pressure on me and my family.''
         ``I spend more time away from my children.''
         ``Mothers cannot mother properly''

        B. The Assistance has Declined:
         ``I did not receive benefits this month.''
         ``I cannot make ends meet; ``I'm behind in rent''
         ``Was discontinued from receiving TCA for not looking 
        for a job while in school''
         ``I am not a citizen so things have become much harder 
        and my child suffers.''
         ``The day care assistance doesn't pay enough for the 
        care of my child''
         ``It has made us get 2 jobs to meet the criteria and 
        then it made us over income to receive MA.''

4. WHAT WOULD HELP YOU TO GET OFF OF WELFARE?

        A Job; A better job (96%)
         ``A better paying job.''
         ``A permanent job with benefits.''
         ``A job where hours can match my child's school.''
         ``A decent paying job.''
         ``More jobs on the Eastern shore''; ``More jobs in 
        Garrett County''

        More Training and Education (47%)
         ``Help in continuing my education.''
         ``Obtain my GED and get training for a good paying 
        job.''
         ``Some type of training program.''

        Child Care Assistance (12%)
         ``Help with a job and day care.''
         ``A babysitter I can trust.''
         ``Day care help.''
         ``After-school programs for children of parents who 
        are working.''

    Other Areas of Importance:
         Transportation (5%)
         Housing (4%)
         Child Support (4%)
         Drug Rehab (1%)
         Housing (4%)
         Health Care (3%)

5. WHAT CHANGES WOULD YOU MAKE TO THE WELFARE PROGRAM?

        Quality jobs, not just any job
         ``Put more into helping parents find decent jobs''
         ``To make sure the jobs people are getting are good 
        career jobs and pay enough money''

        Quality child care, not just any child care
         ``Better child care''; ``more funds for child care''

        Education/Training Opportunities for all recipients who need it
         ``Define education as a work activity''
         ``Include serious training so people could et jobs 
        with benefits''
         ``More emphasis on education and other programs which 
        would lead to self-sufficiency''
         ``Social Services should make people with no high 
        school get a GED''
         ``Would push college/vocational education as well as 
        job finding skills''

        Policy should focus more on health and children
         ``Focus more on children and medical''
         ``Give child with disability treatment, not just 
        money''
         ``Make dental available''
         ``Keep medical assistance at all times''

        Time limits should be extended
         ``Could reapply after the 5 year limit if really in 
        need''
         ``Be more patient with people and don't take people 
        off so quickly''

        People Need a Basic Safety Net
         ``Help people until they can find a job''
         ``More Food Stamps''; ``More help with utilities''; 
        ``Provide more money for housing costs''; ``Make it easier for 
        families who stay together''; ``Give more support''
         ``Increase the minimum gross amount a family can earn 
        in order to receive public assistance''

        Provide Transitional Support when Leaving Welfare for Work
         ``Working single parents should be allowed to receive 
        TCA for 1 year to assist and prevent any reason to return''
         ``Need day care when sent to work programs''
         ``Extend time receiving benefits even when get a job''
         ``Need to invest more money for a person to get 
        ahead''
         ``Extend child care and medical assistance''
         ``Something to help working moms''

        Recipients Should be Informed of Policy and Policy Changes
         ``Better information about programs''
         ``Inform recipients about how program works before 
        cutting them off''

        Policy should be Tailored to Needs of Individual
         ``Assess the problems the family is incurring: 
        Childcare availability; give specific training, assess housing 
        situation, transportation''
         ``Better screening''
         ``See uniqueness of each case''
         ``Rules are made on a general basis, but really need 
        to observe on case by case situation''
         ``Handle cases individually and take into 
        consideration each unique situation''

        Workers Should Treat Recipients with Respect and be Efficient 
        and Effective
         ``Workers need to be more professional''
         ``Should see worker at time stated on interview''
         ``Workers that like to work with people''
         ``Understanding from workers''; ``Encouragement from 
        workers''
         ``Have a person to take messages from callers and put 
        on workers' desks''
         ``Workers you can get in contact with''
         ``Smaller caseloads for workers''; ``Don't change 
        caseworkers so much''
         ``More efficient workers''; ``Quicker processing''

    Prepaped by Welfare Advocates: 1/2000 Based on an analysis 
by: Daphne McClellan, Ph.D., MSW, University of Maryland, 
Baltimore County
      

                                

  STATEMENT OF SHARON DUNCAN-JONES, EXECUTIVE DIRECTOR, PARK 
     HEIGHTS CORRIDOR COALITION, INC., BALTIMORE, MARYLAND

    Ms. Duncan-Jones. Thank you for the opportunity to share a 
grassroots perspective on the socioeconomic impact of welfare 
reform. I am going to kind of tailor my comments first by 
giving you a statistical overview of the Park Heights community 
which I represent, also assess welfare reform from a 
neighborhood perspective, as well as acknowledge some real 
creative ways that the local department is using some of its 
flexibility and how it really complements some of the 
revitalization efforts in Baltimore, and in particular the Park 
Heights community.
    I am going to offer what I believe are some common-sense 
approaches how we can further leverage our welfare reform and 
allow these lessons to really benefit the families and the 
communities that we serve.
    Park Reist Corridor Coalition is a grassroots organization 
which is committed to revitalizing the social, economic and 
environmental infrastructures of Park Heights. Geographically 
it is located in northwest Baltimore, and it is the single 
largest neighborhood in Baltimore City. Park Heights is in the 
Seventh Congressional District, populated with nearly 40,000 
residents, which embody 1,733 acres. Park Heights is described 
as the largest urban renewal area in the United States.
    Park Heights is not an empowerment zone. The social and 
public health indicators impacting Park Heights reflect a 
blighted community. Child maltreatment, crime, infant 
mortality, substance abuse, diabetes, crime, and HIV/AIDS are 
the highest in the State, and the present economic condition in 
Park Heights can be linked to past conditions in Baltimore 
beginning in the seventies when manufacturing jobs began to 
fall. Since 1990, Baltimore City has suffered a loss of 63,000 
manufacturing jobs. Specifically, Park Heights has experienced 
economic decline with two major companies relocating out of our 
community and out of the city. That is London Fog, a clothing 
manufacturer, and Park Sausage, a meat manufacturer.
    In spite these blighted conditions, the strength of Park 
Heights is the resiliency of its people, its residents, who 
desire in live in a safe, sober and economically sound 
community.
    The big question today is has welfare reform worked in 
Baltimore and in Park Heights. Depending on how you define 
success, I think the answer will differ. Has Maryland been 
successful in decreasing the welfare roll, welfare dependency 
and welfare caseloads? Yes. Has welfare reform significantly 
impacted the socioeconomic well-being of Maryland, Baltimore 
City and Park Heights? I don't believe so, so my answer is no; 
no because obtaining employment is not enough in changing human 
behavior.
    Our families and communities need intensive family centered 
services that focuses on building the individual, the family 
and the community. However, there is hope. The Baltimore City 
Department of Social Services' new Northwest Project is very 
promising because its 3-year initiative which commenced October 
1999 leverages lessons learned from social service delivery and 
welfare reform. The new initiative begins to boldly and 
realistically address the socioeconomic barriers to obtaining 
self-sufficiency. The generic caseloads, which consist of one 
clinician to eight families, enhances not only the family 
capacity, but the community's capacity as well.
    The project goal is to infiltrate Park Heights with intense 
family centered services. Thus far, the community's response to 
this has been incredible, mainly because a governmental agency 
finally gets it. Comprehensive approaches to welfare reform, 
can be cost-effective, and they can work.
    I really want us to continue to be creative, particularly 
when we are talking about urban-based communities impacting 
African American families and using common-sense approaches to 
enhance effectiveness of welfare reform. Spend the funds wisely 
and invest in the human spirit, and I have a couple of 
suggestions. I believe that we really need to maximize the 
family centered services to assist the employers in reducing 
job retention. We need to pool multiagency resources like HUD, 
EPA, Department of Commerce, the Justice Department, Education 
Department, CDC to maximize the family and community capacity 
to be sober, safe and economically sound. We need to leverage 
the community, establish linkages with the community-based 
revitalization efforts and welfare reform. When doing so, we 
systematically leverage critical resources like health care, 
education, community development and job training services.
    Another point, we need to utilize the unique capacity of 
faith-based institutions to further nurture the human spirit of 
families and communities.
    My final point is we need to invest in communities to 
enhance the local economy on a neighborhood-level by advocating 
for specific job training to restore the basic retail services 
like dry cleaners, bakeries and family restaurants. In Park 
Heights, as large as it is, there is only one family 
restaurant. Let's start designing healthy and family friendly 
communities.
    Bottom line, poverty cost; and poverty left to fester 
carries an intergenerational price tag that we cannot afford. 
Getting a job is not enough. Strengthening people, families and 
the socioeconomic infrastructure of communities will yield 
positive and sustainable results in America, Maryland, 
Baltimore City and Park Heights.
    Thank you for the opportunity to share the reality of 
welfare reform in Park Heights with you today.
    [The prepared statement follows:]

