U.S. GOVERNMENT PRINTING OFFICE

65–693 CC WASHINGTON : 2000

WELFARE REFORM

HEARING

BEFORE THE

SUBCOMMITTEE ON HUMAN RESOURCES

OF THE

COMMITTEE ON WAYS AND MEANS

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

FIRST SESSION

NOVEMBER 15, 1999

Erie, Pennsylvania

Serial 106–47

Printed for the use of the Committee on Ways and Means

(

For sale by the U.S. Government Printing Office

Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ii

COMMITTEE ON WAYS AND MEANS

BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois

BILL THOMAS, California

E. CLAY SHAW, JR., Florida

NANCY L. JOHNSON, Connecticut

AMO HOUGHTON, New York

WALLY HERGER, California

JIM MCCRERY, Louisiana

DAVE CAMP, Michigan

JIM RAMSTAD, Minnesota

JIM NUSSLE, Iowa

SAM JOHNSON, Texas

JENNIFER DUNN, Washington

MAC COLLINS, Georgia

ROB PORTMAN, Ohio

PHILIP S. ENGLISH, Pennsylvania

WES WATKINS, Oklahoma

J.D. HAYWORTH, Arizona

JERRY WELLER, Illinois

KENNY HULSHOF, Missouri

SCOTT MCINNIS, Colorado

RON LEWIS, Kentucky

MARK FOLEY, Florida

CHARLES B. RANGEL, New York

FORTNEY PETE STARK, California

ROBERT T. MATSUI, California

WILLIAM J. COYNE, Pennsylvania

SANDER M. LEVIN, Michigan

BENJAMIN L. CARDIN, Maryland

JIM MCDERMOTT, Washington

GERALD D. KLECZKA, Wisconsin

JOHN LEWIS, Georgia

RICHARD E. NEAL, Massachusetts

MICHAEL R. MCNULTY, New York

WILLIAM J. JEFFERSON, Louisiana

JOHN S. TANNER, Tennessee

XAVIER BECERRA, California

KAREN L. THURMAN, Florida

LLOYD DOGGETT, Texas

A.L. SINGLETON, Chief of Staff

JANICE MAYS, Minority Chief Counsel

SUBCOMMITTEE ON HUMAN RESOURCES

NANCY L. JOHNSON, Connecticut, Chairman

PHILIP S. ENGLISH, Pennsylvania

WES WATKINS, Oklahoma

RON LEWIS, Kentucky

MARK FOLEY, Florida

SCOTT MCINNIS, Colorado

JIM MCCRERY, Louisiana

DAVE CAMP, Michigan

BENJAMIN L. CARDIN, Maryland

FORTNEY PETE STARK, California

ROBERT T. MATSUI, California

WILLIAM J. COYNE, Pennsylvania

WILLIAM J. JEFFERSON, Louisiana

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.

iii

C O N T E N T S

Page

Advisory of November 8, 1999, announcing the hearing ...................................... 2

WITNESSES

Gamble, Thomas J., Mercyhurst College Civic Institute, and Mercyhurst Center for Child and Family Policy .......................................................................... 51

Greater Erie Community Action Committee, R. Benjamin Wiley ....................... 45

Mercer County Community Action Committee, Gary A. Cervone ....................... 55

McDonald’s, Karen L. Bechtold .............................................................................. 57

Pennsylvania Department of Public Welfare, Hon. Feather O. Houstoun, Secretary ..................................................................................................................... 33

(1)

WELFARE REFORM

MONDAY, NOVEMBER 15, 1999

HOUSE OF REPRESENTATIVES,

COMMITTEE ON WAYS AND MEANS,

SUBCOMMITTEE ON HUMAN RESOURCES,

Washington, DC.

The Subcommittee met, pursuant to call, at 12:10 p.m., Erie City

Council Chambers, 626 State Street, Erie, Pennsylvania, Hon.

Nancy L. Johnson (Chairman of the Subcommittee) presiding.

[The advisory announcing the hearing follows:]

2

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

SUBCOMMITTEE ON HUMAN RESOURCES

FOR IMMEDIATE RELEASE CONTACT: (202) 225–1025

November 8, 1999

No. HR–12

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, November 15, 1999, in the Erie City Council Chambers, 626 State

Street, Erie, Pennsylvania, beginning at 12:00 noon.

Oral testimony at this hearing will be from invited witnesses only. Witnesses will

include the Secretary of the Pennsylvania Department of Welfare as well as local

program administrators, scholars, and employers. 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 a continuation of a series of field hearings across the country on

welfare reform. The Subcommittee is expected to conduct additional hearings in

other locations.

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. This information will build a public record on differences and

similarities in how welfare reform is being conducted and the effects it is having

in selected States and counties around the nation.

In announcing the hearing, Chairman Johnson stated: ‘‘The 1996 welfare reform

law is one of the most imporatnt reforms of American social policy in recent decades. Our Subcommittee has been conducting hearings ever since the legislation was

enacted to show the deep and continuing interest of Congress in how the legislation

is being implemented, educating our Members on the effects the legislation is having, and building a strong public record on the legislation. Field hearings give the

Subcommittee a chance to visit sites where the reforms are being implemented and

to meet and hear from those who are actually doing the most important work in

attacking welfare dependency.’’

FOCUS OF THE HEARING:

The Subcommittee expects to learn details about the welfare reform programs

being conducted in both the State of Pennsylvania and in Erie County. Witnesses

are also expected to describe specific impacts of the Pennsylvania programs on families, welfare dependency, employment, and communities.

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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 5.1 format, with

their name, address, and hearing date noted on a label, by the close of business, Monday, November 29, 1999, 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.

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 5.1 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://WWW.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.

hearing of the Human Resources Subcommittee of the Ways and

Chairman JOHNSON. We are here this afternoon to bring this

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Means Committee of the United States Congress to order in the

City of Erie, Pennsylvania.

It’s a pleasure to be here. We had a very productive visit so far

and very much appreciate the input we received this morning from

Mrs. Josephine Johnson and her able staff and the variety of departmental people that are responsible for implementing the Welfare Reform bill, and also from two of the recipients who have done

a remarkable job of getting themselves into the work force and

managing their family affairs in a way that’s going to be promising

for the future.

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I’m Nancy Johnson. I represent the sixth district of Connecticut.

I chair the Human Resources Subcommittee and I’m very pleased

to be here today, and very pleased that my colleague and friend,

Bill Coyne could join us. We served together for many years on different committees and it’s a pleasure to have him here today. And,

of course, I’m very pleased to be here in the center, I guess, of my

colleague Congressman Phil English’s district. Phil is the ranking

Republican on the Ways and Means Human Resources Subcommittee and helps me with a great number of issues and with

running the business of the Committee.

We are, as you may know, the Subcommittee responsible for having written the Welfare Reform bill and for the oversight of its implementation, which means that we’ve been holding hearings on

each section of that bill, that may have many different aspects to

it, to see how, in fact, it is working out there in service to people.

That’s what self-government is all about. We make the laws and

it’s our obligation to see how are they working and what is it that

we need to learn from the people affected about how to improve the

law or what the next step is. So I’m very pleased to report that I

believe that the national information is very positive about how

well the reform is working, but it is very clear that we have a next

step.

We have new challenges to meet. And it is through hearings like

this across the country and in Washington that we are refining our

understanding of the new challenges ahead so that we can shape

the law and assure that they use only the resources that are necessary. To not only assure that when you need a hand, you get a

hand but that that hand is a hand up to a brighter and more fulfilling future for parents and for their children. So this is a very

important hearing in the work of the Committee.

It’s very important that we were able to pass on the floor of the

House last week a fatherhood bill that will reach out to some of the

fathers of the children on welfare to offer the same kinds of resources that we have been extending to women on welfare.

So I think as we move through building an empowering network

of services and a national policy subsidizing work as opposed to

non-work, that we will be able to fulfill the fundamental promise

of freedom, which is opportunity. And that’s what we’re here about

today.

We want to see how much opportunity has been created for welfare recipients and their children and how we can do a better job

to assure that they not only can move out but move up.

And so I’d like to yield the leadership of this hearing to my valued colleague, Congressman English, and thank him for his work

on the Subcommittee and for the opportunity that we’re having

today to hear first hand from people in Erie and the surrounding

areas as to what’s working and what needs work. Thank you, Phil.