Statement of Sharon Duncan-Jones, Executive Director, Park Heights 
Corridor Coalition, Inc., Baltimore, Maryland

    Introduction
    Hello, I am Sharon Duncan-Jones, Executive Director of the 
Park Reist Corridor Coalition, Inc. a grassroots nonprofit 
organization committed to revitalizing the social, economic and 
environmental infrastructures of Park Heights. Geographically, 
Park Heights is located in Northwest Baltimore, and it is the 
single largest neighborhood in Baltimore City. Park Heights is 
in the 7th US Congressional District of Maryland. Populated 
with nearly 40,000 residents which embody 1,733.7 acres, Park 
Heights is described as the largest urban renewal area in the 
United States. Park Heights is not an empowerment zone.

                          Statistical Overview

    The social and public health indicators impacting Park 
Heights reflect a blighted community. Child maltreatment, 
crime, infant mortality, substance abuse, juvenile crime, 
diabetes, and HIV/AIDS are the highest in the State. The 
present economic condition in Park Heights can be linked to 
past conditions throughout Baltimore. Beginning in the 1970's, 
manufacturing jobs had begun to fall. Since 1990, Baltimore has 
suffered a loss of 63,000 manufacturing jobs. Park Heights has 
experienced economic decline with two major companies 
relocating out of the community and the city: London Fog, a 
clothing manufacturer and Park Sausage a meat manufacturer. 
Park Height's unemployment rate is 22%, and it is well above 
the city's average.
    Yet, despite these blighted conditions, the strength of 
Park Heights is the resiliency of the residents. Residents who 
desire to live in a sober, safe and economically sound 
community.

                        Assessing Welfare Reform

    The big question for today is, has welfare reform worked in 
Baltimore City and in particular, Park Heights. Depending on 
how you define success, the answer will differ. Has Maryland 
been successful in decreasing the welfare roll, welfare 
dependency, welfare caseloads, yes! Has welfare reform 
significantly impacted the socioeconomic well-being of 
Maryland, Baltimore City, Park Heights, no! No because, 
obtaining employment is not enough in changing human behavior. 
Our families and communities need intensive family-centered 
services that focuses on building the individual, their 
families and communities.

           Promising Socioeconomic Approach to Welfare Reform

    However, there is hope. The Baltimore City Department of 
Social Services' new Northwest Project is very promising 
because the three-year initiative which commenced October 1999, 
leverages lessons learned from social service delivery and 
welfare reform. The new initiative begins to boldly and 
realistically address the socioeconomic barriers to obtaining 
self-sufficiency. The small-generic caseloads (1:clinican to 8 
families) enhance family and community capacity. The project's 
goal is to infiltrate Park Heights with intense family-centered 
services. Thus far, the community's response has been 
incredible. Mainly because a governmental agency finally gets 
it! Comprehensive approaches to welfare reform are cost 
effective and they can work!

            Creative and Common-Sense Approach & Strategies

    Let's continue to be creative and use common sense 
approaches to enhance the effectiveness of welfare reform. 
Spend the funds wisely. Invest in the human spirit. I have a 
few suggestions:
     Maximize family-centered services to assist 
employers in reducing job retention.
     Pool multi-agencies resources like HUD, EPA, 
Department of Commerce, Justice Department, Education 
Department and CDC to maximize family and community capacity to 
be sober, safe and economically sound.
     Establish linkages with community-based 
revitalization initiatives and welfare reform. When doing so, 
we systemically leverage critical resources like health care, 
education, community development and job training services.
     Utilize the unique capacity of faith-based 
institutions to further nurture the human spirit of families 
and communities.
     Invest in communities to enhance the local economy 
on a neighborhood-level by advocating for job training to 
restore the basic retail services like dry-cleaners, bakeries 
and family restaurants. Let's start designing healthy and 
family-friendly communities.
    Bottom-line, poverty cost; poverty left to fester carries 
an intergenerational price tag that we can not afford. Getting 
a job is not enough. Strengthening people, families and the 
socioeconomic infrastructure of communities will yield positive 
and sustainable results in America, Maryland, Baltimore City 
and Park Heights.
    Thank you for the opportunity to share the reality of life 
in Park Heights with welfare reform.
      

                                

    Mr. Cardin. Mr. Bartolomei-Hill.

 STATEMENT OF STEVE BARTOLOMEI-HILL, DIRECTOR, MARYLAND BUDGET 
       AND TAX POLICY INSTITUTE, SILVER SPRING, MARYLAND

    Mr. Bartolomei-Hill. Thank you. I am Steve Bartolomei-Hill, 
Director of the Maryland Budget and Tax Policy Institute, which 
is a project of the Maryland Association of Nonprofit 
Organizations. I am going to talk about three things today: How 
well people are faring once they have left welfare, the 
opportunities that exist to mitigate some of the hardship that 
continues for people who have left, and people who remain on 
the rolls, and talk about the State maintenance-of-effort 
requirements.
    Now, caseload declines have been the numbers that have been 
used the most to tout success of welfare reform, and the 
declines have been dramatic. At their peak, three times as many 
people received welfare in Maryland as currently are on the 
rolls. These caseload declines do mask some of the hardship 
that continues.
    The Department of Human Resources has been tracking people 
who have left welfare. One of the things that they found is 
that at the time that people leave welfare, about half of them 
are found to be working. Four out of 10 are working in both the 
first and second quarters after they have left welfare, but 
only 3 out of 10 are found to have any earnings in each of the 
first four quarters after they leave welfare. Their numbers do 
understate the number of people who are actually working, but 
even if they understate the number by half, it is clear that 
many people have left, but they cannot be found to be working.
    Even those that are working have earnings that remain quite 
low. The median income is about $800 a month. That is below the 
poverty level for any size family with children. Understand 
that a substantial fraction are not working. Among the minority 
that are working, half earn less than $800 a month. Clearly 
many families continue to struggle to make ends meet. Part of 
that is by design. As Senator Madden said, the State has 
earnings disregards and a benefit level that intentionally ends 
eligibility for benefits when people's earnings remain very 
low.
    However, amidst this hardship, there are substantial 
opportunities to make some improvements. The caseloads have 
declined. That leaves fewer people to work with. State and 
Federal resources remain available at their prereform levels 
based on the fixed block grant. And independent of the welfare 
funds, the State has a substantial budget surplus of about a 
billion dollars, they are projecting budget growth of about 9 
percent, and we have tobacco settlement funds. If only a 
portion of these funds were invested in the well-being of low-
income families, the state could make substantial improvement.
    Unfortunately, there have been only a few bills introduced 
in this legislative session that make progress in that area. We 
have talked about some of them, passing through child support, 
reversing some of the earlier benefit cuts, and increasing the 
State-earned income credit. However, as mentioned, some of 
these simply reverse cuts, and none of these are assured of 
enactment.
    I think what is more telling are areas where policymakers 
have not sought increases. Those areas include child care, 
health care access for adults, and increase in benefits or 
disregards.
    I think one thing that is apparent is that the more 
significant policy changes and the policy changes that cost 
money remain outside of State fiscal priorities.
    I think the continued Federal role is important. The 
Federal Government can stimulate change perhaps by offering 
incentives to States to take action. The Child Health Insurance 
Program is a great example of that. When the child health 
insurance block grant became available, suddenly increasing 
access for children became a fiscal priority in most States. On 
the other hand, without similar incentives, their parents got 
left behind. While Maryland, like many States, provides access 
to health insurance for low-income children up to 200 percent 
of poverty, their parents get health insurance or lose their 
health insurance when their income is about half of poverty. 
That would be an opportunity. If there were Federal incentives 
to increase health care access, States might do that.
    Child care is another area. There was discussion about the 
State increasing its child care limits. There has been some 
modest progress. One thing that wasn't mentioned, though, was 
that all of that progress is being made with Federal funds. 
There have not been any new State funds invested in extending 
child care.
    And the child support disregards would be another area 
Federal incentives could stimulate State policy. Most States 
are not passing through child support to families that receive 
cash assistance. So there might be some role for the Federal 
Government in offering some incentives to do that.
    Just briefly, on the maintenance of effort: one of the most 
challenging aspects of understanding state policy choices under 
welfare reform is being able to follow the money--both federal 
and state welfare funds. Cash assistance payments in Maryland 
have declined from $294 million in 1996 to about $100 million 
for FY 2001, yet we are told that there is not enough money to 
make program enhancements. It might be appropriate for your 
General Accounting Office to look at what the fiscal conditions 
are in States and where the money is going.
    I will conclude there. In summary, many families have left 
welfare, but even those that have left still endure economic 
hardship. There are plenty of opportunities to make progress in 
that area now. To the extent the policymakers argue that the 
are no funds available for enhancements, we need to increase 
our understanding of where the money is going. Thank you.
    Mr. Cardin. Thank you.
    [The prepared statement follows:]

Statement of Steve Bartolomei-Hill, Director, Maryland Budget and Tax 
Policy Institute, Silver Spring, Maryland

    Thank you for the opportunity to address you today. My name 
is Steve Bartolomei-Hill, and I am director of the Maryland 
Budget and Tax Policy Institute. The Institute provides timely 
and accurate analysis of budget and tax priorities in Maryland. 
We focus on how policies affect low-and moderate-income people 
and other vulnerable populations, and the important community 
programs that serve them. The Institute is a project of the 
Maryland Association of Nonprofit Organizations.
    Prior to directing the Institute, I worked for several 
years in the Office of the Assistant Secretary for Planning and 
Evaluation at the U.S. Department of Health and Human Services. 
Because of my prior experience analyzing welfare issues, the 
Institute has paid particular attention to the progress of 
welfare reform in Maryland.
        My written testimony focuses on two aspects of welfare reform 
        in Maryland:
         caseload declines and indicators of well-being among 
        low-income families with children
         opportunities that exist for enhancing Maryland's 
        welfare program, and the importance of federal leadership and 
        incentives

        For your information, I am also including the following two 
        items:
         policy choices made upon initial enactment of the 
        Personal Responsibility and Work Opportunity Act of 1996
         state plans to meet the Maintenance of Effort 
        requirement

Behind the Numbers: Indicators of Success and Well-Being

    In Maryland, as in many states, the most prominent number 
used to tout success under welfare reform is the dramatic 
decline in caseloads. At the pre-reform peak, three times as 
many families received cash assistance in Maryland compared to 
current enrollment levels. However, focusing on caseload 
declines masks the economic hardship that continues for most 
families that have stopped receiving cash assistance. Further, 
the declines in caseloads have not coincided with commensurate 
increases in employment.
    Since October 1996, the Maryland Department of Human 
Resources has been tracking the employment status of families 
that have stopped receiving cash assistance. Their data, which 
is based on state employment records, shows the following 
outcomes:
     Half of exiting families had earnings in the 
quarter that they left welfare;
     Four in ten exiting families had any earnings in 
both the first and second quarters after leaving welfare;
     Three in ten exiting families had any earnings in 
each of the first four quarters after leaving welfare.
    State employment data do not account for former recipients 
who are working in other states, those who are in jobs that are 
not covered by the state's unemployment insurance system. Thus, 
it understates the number of former recipients who are working. 
Nonetheless, as the majority of recipients live in Baltimore 
City, which does not border another state, this factor is 
unlikely to explain away the large percentage of families who 
cannot be found on state employment data.
    Among those who are fortunate enough to work, earnings 
remain low. Median earnings are about $800 per month. Earnings 
at this level are less than the federal poverty level for any 
size family with children.
    These employment and earnings outcomes say more about the 
``success'' of welfare reform than simply looking at caseload 
declines. Yes, families are no longer receiving cash 
assistance, but most cannot be found to be working, and even 
those who are working remain poor.
    Several factors contribute to the continuing poverty of 
those who have left welfare and those who remain. Benefit 
levels remain low enough such that the day to day financial 
hardship may itself be a barrier to work and the potential for 
economic well-being. When recipients do begin to work, benefit 
reductions begin at the first dollar of earnings, and are steep 
(benefits are reduced by $.65 for every dollar earned). As a 
result, a family of three loses eligibility for assistance when 
earnings are about $650 in a month-an amount that is slightly 
more than half of the federal poverty level.
Current Opportunities