Mr. ENGLISH. Thank you, Madam Chair. I want to thank you for

bringing the Subcommittee to Erie for what we think will be a very

productive and insightful hearing. When I looked at our role as the

Subcommittee in oversight responsibility for welfare reform it

struck me that an excellent place to begin would be Erie, Pennsylvania, my hometown, a community with real needs but also one

with a tradition of superb social services at the local level. If welVerDate 20-JUL-2000 07:30 Sep 20, 2000 Jkt 060010 PO 00000 Frm 00008 Fmt 6633 Sfmt 6602 K:\HEARINGS\65693.TXT WAYS1 PsN: WAYS1
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fare reform is going to work, it needs to work here. And this is a

good starting place for us to assess what has happened at the Federal level.

I want to also thank Mrs. Johnson for personally coming from

Connecticut to participate in this hearing and my colleague, Mr.

Coyne, for coming up from Pittsburgh. Bill Coyne has served with

me on Ways and Means in the 6 years since I came to Congress.

He has been a superb advocate of western Pennsylvania and I

think will offer important and balanced views here as part of this

hearing. We are all here primarily though to listen.

The Committee on Ways and Means played the central role in

writing and passing the seminal 1996 Welfare Reform Law. Although we are exceptionally proud of that law, we are well aware

that laws are only as good as their implementation. For that reason we’ve been holding an extensive set of oversight hearings in

Washington and we’re in the midst of a series of field hearings to

learn about how the law is being implemented around the country.

Previously we’ve conducted field hearings in Arizona and in New

Mexico. In the next several months, we plan to conduct hearings

in Florida and in Maryland.

Both our hearings in Washington and our field hearings have

documented the remarkable successes of welfare reform. The hearings, as well as scientific evaluation studies, have shown a few

rough spots, and we need to be honest about those. But on the

whole I think almost everyone who follows social policy has been

amazed by the scope of the success of the welfare reform movement

that has swept the country since about 1994. By 1994, about half

the States had been granted waivers to conduct their own welfare

reform programs. Then national legislation based on flexibility was

passed in 1996.

In my opening remarks I want to provide our audience with some

idea of what welfare reform is all about and what our Committee

has learned about its effects on children and on families. This information, which has been prepared by our staff, will provide a

good backdrop for our attempt to learn more about welfare reform

in Pennsylvania and in Erie County.

If I could I’d like to put up the charts at this point. As you’ll notice from chart 1 we outlined five steps to welfare transformation.

This chart shows the major features of the 1996 Welfare Reform

Law. First, end cash entitlement. Under the old Aid to Families

with Dependent Children program, millions of mothers became dependent on welfare because they were entitled to the benefits,

which means they got the benefits regardless of whether they tried

to work or took constructive action to help themselves. The entitlement system encouraged dependency because State and local programs were legally prohibited from requiring recipients to work or

prepare for work.

Block grant funding. The second major feature of welfare reform

was that we began giving States a fixed sum of money each year

rather than more money for each person they put on welfare and

less money for every person that left welfare. The old system punished States that helped adults leave welfare and rewarded States

that allowed them to stay on welfare. This fixed funding feature of

block grants gives States a greater incentive to help people leave

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welfare. After all, if States receive fixed funding and can help people leave welfare, they get to keep the money that was previously

spent for benefits. States can then turn around and use this money

to help more people leave welfare.

Work requirements. Of all the attributes of the old welfare system, the fact that able-bodied adults could receive benefits year

after year and not be required to do anything to prepare for independence was its single most fatal flaw. Now, however, States must

put a specific percentage of their welfare caseload into work programs or be fined by the Federal Government. So far every State

has met its work requirements and now around half the people receiving welfare are working.

Sanctions. Inevitably, a few people will try to take advantage of

the system and avoid meeting their obligation. Under the previous

welfare system, the few people who were required to prepare for

work often ignored the requirement. Any system, whether the

workplace, schools or sports teams, that allows its members to ignore the rules soon has no rules, or at least no effective rules. But

now States can and actually do back up their requirements with

sanctions. If an adult on welfare is required to work or prepare for

work but does not meet the requirement, then their benefit is reduced and in many States even terminated. Sanctions have given

an entirely new tone of seriousness to the Nation’s welfare programs.

Five-year time limit. The day people sign up for welfare, they are

told that they have a lifetime total of 5 years of cash benefits.

There is no better or clearer way to emphasize the temporary nature of welfare than by imposing a time limit on the amount of

time able bodied adults can receive benefits. This new requirement

has brought a great sense of purpose to both welfare caseworkers

and welfare recipients. Simply put, they must succeed in achieving

independence.

These five characteristics of the new welfare system have been

in place in every State since 1996 or 1997, and many of the features were in place in most States by around 1994. Taken together,

these reforms constitute the most thorough reform of any major social program in American history. Now let us turn to an examination of the effects produced by these reforms.

If I can put up chart 2. This gives you a sense of caseload decline. This chart shows the history of enrollment in the new Temporary Assistance for Needy Families program, TANF, and in its

predecessor program, AFDC. I want to call your attention to three

features of this graph. First, between the late 1950s and 1994,

there is a nearly uninterrupted increase in the rolls. Notice that

there are only a few years in which the caseload actually declines.

Even when the economy is hot and jobs are plentiful, as was the

case in the 1960s and in the 1980s, the rolls don’t go down.

Second, notice the big increase in the late 1980s and early 1990s.

No one has a complete explanation for this increase, but during a

period of major economic growth of the early 1990s, the rolls kept

going up until 1994.

Third, and most important, look at the decline after 1994. Modest at first, but then almost a free fall after we passed the Federal

Reform Law of 1996. We have now reached the point at which the

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average State has seen a 50 percent decline in its rolls. And many

States have seen a decline of over 70 percent. Nothing like this has

ever happened in the history of American social policy.

Now if I could put up chart 3, recalling my comments on the feature of fixed funding, look at the generous resources States are now

enjoying. Because the welfare rolls have declined while funding has

remained fixed, the States now have almost twice as much money

per family on welfare as they had in 1994. This money, which can

only be spent on children and families, means that States can

maintain their welfare benefit levels and still have lots of money

for child care, transportation, training and whatever else is required to help the remaining families leave the rolls. What this

chart really shows is that success promises to lead to even greater

success.

If I could put up chart 4. If welfare reform is working, we should

expect to find an increase in employment by mothers, especially

poor mothers. This next chart, in many ways the most impressive

chart of all, shows the dramatic increase in the number of mothers

entering the work force. The top panel shows the yearly average increase in employment by all single moms. In the years before 1996,

the average increase was about 140,000 per year. But in 1996, the

year welfare reform passed, the increase jumped to 197,000. This

impressive increase, however, pales in comparison with the 1997

increase of 412,000, by far the largest increase ever.

The bottom panel is equally impressive. This graph shows the increase in employment by never-married mothers. These mothers

are the poorest on balance, the most likely to go on welfare, the

most likely to stay on welfare for a long time, and the least likely

to work. And yet, between 1993 and 1998, precisely the period during which welfare reform was being implemented and the rolls

were declining, there was a whopping 40 percent increase in employment by never-married mothers. There can simply be no question that welfare reform has led to historic increases in employment, particularly by the mothers most likely to be poor.

If I could put up chart 5. From the beginning of the welfare debate, Republicans on the Ways and Means Committee have argued

that welfare has always been a trap that guarantees that children

will be reared in poverty. A huge flaw in the previous welfare system was that people on welfare could not escape poverty unless

they cheated. The level of benefits taxpayers were willing to pay

simply could not lift a family out of poverty. But as we will see in

a moment, a system that combines work and wage supplements

has tremendous potential for reducing poverty.

If we were correct in this claim, now that welfare reform has

passed and work by mothers has increased, we should expect to see

a decline in poverty. As this chart shows, that is exactly what has

happened. Overall poverty, child poverty, and poverty among minority children has declined every year since 1994. In fact, the decline in black child poverty in 1997 was the biggest decline on

record.

Let me put up chart No. 6. This chart shows why poverty declined so much when mothers went to work. What this chart demonstrates is that the Nation has had two revolutions. First, we had

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the welfare revolution that you read about in the newspapers and

that is so widely known and popular among the American people.

But second, we had a quieter revolution in the Nation’s work

support system, the programs by which taxpayers subsidize the incomes of families that are trying to help themselves by working.

This lesser known but equally essential work support system is

composed primarily of child care, the Child Health Insurance Program or CHIP, the child tax credit, Medicaid and the earned income credit.