    Amid the ongoing problem of economic hardship, a confluence 
of factors provides an unprecedented opportunity to help low-
income families.
     The substantially reduced caseload leaves fewer 
cases to work with, though today's recipients may have greater 
needs and greater barriers to work.
     The continued poverty of those who have left the 
roles indicates the need to enact policies that help low-
income, working families make ends meet.
     The availability of federal and required state 
welfare funds provides resources to meet some of the needs of 
low-income families with children.
     Independent of welfare-specific funds, the state 
has a budget surplus of nearly $1 billion, is projecting 
spending growth of nearly 9 percent for the coming fiscal year, 
and has an infusion of tobacco settlement funds. If just a 
portion of these funds were targeted to lower income families, 
Maryland would have the opportunity to make substantial program 
enhancements.
    A few bills have been introduced in this session of the 
General Assembly that take advantage of this opportunity and 
address some of the issues that contribute to income 
inadequacy.
    Child Support Pass-Through and Disregard Currently, none of 
the child support that is collected on behalf of families 
receiving cash assistance is actually passed on to the family. 
Like 26 other states, Maryland keeps all child support 
collected and shares it with the federal government. A proposal 
would pass through and disregard all child support.
    Make Benefits Payable From the Date of Application 
Currently, new recipients and families who are re-enrolling in 
the program receive a first-month payment that is roughly half 
of the regular benefit-a maximum of $222 for a family of three. 
This is one of three cost-saving measures that was implemented 
in 1997 when there was concern that state and federal welfare 
funds would be insufficient to cover costs. A proposal would 
reverse this and provide the full benefit to new enrollees.
    Earned Income Credit One proposal would increase the 
state's refundable earned income credit from 15 percent of the 
federal credit in tax year 2001 to 50 percent of the federal 
credit.
    While these are important proposals, some simply reverse 
previously enacted cuts, and none are assured of enactment. 
More telling are the numerous areas where policy makers are not 
seeking to invest more state funds. These include essential 
items such as child care, health insurance for adults, and 
increases in benefits or disregards in the cash assistance 
program. This highlights an important point about state policy 
decisions affecting low-income people: the more significant, 
and thus costly, items continue to remain outside of state 
fiscal priorities, even in this time of plenty.
    I believe that this indicates the importance of federal 
leadership to stimulate policy change. A good example of this 
is the Child Health Insurance Program, which has led states to 
substantially increase health care access for children. Federal 
financial incentives made expanding health care access to 
children a fiscal and policy priority. At the same time, 
without similar federal leadership and incentives, parent 
access to Medicaid has languished. In Maryland, a parent who 
makes a little more than $500 a month-less than half of the 
poverty level-earns too much money to qualify for Medicaid.
    Another example exists in the area of child care. Maryland 
has made modest inroads in increasing access to child care. 
However, all of this has been done with federal funds. Without 
cost-sharing incentives, the state has invested no new funding 
in child care. As a result, a single parent with two children 
in day care and who earns a little more than $25,000 per year 
is ineligible for any child care assistance.
    A final example is in the area of child support pass-
throughs. When federal cost sharing stopped with passage of the 
welfare law in 1996, 27 states, including Maryland, ended their 
child support pass-throughs.
    There are many advantages to state flexibility and the 
creation of block grants. However, the importance of federal 
leadership and incentives to states cannot be understated.
    The remainder of my testimony provides information on how 
Maryland responded to welfare reform, and how Maryland is 
meeting its Maintenance of Effort requirement amid the dramatic 
caseload declines.

Initial Responses to the Personal Responsibility and Work 
Opportunity Act of 1996

    In addition to complying with the work-focused approach of 
the federal law, Maryland reacted to the Personal 
Responsibility and Work Opportunity Act of 1996 by enacting 
several policy changes in its welfare program. Some of these 
are described below.
    Changes in earnings disregards: Earnings disregards were 
simplified. If you recall, under prior federal law the first 
$120 of earnings and one-third of the remainder were 
disregarded for the first four months of earnings; the first 
$120 of earnings were disregarded in the fifth through twelfth 
month of earnings; and, the first $90 of earnings were 
disregarded thereafter. Many had complained that the time-
limited nature of disregard policies were confusing and 
discourage work.
    Maryland changed its disregard policy such that 20 percent 
of earnings were disregarded for determining program 
eligibility, and 26 percent of earnings were disregarded for 
recipients. This 26 percent disregard was increased to 35 
percent in 1999. In 1999, legislators also took advantage of 
the flexibility allowed under federal law and removed from the 
federal 60-month time limit those families who are working.
    As a result of the current disregard policy, a family of 
three must earn below $520 in a month in order to become 
eligible for cash assistance. Recipients who earn more than 
$650 in a month are ineligible for assistance. To give you some 
perspective, this ranks 41st among the 50 states in earnings 
level before eligibility ends.
    Cost Saving Measures: Initially, there was concern that the 
federal block grant and new federal cost sharing arrangement 
would not provide the state with enough money to meet cash 
assistance needs. As a result, changes were adopted to reduce 
cash assistance payments:

        Child Support: Maryland repealed the $50 pass-through in child 
        support. As a result, none of the child support that is 
        collected on behalf of families receiving cash assistance is 
        passed on to the families for whom it is collected.
        Delayed Eligibility: New applicants, and families who re-enroll 
        in the program, receive a reduced benefit in the first month of 
        program eligibility. Under this policy that delays program 
        eligibility until 15 days after the date of application, the 
        maximum first-month benefit for a family of three is reduced to 
        $222-an amount that would be less than 20 percent of the 
        federal poverty level.
        Housing Assistance is Counted as Unearned Income: Families who 
        receive section 8 and public housing assistance have their 
        benefits reduced by $60 per month.

    All of these policies were implemented to save money when 
shortfalls were projected in state and federal funding for 
welfare. To this date, despite a caseload decline of two-thirds 
and ample federal and state funds, these policies remain in 
effect.
    Indexing Benefits Cash assistance benefits are adjusted 
annually so that their value is no longer eroded by inflation. 
In 2000, maximum benefits in Maryland for a family of three are 
$417 per month, an amount roughly equal to one-third of the 
federal poverty level. However, the indexing that began in 1997 
does not make up for benefit cuts that occurred in the early 
90s. Between 1990 and 1997, benefit cuts and inflation reduced 
the value of cash assistance benefit by more than 25 percent.

Meeting Maintenance of Effort

    One of the more challenging aspects of understanding state 
policy choices under welfare reform is following the money-both 
state and federal funds. In fact, tracking the funds can be so 
complicated that you may wish your General Accounting Office to 
examine how states are meeting the maintenance of effort 
requirement amid the caseload declines that have been 
experienced.
    Maryland's TANF block grant is $229.1 million per year. 
Maryland's maintenance of effort level is based on pre-reform 
state spending of $236 million per year. Combining federal and 
state funds, pre-reform spending on welfare and related 
programs was $465 million per year.
    However, total spending on cash assistance has fallen by 
nearly two-thirds-from $296 million in 1996 to a projected $104 
million for the upcoming fiscal year. Still, Maryland does not 
have a significant surplus of unspent TANF funds, and the 
apparent lack of state funds continues to be a barrier to 
program enhancements. Where has the money gone, and how is the 
state meeting its MOE requirements?
    In a hearing before the Senate Budget and Tax Committee 
last week, Department of Human Resources officials assured 
committee members that they had scoured the state budget to 
find every possible spending item that could help the state 
meet its MOE requirement without necessitating an actual 
increase in spending. Existing spending that is proposed to 
count as MOE includes the state's refundable earned income 
credit, education grants to high poverty areas, and after 
school programs.
    Two relatively small items may be indicators of the state's 
aggressiveness in identifying spending to meet MOE. In both 
cases, items may be counted as MOE, even if state funds are not 
involved.
     In 1999, Montgomery County, Maryland enacted a 
local refundable earned income credit, to be financed with 
county funds. Under current regulations, these county funds may 
be counted as state Maintenance of Effort funds., and state 
fiscal analysts have suggested that state do so.
     In 1999, as part of electric utility deregulation, 
a surcharge on commercial and residential utility rates was 
applied to create a universal service program for low-income 
consumers. Some of these funds are likely to be counted as 
maintenance of effort funds.
    All together, nearly $100 million of non-welfare funds have 
been found to count toward the state's MOE limit for the 
upcoming fiscal year. These funds offset the $100 million 
reduction in state funds from areas considered to be 
traditional welfare spending.
    It is my understanding that some are calling for reductions 
in the MOE spending requirements. I believe that policy choices 
made in Maryland indicate that the opposite is needed. MOE 
requirements should be tightened to ensure that states maintain 
spending for lower-income families. For example, at the very 
least, MOE should be limited to state general funds.

Summary

     While many families have left welfare, their 
earnings remain very low, and their need for ongoing assistance 
such as child care, health care, and income support continue.
     Despite an abundance of funds, significant 
enhancements in state safety nets have remained outside of 
state budget priorities. This suggests the need for federal 
leadership to stimulate state investments in lower income 
families.
     Despite the maintenance of effort requirements in 
federal law, Maryland has taken advantage of caseload 
reductions to invest in the well-being of families. Rather, the 
state has scoured the budget to find as many existing items as 
possible that can count under MOE, thus avoiding the need to 
actually maintain or increase spending. This suggests the need 
for tighter federal rules on how Maintenance of Effort funds 
can be spent.
      

                                

    Mr. Cardin. Dr. Born.

  STATEMENT OF CATHERINE E. BORN, PH.D., PROFESSOR, SCHOOL OF 
        SOCIAL WORK, UNIVERSITY OF MARYLAND AT BALTIMORE

    Ms. Born. Thank you.
    Madam Chair, Mr. Cardin, and Mr. English, I have been doing 
welfare research in Maryland in partnership with our State 
agency and our general assembly for about 20 years, and this is 
my first opportunity to appear before a congressional 
Committee, and I have to tell you, it is a big thrill. I am 
delighted that you are holding this hearing in Maryland. I 
think you realize that we have made a true bipartisan effort 
and have had some real accomplishments here in welfare reform 
even though we have not gotten the national attention that some 
other States have.
    It is fitting that we are here in Baltimore City as well, 
because I think in this city and other urban centers is where 
many of the key challenges we now face will be played out in 
the next few years.
    We have a bipartisan effort here in Maryland. We don't 
always agree about everything. Mr. Bartolomei-Hill has a 
slightly different interpretation of some of our research 
findings than I do. It may be a perception--matter of the glass 
being half empty or half full.
    I would like to talk about my perspective on successes and 
challenges as they have emerged through our one research study, 
Life After Welfare, which is the first leaver study to be 
released in the country. I have been told and I believe it is 
indeed one of the best and one of the biggest. It is not the 
only study that we are doing, and I think that is important to 
note. We are studying welfare stayers, people who are coming on 
now for the first time, special populations, how welfare and 
housing subsidies interact. We have one of the most 
comprehensive State-level research agendas in the country, and 
I think our elected and appointed officials deserve credit for 
taking the risk to subject what our State has been doing to 
public scrutiny. I applaud them for that, not just for the 
money that they give me to do the studies.
    Very quickly, I think that the successes in Maryland are 
families are leaving welfare voluntarily, not because they have 
been sanctioned. Sanctioned cases represent 10 percent or fewer 
of all case closures. Families are not being forced to put 
their children into foster care, an outcome I think that was 
not desired by anybody when this national debate was going on. 
Children are not coming into foster care as a result of welfare 
reform. Families are not coming back on welfare either.
    Recidivism, as the Chairman noted, is fairly low, but it is 
a phenomenon that we need to worry about. The recidivism that 
we have seen in Maryland happens in the first few months after 
families leave welfare, which I think suggests a challenge. I 
am not sure we have figured out exactly how to cope with it. 
However, we have to make sure that postexit services are 
available for families immediately upon leaving, because those 
first 3 to 6 months are critical if they are to remain off the 
rolls.
    The majority of exiting adults do find employment after 
they leave welfare. Two-thirds work after leaving welfare. That 
is based on our review of the unemployment insurance database 
for the State of Maryland. Half of all exiting adults work in 
the first quarter after they leave welfare, and work effort 
does persist over time. This is not a short-lived phenomenon. 
Half of all of the exiting adults work in every single quarter 
up to nine quarters postexit. They may work longer than that, 
but that is as far as our data go at this point in time.
    I think the bottom line is simply this: Families are 
leaving welfare voluntarily in Maryland. They are keeping their 
families together. They are finding employment in unemployment 
insurance-covered jobs in the State. They are keeping their 
families together. We have won the first welfare reform 
battles, I think, rather clearly and convincingly in this 
State, but we are far from winning the war. We are not finished 
yet. That is part of why you are here.
    Some of the challenges do relate to the fact that when 
people leave welfare, they tend to find jobs. Those jobs happen 
to be in the industries that are growth industries, wholesale 
and retail trade, nursing homes, hospitals and that, but they 
tend not to make very high initial earnings, $2,400-$2,500 a 
quarter. There is a trend toward wage growth over time, but no 
one would conclude that most of these adults are immediately 
lifted out of poverty by their own earnings. We do need to 
think about what we can do to help people move up the earnings 
and employment ladder.
    The challenges. One of them is the researcher's challenge 
that I think is really relevant to policy. We need more data. 
All I can talk to you about in terms of tracking our families 
is people who found jobs in Maryland that are covered by the 
unemployment insurance program. I looked quickly at the 1990 
census data. Forty-four percent of the adults in Prince 
George's County who work, work outside of the State; 32 percent 
of the working adults in Montgomery County work outside of the 
State; 38 percent of working adults in Cecil County work 
outside of the State. If we really want to know what happens to 
families and be able to answer your questions thoroughly, you 
need to help us get reasonable access to the unemployment 
insurance databases of other States.
    I have been told by a Federal agency that shall remain 
nameless that individual States should call Mr. So-and-so at 
the U.S. Department of Labor, and he could help us figure this 
out. That is no way to run a railroad or to access this type of 
important tracking data. Those data need to be protected from 
misuse, and confidentiality is a concern, but I believe we need 
your help to get that data available to States.
    One other database that is critical is the expanded Federal 
Parent Locator Service. That can help us answer a critically 
important question that no one has really addressed, and that 
is the role of child support in families' postexit lives. Is 
this a reliable source of income? Are we doing everything that 
we can to collect support for families once they have left 
assistance? That databases has all kinds of State employment 
information in it as well as Federal employment. At least in 
Maryland we really would like to answer all of these questions 
about what happens to families as honestly and thoroughly as we 
can, but we do need your help in accessing additional data to 
do that. Thank you.
    Mr. Cardin. Thank you very much.
    [The prepared statement follows:]