As this chart demonstrates so clearly, all of these programs have

either been initiated or expanded dramatically since 1984. In fact,

if we had not passed the legislation that built the new work support system in 1999, we would now be spending only $5.6 billion

helping these low-income working families. But because we passed

the new work support laws, mostly on a bipartisan basis, the Nation will actually spend almost $52 billion helping these deserving

families.

That’s why we’re able, at last, to roll up victories in the war

against poverty. We reformed welfare to encourage or force ablebodied adults to leave welfare. Then we created a terrific new work

support system to subsidize their income when they took the low

wage jobs that they are qualified for and that are easily available

in the American economy.

Chart No. 7. Take a look at my last chart. This chart shows the

decline in child poverty by a broad Census Bureau definition that

includes income from all the programs in the work support system

I just showed you. In just 4 years, the child poverty rate has declined from 17.5 percent to 12.9 percent, a 26 percent decline.

How important is this achievement? In 1965 the Nation decided

to fight a war against poverty by creating hundreds of social programs and giving away billions of dollars in cash and benefits. Between 1965 and 1995, Federal and State Governments increased

spending on social programs by a factor of 10, from about $40 billion to nearly $400 billion in constant dollars.

Despite all these new programs and all of the new spending, the

child poverty rate did not decline at all, not at all. So we threw billions of dollars at poverty and in a sense, poverty won. The reason

is now clear. We were fighting a war using the wrong weapon. Our

main strategy was giving away benefits without requiring anything

in return. Instead of poverty reduction, we got welfare dependency.

Instead of helping people get back on their feet, we stuck them

with a system that punished work.

But now the Nation has adopted a new strategy. We encourage

and, where necessary, demand work. Then we supplement income

with the growing work support system. As the poverty data in this

chart show, we are having great success so far.

Now, I don’t want to leave the impression that we’ve solved every

problem and there’s nothing left to do. The point of this hearing is

that is not the case. There are at least three problems that our

Subcommittee wants to know more about.

First, not enough children are getting Medicaid after their family

leaves welfare. More children are now eligible for Federal and

State health insurance coverage than ever before. And yet for the

first time in a generation, the number of children actually enrolled

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in Medicaid is declining. We want to know why, and under Chairman Johnson’s leadership, our Subcommittee will be exploring this

issue in the months ahead.

My own view is that States are already figuring out ways to

solve this problem by simplifying their health insurance eligibility

forms, increasing their outreach to eligible families, and simplifying their Medicaid requirements for continuing eligibility.

The second problem is that enrollment in food stamps is also declining. Frankly, the evidence seems to indicate that some of this

decline is being caused by stigma. Lots of families want to escape

welfare completely and depend only on themselves and the less

stigmatized parts of the work support system like the earned income credit. So many families seem to be choosing not to receive

food stamps. While admiring these families for their choice, we

should still make sure food stamps are available to families that

really need them.

And finally the evidence indicates that there is a small group of

families at the bottom who are being left behind. They are leaving

welfare but they’re not working. We need to know why they’re not

working and we need to develop better ways to help them. As the

evidence I have summarized makes clear, there is a lot of money

available to tackle this problem.

Our Subcommittee on Human Resources has come here today to

spread the word that welfare reform is working and that we need

to continue on the path we’re on. We are making dramatic progress

against poverty, and we’re making it the old-fashioned way. People

are earning their way out of poverty. But we’re also here because

we want to know more about the details of welfare reform in States

and localities throughout the Nation. I am proud that the Subcommittee has decided to visit my district and learn more about

how our professionals and other citizens are handling welfare reform and offering genuine innovation. We have, as Chairman Johnson has indicated, already learned a great deal by visiting the Erie

County Assistance Office, and I expect we’ll learn a lot more during

this hearing.

[Charts 1 through 7 follow:]

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12

13

14

15

16

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Mr. ENGLISH. I would now like to yield to my colleague, Mr.

Coyne, who also has an opening statement.

Mr. COYNE. Well, thank you, Phil, for hosting this hearing and

Chairman Johnson for conducting and agreeing to come to Erie to

hold this very important meeting on a subject that’s very important

to many, many people.

I think that it is critically important that Congress monitor the

impact of the Personal Responsibility and Work Opportunity Reconciliation Act. Since Congress gave the States a great deal of flexibility in this landmark legislation, we have a responsibility to look

at how welfare reform is being implemented by different States

throughout the country and determine what effect the bill is having

on poor children and their families. Congress also needs to ensure

that the States are held accountable for using their Federal funding responsibly and in accordance with the law as it was passed.

For those reasons, it is especially helpful for Members of the Subcommittee to hold field hearings and hearings in Washington on

this issue across the country.

Today, 3 years after the enactment of the Welfare Reform Act,

we are beginning to get the first real feedback on the impact of the

1996 bill. On the surface, the bill looks like a great idea and it

looks like it is succeeding. AFDC and TANF caseloads have

dropped by roughly 40 percent nationwide since welfare reform legislation was enacted. There is other information, however, that suggests that there is cause for some concern about this issue. A study

by the Center on Budget and Policy Priorities, for example, concluded that the average incomes of the poorest single-parent families dropped by more than $500 between 1995 and 1997. That’s a

lot of money for a family getting by on just a few thousand dollars

a year.

A recent GAO study done at my request and Congressman Levin’s request determined that much of the drop in food stamp use

was not due to a drop in the need for food stamps. In fact, food

banks are hard pressed to keep up with local need, even with unemployment at close to 4 percent, a 31-year low. The General Accounting Office concluded that a significant part of the drop in food

stamp use was due to efforts by State welfare agencies to place

new procedural roadblocks in the way of families seeking assistance. The GAO also found that many people who were eligible for

food stamps were either not informed or were misinformed about

their eligibility by State caseworkers throughout the country.

We also have learned that nationally only about 15 percent of the

10 million children who are eligible for subsidized child care are

being served. Additional congressional action to provide child care

assistance is clearly needed.

Similarly recent studies by the GAO and Families USA determined that in 1999, fewer children were covered under the Children’s Health Insurance Program and Medicaid than were covered

by Medicaid alone in 1996. The GAO also found that very few

States are doing a good job of providing transitional Medicaid coverage.

Finally, the Pittsburgh Foundation has been working on a

Health and Human Services welfare reform demonstration project

with the Allegheny County Assistance Office. And its first year reVerDate 20-JUL-2000 07:30 Sep 20, 2000 Jkt 060010 PO 00000 Frm 00021 Fmt 6633 Sfmt 6602 K:\HEARINGS\65693.TXT WAYS1 PsN: WAYS1
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port identifies some gaps in assistance with families making the

transition from welfare to work. I have several copies that I’ve

given to the staff of that report and I’d like to ask the report be

included at this point in the record for this hearing.

Mr. ENGLISH. Without objection.

Mr. COYNE. In closing let me observe that the 1996 Welfare Reform Act clearly benefited from good timing. The bill was enacted

into law in the midst of the strongest and longest economic booms

of the 20th century. Welfare caseloads were dropping dramatically

across the country even before the 1996 Welfare Reform bill was

enacted. Moreover, other recent congressional action has helped to

reduce poverty in this country and get families off of welfare. Part

of the success in helping poor families become self-sufficient is attributable to the increases in the minimum wage and expansion of

the earned income tax credit, both of which are worthy of support.

The real challenge for the Welfare Reform Act will come when the

economy slows down, as it inevitably must. Oversight hearings like

this one are essential in order to ensure that children in this country don’t go hungry or homeless, and to ensure that they receive

the medical care and child care that they need and deserve.

I commend Chairman Johnson and Congressman English for

their interest in this very important matter, and I look forward to

working to help all American families become self-sufficient and

enjoy a decent standard of living. I ask that my full statement be

included in the record.

Mr. ENGLISH. Without objection. Thank you, Mr. Coyne.

[The prepared statement and an attachment follow:]

Statement of Hon. William J. Coyne, a Representative in Congress from the

State of Pennsylvania

I want to thank Chairman Johnson for holding today’s hearing, and I want to

thank my colleague from Pennsylvania, Congressman English, for hosting this hearing in his district.

I think that it is critically important that Congress monitor the impact of the Personal Responsibility and Work Opportunity Reconciliation Act. Since Congress gave

the states a great deal of flexibility in this landmark legislation, we have a responsibility to look at how welfare reform is being implemented by different states—and

determine what effect the bill is having on poor children and their families. Congress needs to ensure that the states are held accountable for using their federal

funding responsibly and in accordance with the new law. For those reasons, it is

especially helpful for Members of the Subcommittee to hold field hearings on this

issue across the country.