Statement of Catherine E. Born, Ph.D., Professor, School of Social 
Work, University of Maryland at Baltimore

                              Introduction

    Good morning. My name is Catherine Born. I am a faculty member at 
the University of Maryland School of Social Work, where I am proud to 
lead an inter-disciplinary team of social science researchers engaged 
in a number of policy-relevant and often cutting-edge research projects 
in the area of welfare reform, broadly defined. On behalf of myself and 
my research team, I am extremely honored, Madam Chair, Vice-Chairman 
Cardin and members of the Committee, to have been invited to appear 
before you this morning to talk about what our research suggests some 
of the successes and challenges have been during the first three years 
of this new welfare era.
    I am also extremely pleased that you are holding this field hearing 
here in my home state. Maryland's reform efforts and accomplishments 
have not gotten anywhere near the national attention that some states' 
programs have received. Yet, while the national spotlight was shining 
elsewhere, we were quietly and competently and in true bi-partisan 
fashion going about the very important business of crafting a welfare 
reform program for our state and its people. As I trust you will 
conclude from the testimony submitted and heard here today, we have 
done an excellent job. In addition, I believe our elected and appointed 
officials deserve considerable credit for taking the risk of subjecting 
their new welfare programs to independent research scrutiny. As I'm 
sure you know, there are now a number of ``welfare leavers'' studies 
afoot in the land; Maryland was the very first state in the nation to 
commission such a study and -to this day -our study is one of the 
largest, longest and best of its kind.

                  Maryland's Welfare Research Program

    For over 20 years the University of Maryland School of Social Work 
and the Maryland Department of Human Resources have partnered in the 
conduct of policy-relevant research on Maryland's welfare programs; in 
fact, School of Social Work research provides the empirical backbone 
for Maryland's approach to welfare reform. Through partnership 
projects, Maryland has become a national leader in both welfare policy 
and welfare research. Currently, the School is carrying out three 
programs of research each consisting of multiple projects:
     Life After Welfare--This program began with a large, on-
going, multi-year study of welfare leavers. The study began in the 
first month of welfare reform in Maryland, October 1996 and the first 
report was issued in March 1997, one of the first in the nation 
released in the post-PRWORA era. Four interim reports have been issued 
to date reporting on employment, recidivism, and child welfare 
outcomes. More detailed analyses of special populations are also 
conducted including, to our knowledge, the first study of the 
circumstances and outcomes of sanctioned families, released in November 
1999. Notably, separate analyses of employment stability, wages and 
wage growth by industry are also underway as is a study of the role of 
child support in families' post-TANF lives.
     Life On Welfare--This series focuses on welfare-stayers 
and welfare-newcomers since TANF and state-level reform. Among the 
projects are: 1) a quantitative and qualitative look at one county's 
entire on-welfare caseload in the 18th month of reform; 2) a multi-year 
study of first-time entrants to cash assistance in the summer of 1999 
utilizing both administrative and survey data; and 3) an in-depth 
comparison of the on-welfare caseload at two time points to see if the 
prediction that caseload decline leaves a higher proportion of hard-to-
serve clients on assistance is accurate.
     Setting the Baselin--This series consists of focused 
analyses of historical administrative data to provide baseline measures 
of phenomena such as cash assistance recidivism and foster care entries 
among children whose families have left welfare.
    Together these research efforts provide state and local 
policymakers with important data on how welfare reform is affecting 
Maryland families and any mid-course corrections that might be needed. 
They also enable us to identify successes achieved to date and 
important challenges which remain. The remaining pages highlight some 
of these successes and challenges.

                                Success:

Maryland's caseload decline is not due to the imposition of 
full family sanctions

     In the first three years of reform, just about one 
in ten (11%) cases in our Life After Welfare sample exited cash 
assistance because of a full family sanction.
     Though still low, the percent of work sanctions 
has increased over time (from 3.5% in the first six months to 
11.2% in the most recent six months). The percent of child 
support sanctions has remained very low at less than 2%.
     Compared to non-sanctioned welfare leavers, 
sanctioned payees are younger, began having children at earlier 
ages, are more likely to be Caucasian, and are less likely to 
have worked, pre-exit, in a Maryland UI-covered job.
[GRAPHIC] [TIFF OMITTED] T7486.001

                                Success:

The majority of sanctioned families either return to welfare or 
become employed in the first few months.