The issue of welfare reform has been the subject of discussion and debate for

many years. Throughout the 1980s and early 1990s, legislation was introduced to

reform the AFDC program. Congressional committees held dozens of hearings on

the problems with federal welfare programs. But until 1996, no major changes in

the AFDC program were enacted. The reason, of course, was simple. Year after

year, Members of Congress relearned one apparently unassailable truth—that

warehousing the poor was cheaper than spending the money needed to help them

make a successful transition from welfare dependency to self-sufficiency.

In fact, even before enactment of the 1996 welfare reform bill, most of the families

that received AFDC stayed in the program a relatively short period of time and

needed little help becoming self-sufficient. The relatively small percentage of families that stayed on welfare for long periods of time, however, not only consumed a

disproportionate share of the federal welfare budget and shaped the public’s negative perceptions about all welfare recipients. They also needed a lot of help to become self-sufficient. Consequently, year after year—and in the face of substantial

federal deficits—Congress chose to maintain the status quo rather than invest the

resources necessary to help the long-term welfare recipients become self-sufficient.

In 1996, however, Congress passed a welfare reform bill, and President Clinton

signed it into law. This legislation, the Personal Responsibility and Work OpporVerDate 20-JUL-2000 07:30 Sep 20, 2000 Jkt 060010 PO 00000 Frm 00022 Fmt 6633 Sfmt 6602 K:\HEARINGS\65693.TXT WAYS1 PsN: WAYS1
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tunity Reconciliation Act, ended the 60-year entitlement to a subsistence income

that the federal government had provided to poor children and their parents—and

replaced it with a program of block grants to the states. The bill limited lifetime

dependence on welfare to 5 years and required adults on welfare to work after two

years of receiving benefits. Supporters of this legislation believed that the bill would

force parents on welfare to take greater responsibility for themselves and their families.

Critics of the bill, myself included, disagreed with the policy of ending the AFDC

entitlement. We believed that the world’s wealthiest, most civilized nation could and

should guarantee that all of its children received adequate food, shelter, and health

care. We were concerned that innocent, vulnerable children would suffer as a result

of the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act. We were also concerned that the bill failed to provide the resources necessary for families on welfare to become self-sufficient. We were especially concerned

by the failure of this legislation to adequately address the issue of job training. Consequently, I voted against the Personal Responsibility and Work Opportunity Reconciliation Act.

In 1997, Congress acknowledged some of the shortcomings in the Personal Responsibility and Work Opportunity Reconciliation Act. The Balanced Budget Act of

1997 established a $3 billion program to help adult TANF recipients make the transition from welfare to work. It also established the State Children’s Health Insurance Program (CHIP) to complement Medicaid and provide health insurance for lowincome children.

Today, three years after the enactment of the Personal Responsibility and Work

Opportunity Reconciliation Act, we are beginning to get the first real feedback on

the impact of the 1996 welfare reform bill. On the surface, the bill looks like a great

success. AFDC/TANF caseloads have dropped by roughly 40 percent nationwide

since welfare reform legislation was enacted. The labor force participation rate of

women maintaining families with children has increased from 72 percent to 77 percent. Federal outlays for welfare, Food Stamps, and Medicaid have decreased significantly.

There is other information, however, that suggests that there is cause for some

concern. A study of U.S. Census data by the Center on Budget and Policy Priorities,

for example, concluded that the average incomes of the poorest single-parent families dropped by more than $500 between 1995 and 1997. That’s a lot of money for

a family getting by on just a few thousand dollars a year.

In addition, a recent GAO study, done at my request and that of Congressman

Sander Levin, determined that much of the drop in Food Stamp use was not due

to a drop in need. In fact, food banks in Pittsburgh and other parts of the country

are hard pressed to keep up with local need—even with unemployment at close to

4 percent. GAO concluded that a significant part of the drop in food stamp use was

due to efforts by state welfare agencies to place new procedural roadblocks in the

way of families seeking assistance. The GAO also found that many people who were

eligible for food stamps were either not informed or were misinformed about their

eligibility by state caseworkers.

We also have learned that, nationally, only about 15 percent of the 10 million children who are eligible for subsidized child care are being served. Local officials in

my district have told me that there is a long waiting list for child care subsidies

in Allegheny County, and that the list would be even longer if many families hadn’t

given up completely on the prospect of ever getting this assistance. Additional Congressional action to provide child care assistance is clearly needed. Earlier this year,

I cosponsored legislation that would increase funding for the Child Care and Development Block Grant and the Dependent Care Tax Credit, and I recently signed a

letter to President Clinton urging him to fight for increased funding for the Child

Care and Development Block Grant in the fiscal year 2000 Labor-HHS appropriations bill.

Similarly, recent studies by the GAO and Families USA determined that in 1999,

fewer children were covered under the Children’s Health Insurance Program (CHIP)

and Medicaid than were covered by Medicaid alone in 1996. Pennsylvania is one of

12 states where Families USA determined that 30,000 fewer children were receiving

health care coverage under CHIP and Medicaid than in 1996—even though more

children are now eligible for coverage. The Census Bureau recently reported that

a million people across the country lost Medicaid coverage last year. It is irresponsible and inhumane to deny health care coverage to children. The lack of health insurance for poor families is a community concern as well as a humanitarian one—

charitable care for the poor, which averages $60 million a year in Pittsburgh’s hospitals alone, places significant economic pressures on institutions which are already

under great pressure from the changes taking place in the health care industry.

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The GAO also found that very few states are doing a good job of providing Transitional Medicaid (TMA) coverage—even though it is required by law. GAO suggested

that the beneficiary income reporting requirements associated with Transitional

Medicaid significantly reduce the percentage of families that take advantage of this

program. The Health Care Financing Administration (HCFA) has proposed eliminating these requirements for up to one year, and is my hope that the Subcommittee will hold hearings on this issue—and consider enacting such legislation

if the hearings suggest that it would increase TMA coverage.

The 1996 welfare reform act clearly benefited from the accident of good timing.

The bill was enacted into law in the midst of one of the strongest and longest economic booms of the 20th century. Welfare caseloads were dropping dramatically

across the country before the welfare reform bill was even enacted. Since 1996, the

economy has been particularly strong, with unemployment dropping recently to

record lows. It is no surprise that welfare caseloads are dropping. This is the period

in the economic cycle when we would expect welfare rolls to decline. A rising tide

does eventually lift all boats—if it rises high enough. Moreover, other Congressional

action has helped to reduce poverty in this country and get families off welfare—

part of the success in helping welfare families become self-sufficient is attributable

to increases in the minimum wage and expansion of the Earned Income Tax Credit,

both of which I supported. But the real challenge for the welfare reform act will

come when the economy slows down or stalls, as it inevitably must.

In conclusion, let me merely state that oversight hearings like this one are essential in order to ensure that children in this country don’t go hungry or homeless—

and to ensure that they receive the medical care and child care that they need. I

believe that Congress needs to take additional action to achieve these important objectives. We are clearly falling short even in the current favorable economic climate,

and we won’t really confront the limitations of the 1996 welfare reform bill until

the next recession hits.

I look forward to hearing testimony from the witnesses who will testify before us

here today. I commend Chairman Johnson and Congressman English for their interest in this important issue, and I look forward to working with my colleagues in

a bipartisan fashion to help all American families become self-sufficient and enjoy

a decent standard of living.

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with whom I have worked extensively over the last few years on

Mr. ENGLISH. And with that let me welcome Secretary Houstoun

f

this issue. I want to invite her to offer her testimony. We have a

flexible 5-minute limit. If you could limit your comments and offer

your full testimony to the record, that would help us move forward.

And I would also like to create an opportunity for us to give you

a full range of questions. So I thank you for being here, Madam

Secretary, and I compliment you on the extraordinary job with the

Ridge administration addressing this great challenge. The floor is

yours.

STATEMENT OF HON. FEATHER O. HOUSTOUN, SECRETARY,

PENNSYLVANIA DEPARTMENT OF PUBLIC WELFARE

Ms. HOUSTOUN. Thank you, Congressman English. It’s a great

pleasure to be here. Pennsylvania was one of the first States to

enact a comprehensive State welfare reform program. We did that

in 1996, about 5, 6 months before the Congress acted. We had bipartisan support for our welfare program and we are working very

hard to replace the old entitlement program that mired families in

poverty, without any movement toward self-sufficiency. We take it

very seriously and very responsibly. I think once you’ve gone

around the country and heard the concerns about the ‘‘race to the

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bottom,’’ this has not happened, certainly not in Pennsylvania.

We’re very proud of the compassion and the care with which we designed our program.

In Pennsylvania we really had a three-pronged approach. For

those people who were immediately eligible and able to work, we

helped them get a job. In the first 24 months clients have a great

deal of latitude to pursue education as fulfillment of their work obligation. After 24 months clients need to be working 20 hours a

week, but to pay attention not just to that 24th month deadline but

also to the 5-year lifetime limit that is part of our program.

We have a very wide array of employment and training programs. They range from intensive wraparound supports all the way

through simple job preparation programs to support clients who

need different kinds of preparation before they attach to the work

force.

We have a strong school component requiring recipients who

have not completed school to enroll if they are under 18 and encouraging those who are over 18 to complete their education.

We do believe that there is dignity in all work and we hear that

from our clients. The individual’s first job represents the first step

on a career ladder that has to include retention, advancement and

job skill upgrades. We have designed our programs to reflect the

lessons from research by the Manpower Development Research

Corporation, which has demonstrated in countless evaluations that

combining work with skill building and educational opportunities is

the best approach for most welfare clients to become self-sufficient.

We are especially proud that Governor Ridge and the General

Assembly enacted a ‘‘make work pay’’ structure for our program. It

provides immediate and lasting financial incentives to work by disregarding 50 percent of the earned income when calculating a recipient’s cash assistance check. In the old system, as you mentioned, Congressman, it did not pay to work. In the new one, particularly in Pennsylvania, it certainly does.

We’ve taken the time to look at the package of benefits that a

working welfare recipient receives. And just to give you a local perspective on what you displayed on the board from a congressional

and national perspective, if a client is working at a $5.75 an hour

job for 35 hours a week, when one combine Medicaid, child care,

the earned income tax credit and food stamps, that $5.75 job turns

into a job worth over $12 an hour. That’s a significant enhancement in the capacity of that family to take care of itself and be on

the road to self- sufficiency.

In Pennsylvania our caseloads have declined pretty consistently

with the national perspective. And that’s particularly significant in

that during the first 24 months on welfare there is no hourly minimum requirement for work. There’s an obligation to look for work

but there’s no minimum hourly requirement as there are in many

other States. Erie County has seen a 46 percent decline. Statewide

it’s been about 41 percent.

We’ve had over 150,000 Pennsylvania clients get jobs since we

began our program in March 1997. There’s been over 7,000 here in

Erie County. This includes full and part-time work. Many of these

jobs almost typically are over the minimum wage. Statewide the

average is about $6.77 an hour. It’s, I think, a little bit lower than

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that here in Erie County. About 40 percent of these jobs do include

some form of medical benefits after about 6 months, which is a

very standard expectation in our programs.

Welfare recipients are competing for and obtaining jobs throughout the mainstream economy from retail and food service to industrial and medical-related industries. Many of them start in business services but then they move on and take permanent jobs outside the temporary agencies that may have gotten them a first job.

We’ve also learned a lot about who was on the caseload and how

complex it is. Statewide nearly 85 percent of the caseload has a

high school diploma or GED, although that’s different in different

parts of the State. Typically it’s a single parent household with two

children. But almost always, the family is discontent with their circumstances and very much want to improve the situation for their

families.

Typically welfare recipients are not as barrier-laden as the general public might perceive them to be. And they are very often very

eager to work.

We have found in our tracking that about two thirds of the Pennsylvania recipients have left the welfare rolls and had some employment since leaving. That’s also very consistent with what other

States have reported. Interestingly, our telephone surveys have

found that former recipients report optimism about the future,

greater satisfaction about their futures, and no disturbing symptoms of quality of life degradation. In fact, a majority report an enhanced quality of life compared to their life on welfare.

This is all very good news, but as all three of our representatives

have said, there is a lot more to be done. We want to help families

become truly self sufficient. We are very active participants in the

new work force development system that is emerging because we

know that it’s going to provide valuable education and training opportunities to transitional and entry level workers. It’s very, very

critical to us that they move into the system and be ready to go

and be more agile as the economy changes.

We also know that we need a lot of increased investments for

employment and training. Pennsylvania has invested nearly $240

million in employment and training programs. We’ve probably doubled our training levels and funding levels under TANF. We’re able

to do things, make offers that were inconceivable under the old programs simply because of the flexibility we have in the block grant.

Pennsylvania’s been a leader in making sure that employment and

training programs are performance-based and that we get a strong

value out of our employment and training programs. They are

structured so that they receive greater compensation if they have

high retention, high placements, higher salaries and better medical

benefits.

Mr. ENGLISH. Can we get into a question and answer period?

Ms. HOUSTOUN. Certainly, certainly.

Mr. ENGLISH. And I’ll let you wrap up at this point.

Ms. HOUSTOUN. OK. Let me just tell you about some of the areas

where we do think we have some work to do. In child care we’ve

changed the system dramatically and increased access by working

families but we do still have some bugs in that system that we

need to deal with.

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We also, as I said, need to think about families that need additional education and training to advance. We need to deal with barriers people have with traditional voc rehab services and other

kinds of substance abuse or health services that connect those for

those kind of families.

And finally and very properly we need to address the issue of retaining children on Medicaid. All States have had some difficulty

in retaining children on Medicaid when the caseload went into free

fall, because many families walked away from the entire benefit

package. We have started an aggressive campaign to bring those

families back to Medicaid. We’ll be training our county assistance

offices to be certain that they do not close the Medicaid and the

food stamp case when the cash case closes. We’ve seen the reversal

in that trend and are very optimistic. The record would probably

be the sending 32,000 Access cards out earlier this year to families

who had left Medicaid in order to bring them back into the system.

[The prepared statement follows:]

Statement of Hon. Feather O. Houstoun, Secretary, Pennsylvania

Department of Public Welfare

Good afternoon, I am Feather Houstoun, Secretary for the Pennsylvania Department of Public Welfare. It is both an honor and pleasure to provide you with testimony on Pennsylvania’s effort in welfare reform.

While several states had waivers operating in early 1995 and 1996, Pennsylvania

was one of the first states to pass a comprehensive, state welfare reform law. We

enacted our law in May 1996, several months before the federal legislation was

signed into law.

In 1996, the U.S. Congress embarked upon eliminating a 40-year old entitlement

system that entrenched families in poverty and provided little opportunity for selfsufficiency. Welfare reform represents one of the most profound social policy

changes in decades—permitting different welfare systems that reflect the diversity

of the nation.

Pennsylvania’s reform is built upon three principles: personal responsibility, parental responsibility and self-sufficiency through work. These philosophies drive our

state strategy for moving welfare families into the workforce and enabling them to

build a path toward self-reliance. In Pennsylvania, we have taken a three-pronged

approach to connecting individuals to jobs. For those who can immediately compete

for jobs, we assist them to obtain employment right away. For those with more barriers, we offer opportunities for them to build a work history, enhance their job

skills and then, connect them to the workforce. And for those recipients who have

not completed school, we require they enroll if they are under age 18; and if they

are over age 18, they are encouraged to attend and complete their program.

In Pennsylvania, we’ve built a system predicated upon the belief that there is dignity in all work. An individual’s first job represents the first step on career ladder

that anticipates retention, advancement and job skill upgrades. National research

conducted by the Manpower Demonstration Research Corporation has proven that

combining work with skills building and educational opportunities is the true foundation to becoming self-sufficient.

More importantly, Governor Ridge and the General Assembly enacted a ‘‘make

work pay’’ structure, which provides immediate and lasting financial incentives to

work by disregarding 50 percent of earned income when calculating a recipient’s

cash assistance check. In the old system, it did not pay to work—in the new one,

it does pay to work, and our experience demonstrates that.

Our family caseload numbers have declined by nearly 40 percent statewide. Thousands of individuals previously trapped in a system of disincentive have now gone

to work, sometimes for the first time ever. In our two and one-half years of reform,

over 150,000 Pennsylvania welfare recipients secured full or part time jobs at well

above the minimum wage. Many of these jobs come with health care benefits. The

statewide average wage is $6.77 and nearly 40 percent of individuals getting jobs

are receiving some form of paid medical benefits within the first six months of employment. Welfare recipients are competing for and obtaining jobs in the mainstream economy from retail and food service to industrial and medical-related industries.