     Sanctioned adults are less likely (31.1%) than 
others (56.1%) to work in the quarter in which they leave 
welfare and, among those who did work during this period, mean 
quarterly earnings of sanctioned adults are significantly lower 
($1,741.57) than among those who were not sanctioned 
($2,344.41). Although the proportion of sanctioned adults 
working in UI-covered jobs increases, the same pattern prevails 
in the quarter after welfare case closure: 38.4% of sanctioned 
payees are working compared to 55.7% of non-sanctioned payees.
     Within the first 90 days after case closure, 
sanctioned families are much more likely to come back on 
welfare than are other families; almost twice as many 
sanctioned families (35.2%) as non-sanctioned families (18.4%) 
came back on welfare in three months or less.
     As these data illustrate, two outcomes are most 
prevalent among sanctioned payees: the majority either seek and 
find employment immediately after case closure or come into 
compliance and return to cash assistance. Of the remainder, the 
vast majority continue to receive Food Stamps and/or Medical 
Assistance. Others move out of state or appear to have other 
sources of support; in no cases, however, did families totally 
disappear from view.
[GRAPHIC] [TIFF OMITTED] T7486.002

                                Success:

Considering all welfare leavers, most former payees become 
employed.

     Excluding those who come back on welfare right 
away (i.e., within 30 days), two of every three payees (66.6%, 
n = 3,082/4,625) worked in a UI-covered job in Maryland after 
leaving welfare.\1\
---------------------------------------------------------------------------
    \1\ All earnings figures refer only to wages earned in a UI-covered 
job in Maryland by the adult who formerly headed the TCA case. Other 
types of income, earned or unearned, received by this person and any 
and all wages/income received by other persons in the household are not 
included. Thus, these figures do not necessarily equate to total income 
for the payee or family.
---------------------------------------------------------------------------
     Excluding those who return to welfare right away, 
about half (50.4% or n = 2,330/4,625) of former payees worked 
in UI-covered employment in Maryland in the first quarter post-
exit.\2\ Among those with history of UI-covered employment 
prior to their TCA exit, nearly two-thirds (64.1%, n = 1,997/
3,118) worked in such a job in the first quarter after leaving 
welfare.
---------------------------------------------------------------------------
    \2\ Excluding child-only cases (where the adult casehead was not on 
the welfare grant), this figure increases slightly to 52.5%.
[GRAPHIC] [TIFF OMITTED] T7486.003

---------------------------------------------------------------------------
                                Success:

Work effort persists over time.

     The statewide pattern of roughly one out of two 
adults working in UI-covered employment in Maryland continues 
in the 2nd through 9th quarters post-exit. That is, in each 
subsequent quarter, about half of all former payees are 
employed in a job covered by the state's Unemployment Insurance 
system.
     Those with a pre-exit wage history have noticeably 
higher rates of post-exit employment: roughly three-fifths of 
these clients are working in each of the 2nd through 9th 
quarters after they exited from welfare.
     In the first post-exit quarter, median quarterly 
UI-covered earnings are $2,100 for all cases.\3\ The trend in 
quarterly earnings is a slight upward one over the 2nd through 
9th post-exit quarters such that, for all cases, median 
earnings are $2,556 by the 9th quarter after the welfare case 
closed.
---------------------------------------------------------------------------
    \3\ All earnings figures refer only to wages earned in a UI-covered 
job in Maryland by the adult who formerly headed the TCA case. The 
figures are a total for the quarter and cannot be reduced to hourly 
figures. Other types of income, earned or unearned, received by this 
person and any and all wages/income received by other persons in the 
household are not included. Thus, these figures do not necessarily 
equate to total income for the payee or family.
---------------------------------------------------------------------------
     For many former clients, work effort and UI-
covered employment do persist over time: 1,493 of 2,905 (51.4%) 
exiters in the 10/96 -3/98 sample worked in the first quarter 
after exit. Of the 1,493 exiters with work experience in the 
first quarter after exit, the percent working in subsequent 
quarters ranges from 83.0% in the second quarter after exit to 
72.7% in the fourth quarter after exit. This finding suggests 
that first quarter working exiters maintain employment at a 
fairly high level in subsequent quarters.
     The most frequent employer types for adults 
working in the first quarter after their TCA exits are:
     Wholesale and Retail Trade -34.2%
     Personal/Business Services -24.1%
     Organizational Services -20.3%
     Together, these three industries account for 78.6% 
of the employers.

                                Success:

The majority of welfare leavers do not return to welfare in the 
first two years.

     Seven out of ten adults (69.8%), who exited TCA in 
the first six months of welfare reform stayed off welfare for 
two full years.
     About one in five families (19.4%) returned to TCA 
within 3 months of exiting.
     The recidivism rate increases slightly over the 
next 9 months reaching 25.4% at the 12 month follow up point.
     Churners, who return to welfare within 30 days, 
account for a large portion of recidivism.
     Excluding churners, the recidivism rates are 8.9% 
at 3 months, 13.8% at 6 months, 18.5% at 12 months, 23.1% at 18 
months and 25.8% at 24 months.
[GRAPHIC] [TIFF OMITTED] T7486.004

                                Success:

Children are not coming into foster care as a result of 
families leaving cash assistance.

     Children in families which leave welfare do not 
appear to be at increased risk of foster care placement. 
Placements that do occur tend to happen in the first few months 
after the family exits cash assistance; the case narratives 
lead us to suspect that in at least some of these cases, the 
foster care placement preceded and indeed prompted the TCA case 
closure.
     We find that 158 of 9,677 (1.6%) children had a 
history of Intensive Family Services prior to the welfare exit 
that brought them into our sample. In the first three post-exit 
months, 18 children out of 9,677 (0.2%) children received 
Intensive Family Services. The number increases over the next 
nine months reaching a high of 44 out of 5560 children (0.8%) 
at the twelfth post-exit month.
     Among all the children in our sample, 30 (0.3%) 
had a history of kinship care and 198 (2.0%) had a history of 
foster care placement. Far fewer children enter foster or 
kinship care in the months following their families' departure 
from the welfare rolls. At the three month follow up point, 13 
of our 9,677 children (0.1%) had entered foster care and none 
had entered kinship care. By the sixth post-exit month two 
children had entered kinship care and 22 were in foster care. 
At the one year follow up point, less than one-tenth of one 
percent of children had entered kinship care and four-tenths of 
one percent had been placed in foster care.