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Over the past two and one-half years we have gained a greater knowledge of who

is receiving cash assistance in Pennsylvania. Gone are the stereotypical perceptions

of a person with little or no ambition to better themselves. The individuals in our

program-nearly 85 percent of the total caseloads-typically have at least a high

school or GED education. These are single-parent households with two children in

their care. These are parents that, for the most part, are discontented with their

current circumstances and want to make a change for the better for themselves and

their families.

We have found that welfare recipients are not as barrier-laden as the general public might perceive them to be. Nor are their barriers to employment all that different from the general population. We have found that nearly of 60 percent of our

caseload has some type of work history and approximately 70 percent have some

education at or above high school completion. For many, the leading barriers to employment are child care and transportation.

Comprehensive tracking also tells us that over two-thirds of the Pennsylvania recipients that left the welfare rolls have had some type of employment since leaving—very much in line with what other states report of their former clients. In a

telephone survey of a sample of former Pennsylvania welfare recipients, 85 percent

reported that they feel better about their future.

While these are impressive numbers, there is more work to be done. While families who took the changes of the system seriously and benefited from our ability to

invest in their futures—got a job, took advantage of employment, training and education opportunities, and used work supports (child care, transportation, etc.)—they

still struggle to become truly self-sufficient. They continue to be helped through assistance programs in child care, food stamps and medical assistance; we would hope

for each the opportunity to advance out of poverty. The Department supports this

intent by being an active participant in the new workforce development system,

which will provide valuable education and training opportunities to transitional and

entry-level workers statewide.

Through careful assessment and monitoring, we were able to determine early in

reform that increased investments were needed to meet the needs of not only those

individuals with barriers to employment, but also those people that had done what

was required of them—to take that first job. Because of the flexibility of the TANF

block grant, we have been able to fund skills building and educational activities at

levels that were inconceivable in the past. This year alone, Pennsylvania has invested nearly $240 million in employment and training programs, a two-fold increase of funding prior to welfare reform.

Our investments do not come without accountability. As stewards of taxpayer

funds, we have a responsibility to ensure a value-add in our services and a return

on all of our investments in services. In addition to our increased funding, we now

utilize performance-based contracting for most of employment and training opportunities. In fact, Pennsylvania has become a national leader in performance-contracting. We consistently command approximately 65 percent placement rate statewide. Moreover, our strict monitoring, corrective compliance protocols and authority

to withhold contract funding gives us the leverage to demand performance, prevent

‘‘creaming’’ and offer qualified candidates to Pennsylvania’s employers. Based upon

‘‘pay for success’’ principles, this way of doing business with our vendors has exponentially increased the likelihood of a welfare recipient remaining in a position,

rather than hopping from job to job.

This past March we took steps to ease the transition from welfare to work for

these parents. Our subsidized childcare system in Pennsylvania previously posed a

barrier for some mothers. Faced with the stress of obtaining employment, our system offered little respite financially for mom. She would have to pay the full cost

of her children’s care out of her pocket, later receiving an adjustment to her cash

grant that would rarely cover the cost of care. The changes we made eliminated this

problem for these mothers. Now, she pays only a small portion of her child care

costs, with the state picking up the rest of the tab.

By streamlining the subsidized system, we not only eased her transition, we were

able to alleviate a financial burden not only for parents on welfare, but also the

working poor. Many of these parents were on waiting lists to receive help paying

for their care. Today, after record increases in child care from TANF funds, we have

largely cleared those waiting lists and are reaching out to ensure all working poor

parents know what is available to them. We now enroll twice as many children per

month compared to the old system. This undoubtedly will yield positive effects on

job retention and advancement of welfare and transitioning parents, and could quite

possibly, prevent other low-income parents from having to turn to welfare to help

make ends meet. This year alone, the Commonwealth has invested $377 million into

a subsidized child care system.

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As you can see, Pennsylvania has many triumphs under its belt, but we still face

challenges, and we have begun to re-tool our systems and re-invent the way we look

at our welfare system. Job retention and advancement initiatives are already in

place to address those individuals already working. Many are reaching their second

and third years on cash assistance. For these people, the upcoming years offer the

opportunity to build further skills so that when their five years are up, they are

self-sufficient.

We have also begun to engage individuals earlier in employment and training opportunities. Those coming into the welfare system for the first time have the greatest opportunity to gain the skills and education necessary to succeed. By coupling

education with a work history early, a recipient will be far better equipped to compete in the job market than someone who has done little with their time on welfare.

Another group of individuals we have begun to focus on are those currently exempt from employment requirements. Despite their exemptions, they too, face their

welfare time running out. It is imperative that we engage them in the same employment and training opportunities to prepare them for life after welfare. Increased

outreach efforts coupled with coordination with agencies providing domestic violence, children and youth, and physical and mental health services are proving to

be fruitful in getting people engaged in the system.

In closing, Pennsylvania is committed to continuing the common-sense and compassionate approach to welfare reform it began in 1997. We have gained a vast

knowledge of the individuals we serve, as well as the system we built. We have employed new strategies and acted swiftly to address the ever-changing needs of our

welfare population. As we move forward, I commit to you today we will continue

to build upon principles that act as our guide through this sea of social change—

personal responsibility, parental responsibility, and self-sufficiency through work—

to ensure better lives for the residents that need the state’s help the most.

the balance of your testimony to the record. And I will, if I may,

Mr. ENGLISH. Thank you, Madam Secretary. I’ll let you submit

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start the questioning. As you know, probably the biggest problem

I’ve run into with welfare reform anecdotally on the local level has

been the problem of access to child care services, particularly coming at the end of a budget year.

Now you have talked to me in the past about what you’ve been

doing to address this problem and the transition to a new child

care system that you’ve been structuring in Pennsylvania. Now can

you elaborate on that a little bit? Again, the bottom line, if someone is a single mother and leaves the welfare system to go in to

the work force, can they be reasonably certain of that support from

the State now if they do so?

Ms. HOUSTOUN. Yes. Two answers to the question. First of all,

the old system that we had in Pennsylvania sabotaged the moms

leaving welfare. They got an allowance when they were training,

then they went to a system where they had to pay out of pocket

and get reimbursed but not for the full cost of the day care. When

they left welfare they got 1-year allowance and then they had to

go stand in line for a new child care subsidy.

Now from start to finish on welfare and leaving welfare that

mom has a child care allowance which allows her to buy any range

of child care. But the beauty of what we’ve done to the system is

that we’ve used TANF block grant funds for that. And the result

of that is that as we’re paying for the TANF families we’ve also

doubled the access of child care for working families that have not

been on welfare at all.

So essentially—we are very close to eliminating any waiting lists

for child care subsidies, and we are reaching out to make sure the

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families know it’s available. They frequently had to wait a year or

more. In Pittsburgh we are a little bit behind in that there is a lot

of families there and it’s simply processing in the system that’s taking us a little bit longer. But here in Erie we’re turning ground applications for child care subsidy in about 6 weeks.

Mr. ENGLISH. You have talked today on a couple of occasions

about training programs that you were a part of and oversee that

have been arranged at the welfare-to-work transition. And I would

be curious to know from the experience so far what kind of training

programs work.

Ms. HOUSTOUN. It depends a lot on the needs of the individual.

Some people do very, very well simply receiving essentially coaching and soft skills that are necessary for working in the marketplace. Other people need more intensive wraparound services and

that’s why we have something called single point of contact which

brings all of them in.

The national research suggests very strongly that a work experience with training experience together is likely to be the best program, one that’s most likely to work for someone who really does

need training.

Mr. ENGLISH. And looking at the composition of the welfare caseload from here, recognizing that many of the people most ready and

leaving the welfare system to go back into the work force are

already in the process of doing so. In order to meet the goals set

in the Federal statute, what sorts of training programs are you

going to need to emphasize to get to the next level?

Ms. HOUSTOUN. I think that people generally believe that as we

go along we will encounter more people with greater barriers. Typically substance abuse barriers, things like that. But it’s important

to understand that it is terrifically important that people get attached to the work force. If they delay entry into the work force,

just in a training program or in a substance abuse program for an

extended period of time, they have not made the essential step

that’s necessary for self sufficiency. So you’re going to see us continuing to help families that have simply come into the system the

first time and tailor it to meet whatever their level of need is.

We’re also going to be focusing on those families that have high

barriers that they must address before they’re going to be competitive in the work force.

Mr. ENGLISH. My final line of inquiry has to do with a problem

that Mr. Coyne and I both felt on your opening statements and

that is the problem of the declining utilization of Medicaid and food

stamps on some of the families that most need it. I know Mr. Wiley

in his testimony is going to touch on this as well. What is Pennsylvania doing and what do you intend to do to guarantee access to

eligible families on Medicaid and food stamps?

Ms. HOUSTOUN. Well, as I indicated earlier, we have been very

actively addressing the issue of people essentially walking away

from the County Assistance office altogether and losing their food

stamp and Medicaid benefits. And we are actively combining CHIP

and MA outreach. We have a lot of things to try to help that. We

do not do what Congressman Coyne mentioned, that is, diversion

programs that essentially discourage people from applying for servVerDate 20-JUL-2000 07:30 Sep 20, 2000 Jkt 060010 PO 00000 Frm 00043 Fmt 6633 Sfmt 6602 K:\HEARINGS\65693.TXT WAYS1 PsN: WAYS1
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ices. We do not need that in Pennsylvania. We do not get criticized

for that.

But I think we do need—frankly, I don’t think we ever anticipated—nor did any State anticipate the number of people who,

given any provocation, would be willing to walk away from the

Public Assistance system. Now I think we’re really quite prepared

organizationally for that and we’re now having to think a little bit

differently about how we approach the issue to assure they receive

benefits to which they are eligible.

Mr. ENGLISH. Thank you, Madam Secretary, and we’re grateful

for your time today. My time has expired so I recognize Mr.

Coyne’s.

Mr. COYNE. Thank you, Phil, very much and welcome to Secretary Houstoun. We appreciate your testimony. I wonder if you

could be a little bit more specific, however, of what you are doing

relative to people who are not aware that they are still eligible for

Medicaid, for the food stamps other than simply say come to the

caseworker.

Ms. HOUSTOUN. The caseworker is a single form of entry so that

caseworker has that person at her desk or his desk and we are reviewing that interaction. The reduction in Medicaid does not come

from the entry level side of the equation as much as it has from

the simple fact that the family will call them and say close my

case. Or they may simply not show up. And they create a compounded problem of disengaging that caused that pattern.

We understand that, and we know that it’s a problem. What we

did about 4 months ago after examining the question carefully was

to literally send 32,000 families new Access cards, live Medicaid

Access cards and said take it, use it and send us a pay stub. Send

us anything that can establish your income eligibility and we will

enroll you, we want you to have Medicaid. We are doing outreach

on the radio and television, and we’re sending flyers to community

groups. We are trying to do everything that we possibly can. Because as I said, I think we simply didn’t fully appreciate the fact

that people were willing to essentially walk away from the public

assistance system and we just—there were too many things happening at once. But I think we have rectified the problem—I think

we have turned the corner. I will mention the advertising around

CHIP. We have now doubled the CHIP enrollment over the last 4

years. And Pennsylvania has cross-over steps to Medicaid as well.

So I’m optimistic that we understand the dynamics and will address it.

Mr. COYNE. And what about the eligibility for food stamps, reminding them that they are eligible for food stamps even though

they’re leaving the program?

Ms. HOUSTOUN. We are currently in the process of correcting any

kind of procedural problem in the organization where someone

might have closed a cash case and a food stamp case together and

we’ve corrected those kinds of issues. We’re now looking at food

stamp eligibility generally and are willing to participate in some of

the outreach programs that are being recommended with the

USDA.

I might add that in the recent USDA survey of States on hunger,

Pennsylvania did relatively well. Certainly not the best, but within

41

the top four or five States in terms of the portion of people who reported being hungry or having to rely on emergency food supplies.

So we know it’s an issue. We are addressing it and we’ll be very

careful about County Assistance offices and not discouraging people

from getting benefits that they deserve.

Mr. COYNE. You mentioned in your testimony that the Commonwealth’s welfare caseload has been reduced by 40 percent since

1996. What percentage of those leaving the program, welfare program have found stable employment?

Ms. HOUSTOUN. I don’t have the numbers with me exactly, but

I think it’s in the order of about 40 percent of those leaving. I will

have to defer—the difficulty with this is the way we get that information, the way we answer that question is tricky because we have

to rely on payroll tax and unemployment compensation records.

And as you know that does not include certain kinds of jobs, such

as Federal jobs, and they don’t obviously include cash reporting at

various times. So you don’t really get a strong picture of that.

Keep in mind also that many women may make a decision to

work part time because they are also receiving child support, for

example, and they are able to patch together something that’s more

what they would like to have in their lives. So it’s a combination

of things. There is a certain portion of people for whom we do not

have a record of them working. But as I said, the telephone surveys

that have been done in this State and in other States of former

welfare recipients does not suggest that there is a serious degradation of the ability of the family to pay their rent and to live the

life that’s good or better than what they had been on welfare.

Mr. COYNE. Can you tell us anything about the former welfare

recipients who are not working? What is the status of that group

of individuals?

Ms. HOUSTOUN. We are in the process right now of completing

an additional report on former welfare recipients. And the report

is going to give the number of them and it will give us demographic

information about them. I’m not sure that we’re going to be able

to say a great deal other than through the telephone survey. The

surveys had fairly limited response rates so I’m not sure that we

will be able to parse it down to a level to answer your question adequately. We will give you demographic information.

I mean, it’s curious, for example, those who don’t have any reported wages tend to be older and they also are more likely to be

married. And more so than the ones who are eligible. So it’s an interesting demographic profile.

Mr. COYNE. Well, you probably won’t be able to tell us for those

who have left welfare, what percentage of those who have left welfare are out of the poverty classification, above the poverty level?

Ms. HOUSTOUN. Well, we do have recorded wage data and this

is available sometime in the next 2 to 3 weeks when we finish the

report. For those who are working we do have data. What the data

shows is that if they’re staying continuously in the work force, then

wages go up about 4 to 5 percent a quarter. So it’s a fairly significant rate of improvement in the financial situation based on the

quarterly data. Now if they moved in and out of work force they

won’t see the same relative increase. But it is fairly clear that if

they go into the work force they do see that increase. And over a

42

period of time a tax credit’s part of the overall package. They are

approaching an out of poverty wage level.

Mr. COYNE. Thank you very much.

Mr. ENGLISH. Thank you. I would like to now recognize the Chair

of the Subcommittee, Chairman Johnson.

Chairman JOHNSON. Thank you. I’m not sure, Secretary

Houstoun, that I understood something you just said. Did you say

that if recipients go into the work force at some level of government, their wages don’t show up in your data?

Ms. HOUSTOUN. The unemployment tax statement that was collected by Labor and Industry agencies does not include the Federal

agencies.

Chairman JOHNSON. So in other words if they’re employed by a

Federal agency and then they become unemployed, and they’re receiving unemployment compensation, you can’t see that with your

data, but you would see it if they’re receiving Government wages?

Ms. HOUSTOUN. What I’m saying is that we know—we track

former welfare recipients’ employment by looking at this Labor and

Industry unemployment tax data for those paying into the unemployment coffers. Federal employees don’t pay into that State’s unemployment fund, so when we do the State transfers to find people

and see what their wage history is, we’re missing that, and that’s

very interesting. So in a sense some of the best-paying jobs with

career ladders because——

Chairman JOHNSON. If someone becomes a mailman which is

really—mail carriers are certainly a job moving up, that wouldn’t

show up on your records?

Ms. HOUSTOUN. That’s very interesting. Of course, both State

and Federal Government and local governments also carry good

health benefits, retirement plans and——

Chairman JOHNSON. I believe State and local employment does

show up in the State records but not Federal. That’s very interesting. Just a couple of things. First of all, the Federal law does

require paternity determination so that we can better enforce our

child support laws. Have you had any difficulty with enforcing paternity determination requirements?

Ms. HOUSTOUN. It depends a lot on the local culture and situation. We are very careful not to put mothers in risk situations so

that are good cause exemptions. It has been something of a point

of irritation and concern among some moms. Also it’s required for

child care subsidies.

Chairman JOHNSON. What about the requirement of Federal law

that young people under 18 remain in school? Have you had any

refusals to participate in the program because they didn’t want to

remain in school under 18?