                      Challenges As We Go Forward

    Welfare reform in Maryland has been and remains a truly bi-
partisan effort based on empirical data and the hard work of 
many persons. Our reform program has been conscientiously 
implemented by state and local welfare agency officials and 
carefully overseen by elected officials and it has involved 
numerous community partners. Also since day one, we have made 
serious and sophisticated efforts to monitor outcomes through 
research and to use research results to improve program 
operations. Despite these commendable traits and the documented 
successes we have achieved, many important challenges remain in 
our state and across the nation. A few of the more important of 
these include:
     Increase participation of former welfare recipient 
families and the working poor, more generally, in programs such 
as Medical Assistance (MA) and Food Stamps (FS) and take steps 
to reframe and market these programs as family supports, not 
``welfare.'' Take-up rates in MA and FS, as well as child care 
and possibly child support have been lower than expected among 
former TANF families and have been chronically lower among the 
working poor than among other groups. This situation continues 
despite expanded eligibility and/or relaxing of certain program 
rules. Such services are critical supports for newly-employed 
former welfare recipients and, indeed, for the much larger 
population of working poor families. Our challenges here 
include: document reasons for these disturbing trends; 
experiment with creative methods of outreach, education and 
service delivery/application venues and strategies; make 
certain all welfare and other community agencies' staff are 
aware of new rules. Perhaps a widespread, generic public 
education campaign (posters on busses, libraries, etc.) might 
be useful.
     Reform Food Stamps! Some positive changes have 
recently been made, but more wholesale review and reform of 
this critically important program is sorely needed. In the 
absence of wholesale reform, expanded waiver authority is 
imperative.
     Devise and reward regional approaches. Caseload 
decreases in many urban centers have not kept pace with 
declines in other areas such that, reversing pre-TANF trends, 
welfare caseloads are now increasingly concentrated in large 
cities. Job opportunities, however, lie elsewhere. Addressing 
this mismatch in other than band-aid fashion requires cross-
jurisdiction collaboration and attention to myriad issues in 
the areas of welfare, housing, transportation, safety, child 
care and more.
     Time is running out. In less than two years, the 
first wave of TANF recipient adults will potentially hit the 
federal five year lifetime time limit. While there was much 
discussion about this time limit at the outset of reform, we 
have seen little data to estimate the magnitude of this coming 
crash, state contingency plans, and the like. The challenge now 
is to begin to take a close look at the needs and TANF use 
patterns of current customers, to develop strategies to prevent 
families from reaching the limit, and to plan for how we will 
deal with those who despite all efforts hit the five year mark.
     Although recidivism has been relatively low, it 
still occurs for 3 out of 10 families. Recidivism did not 
matter in a practical sense under the old system so little is 
known about why families return to welfare. Today, returns to 
welfare mean a family is closer to the lifetime limit. Our data 
make it clear that the first few months after exiting cash 
assistance are a critical period for families in which risk of 
returning to welfare is highest. Policymakers and program 
managers must continue to make concerted efforts to assist 
families in maintaining their independence from cash assistance 
in these first critical months. In addition, few researchers 
have examined recidivism under TANF in any great detail; more 
need to do so.
     Welfare caseloads have changed In some counties, 
the typical welfare family no longer consists of a mother and 
one or two children, but instead is comprised of a grandmother 
or other relative and several dependent children. Welfare 
program rules for such families vary across states, but in 
general we know very little about these types of families -
their characteristics, special needs, long-term prospects, etc. 
In addition to research, policy attention must be paid to how 
TANF features such as time limits, exemption policies and 
thresholds, work requirements, etc. affect these families and 
vice-versa.
     More data are needed The list of questions 
addressed in welfare reform research studies needs to be 
broadened to include studies of special populations (sanctioned 
families, caretaker relative families, new TANF entrants, 
recidivists, etc.). States and their research partners also 
need federal assistance in obtaining access to data that will 
permit more thorough answers to questions already under study 
(e.g., employment outcomes for welfare leavers). Maryland 
shares borders with four other states and the District of 
Columbia; our lack of access to other states' data on UI-
covered employment and wages is the single most important 
barrier to our ability to more comprehensively document former 
recipients' employment, wages and financial well-being.
    Another extremely rich, unique, invaluable and relatively 
inexpensive-to-use source of important program monitoring/
client outcome data is FPLS. These data could be used not only 
to assess the ability of non-custodial parents to pay child 
support, but also to enrich our understanding of the employment 
patterns of former TANF recipients. Easier access to this data 
would eliminate many of the problems with tracking cross state 
employment. Based on our experience and knowledge, 
Congressional leadership will likely be needed to facilitate 
access to these data, but also to insure that the data are not 
misused and that confidentiality concerns are adequately 
addressed.
    There are many other specific challenges, in addition to 
those just listed. However, when all is said and done, I 
believe the biggest challenge we face is simply to finish the 
job that we started just a few years ago. I for one, share the 
view expressed by Isabel Sawhill in a recent issue of the 
Brookings Review.
        ``Ending poverty as we know it is not an impossible dream. By 
        combining requirements that adults work with adequate supports 
        for those that do, and assuming reasonably good labor markets, 
        it should be feasible to reduce poverty and hardship to minimal 
        levels at a cost that is well within reach. The most pressing 
        needs are child care subsidies and health care insurance for 
        adults who now lack such coverage. In the long run, 
        improvements in education and more intact families are the best 
        insurance against poverty. But in the interim, work remains the 
        most powerful antidote to poverty and social exclusion. The new 
        supports for the working poor enacted on a bipartisan basis 
        over the past several decades are a huge step forward. We 
        should now finish the job...'' \4\
---------------------------------------------------------------------------
    \4\ Sawhill, I., (1999). From Welfare to Work: Toward a New 
Antipoverty Agenda. Brookings Review, Fall 1999, p. 27-30.
---------------------------------------------------------------------------
    With the continued strong leadership of your subcommittee, 
I believe we can indeed ``finish the job.'' Thank you very 
much, I would be pleased to answer any questions you might 
have.
      

                                

    Mr. Cardin. Dr. Carlson-Thies.

STATEMENT OF STANLEY W. CARLSON-THIES, DIRECTOR, SOCIAL POLICY 
    STUDIES, CENTER FOR PUBLIC JUSTICE, ANNAPOLIS, MARYLAND

    Mr. Carlson-Thies. Thank you, Madam Chair, Congressman 
Cardin and Congressman English. The Center for Public Justice 
is a national, nonpartisan, faith-based organization, a think 
tank, headquartered in Annapolis. My focus is Maryland 
welfare's collaboration with faith communities. I have been 
following this issue since 1995, and I am a member of a special 
committee, the Faith Community/Department of Human Resources 
Partnership Council, which has been established by the 
department as a bridge to the faith communities.
    It seems to me the logic of welfare reform requires 
collaboration. How can public welfare help people get off 
welfare and stay off unless it works not only with business, 
but also with the many social organizations that provide not 
just training, but also encouragement and guidance? Congress 
pressed collaboration further by adopting the Charitable Choice 
provision requiring States to open welfare procurement to 
competition by all kinds of religious groups, to honor the 
faith characteristics of religious organizations that accept 
public funds, and to protect the rights of welfare recipients 
who get services from such organizations. Maryland has made 
collaboration with the faith communities ones of its welfare 
reform goals, and I think it can show considerable success.
    I salute the department for its initiatives, but the faith 
communities remain largely on the sidelines. I think more 
vigorous State action is needed. Maryland's collaboration 
initiatives predate the 1996 Federal welfare law, and since 
then the Department of Human Resources has continued its 
initiatives, including that partnership council, clergy 
conferences, and changing the welfare statutes in response to 
Charitable Choice. I note three significant fruits of all of 
this.
    First of all, the Community-Directed Assistance Program, a
```