Ms. HOUSTOUN. I have not heard if that’s a major trend. We encourage staying in school. We provide programs, pregnant and parenting programs, other programs to try to keep kids in school. So

we are very supportive in that respect and indeed we will provide

her child care. Any woman who is under 18 she cannot get her own

check and live outside the family’s house, unless there’s an abusive

situation, you know, some reason why that cannot be met.

Chairman JOHNSON. So you haven’t actually had to enforce the

law by withdrawing benefits if people refuse to stay in school?

43

Ms. HOUSTOUN. I’m sure there are situations where young mothers have chosen not to accept benefits because of those requirements. I can’t give you a number on that. I can try to determine

that.

Chairman JOHNSON. But it isn’t big enough so that you’re hearing that?

Ms. HOUSTOUN. It’s not something that I’m hearing about.

Chairman JOHNSON. All right. Mr. Wiley in his testimony claims

that when mothers leave welfare for a job they’re abandoned. To

use his words, he says, this is the time many, if not all, welfareto-work programs declare success and terminate them from the

program. Not only is the client’s support system terminated as soon

as they get a job, both monetary and other benefits are removed.

Is this true in Pennsylvania?

Ms. HOUSTOUN. Mr. Wiley showed me specific evidence of that.

Certainly we need to encourage families to—we want families to

stay on Medicaid now and on food stamps. So again, there may be

situations procedurally where someone says close my case and that

caseworker has made an error and not elicited the proper information to keep that person on. We’re trying to correct that through

good staff training.

Chairman JOHNSON. More specifically do you have any reason to

believe, for example, that the welfare recipients entering into the

work force don’t continue to get their welfare benefits?

Ms. HOUSTOUN. We have monthly reporting. I think the situation

which may occur—and it’s not appropriate for it to occur, is that

the family will—if someone takes a job and says, go ahead, close

my case, if there’s not proper attention given to separating the cash

assistance situation from the food stamp and Medicaid situation,

we could have that happen inadvertently.

And I think that we have carefully trained our caseworkers. I

don’t believe that it has been a significant problem with Erie County, just by evidence of the food stamp rolls and the Medicaid roll

trends. But it has been in some places as it has been all over the

country, and I think we need to also address that.

With respect to abandoning the family, most of our performance

contracts with vendors include additional incentive pay for people

who stay on the job. Most of them provide some assistance and

backup to moms who have been placed in positions. So if we’re not

doing enough of that, I think we’re going to be addressing it with

attention to advancement of services that we are now expanding.

Chairman JOHNSON. In other words, the job placement agencies

get a higher remuneration for their work if they can demonstrate

that the person has to succeed and then stay with their job for

what, 6 months?

Ms. HOUSTOUN. Three months or six months depending on the

contract.

Chairman JOHNSON. He also mentions in his testimony that 19

to 30 percent of the people who leave welfare and get a job return

to welfare within 15 months. Is that a statistic that——

Ms. HOUSTOUN. I don’t think I would quarrel with that. That’s

a wide range. It’s been less than that in some counties. It’s probably been that much in others. However we’ve had strong training

programs and people tend to stay on jobs. A lot of people simply

44

get hired in a hot economy and really have not developed good reliability and good job skills. They may very well churn through the

work force. And that’s something that we’ve been able to address

and are addressing.

Chairman JOHNSON. And I just have two brief questions since

our time is short. Later on we’ll have testimony that there are new

regulations that are specific to the eligibility determination for the

use of TANF funds for abused and neglected children. And we’re

going to have testimony that those regulations are very prescriptive and will make it hard for TANF to serve abused and neglected

children. Are you aware of that and would you provide us with

comments on those regulations?

Ms. HOUSTOUN. I’d like to do that for the record. One of the elements of the new TANF regs took effect in October. It restricts the

county from the use of TANF funds for certain child welfare services. And all the States are struggling with how to do that. We had

previously used block grants funds, but are now restricted and we

all have been struggling with how to meet those needs, and figuring out how to do it within the regulations. It has certainly complicated our lives. I don’t think any State is willing to let abused

and neglected children go wanting. We just have to figure out a different way to fill the budget requirements of those programs.

Chairman JOHNSON. I was not aware of that until this was

brought up in the testimony which I had a chance to read beforehand. And it does certainly seem counterproductive, yes.

Ms. HOUSTOUN. So we will try to look at that and we are going

to be doing some emergency changes in the next week I hope and

maybe we can even address that. Certainly that’s part of our work

in the next session. We’ll take a look at that. I appreciate your interest and we will get you something quickly so that you have it

on hand.

Chairman JOHNSON. And last, Mr. Wiley also mentions the desirability of in-home case management and how you’ve had a lot of

exposure in this area over the years and I was just wondering what

your reaction to that was?

Ms. HOUSTOUN. There’s no question that there are families

where, I think, the stresses on that family are such that outside

assistance at sometimes may be very necessary and valuable. I

think deciding how one is going to decide which family needs that

when you’re thinking about an active program, is a very different

sort of issue. The child welfare system has caseworkers. The mental health system has caseworkers. The employment training we

have has caseworkers. And deciding how you structure that so that

there’s really value added and a change of outcome for families, is

very, very difficult that——

Chairman JOHNSON. I should think you should get into that in

this next round of attention that you described this morning. It

might be useful to look at that, how we identify those families in

which there are so many problems that this approach over time

will be very good.

Ms. HOUSTOUN. And we’ve seen there have been some demonstrations done in Pittsburgh, where it wasn’t quite as intense as

that. It was simply an extra person to call to discuss issues with,

and that was very useful. But in that instance it may be self-selecVerDate 20-JUL-2000 07:30 Sep 20, 2000 Jkt 060010 PO 00000 Frm 00048 Fmt 6633 Sfmt 6602 K:\HEARINGS\65693.TXT WAYS1 PsN: WAYS1
45

tion. If the family knows it has problems and is looking for help

which, you know, they may solve the problem on their own. It’s a

very difficult thing to value, how to employ these resources judiciously.

Chairman JOHNSON. Thank you very much for your testimony

and for meeting with us this morning and congratulations on the

good work that Pennsylvania has done in taking these steps.

Thank you.

Mr. ENGLISH. Thank you, Secretary Houstoun, for coming in

today from Harrisburg to represent the administration and doing

so ably. We appreciate your testimony.

And with that I would like to call the last panel forward, which

consists of R. Benjamin Wiley, executive director of Greater Erie

Community Action Committee, which I might add, has the reputation of being one of the most successful community action agencies

in the country. We’re delighted to have you here. Mr. Tom Gamble,

director of the Institute for Child and Family Policy at Mercyhurst

College, a think tank that over this last couple of years has very

much turned focus on the local scene and local social needs. And

I think it’s a unique resource among local educational institutions

in the region. Mr. Gary Cervone, chief administrative officer of the

Mercer County Community Action Committee of Sharon, Pennsylvania. We’re delighted to have you here, sir. And Karen Bechtold,

owner and operator of one of our local McDonald’s franchises.

We’ve enjoyed talking to you on a number of occasions, Karen, in

our Washington office and you’ve offered some very valuable insights in the past to us directly. We appreciate your taking the

time to be here to offer those insights for the Subcommittee.

With that, Mr. Wiley, I’ll turn this over to you for your testimony. We’ll try to keep everyone’s testimony within 5 minutes. If

you like you can summarize and submit the whole testimony to the

record. And we appreciate your being here, Mr. Wiley.

STATEMENT OF R. BENJAMIN WILEY, CHIEF EXECUTIVE

OFFICER, GREATER ERIE COMMUNITY ACTION COMMITTEE

Mr. WILEY. Thank you. Mr. English, other Members of the distinguished panel from the House who are here, I’d like to take this

opportunity to welcome you to Erie. I’m sure that I have more than

5 minutes, so I will summarize.

Many times the question is asked, has the Welfare Reform Act

been successful? We know that the goal, the initial goal of welfare

reform was to move the people off the welfare rolls into employment. We have moved people off of welfare rolls in a big way. It’s

been an overwhelming success. If you ask yourself the question, are

those who moved off of welfare rolls better off than they were before, I would say overwhelmingly that the answer is no. The people

who moved off welfare did not move into the middle class. They are

still poor and oftentimes desperately poor.

The GECAC and its entire network across the country, some

nearly 1,000 community action agencies, believe that everyone can

and should work. Millions of families have been caught for generations in the cycle of poverty. The move from dependency on government assistance to gainful employment is an important step in the

development of self-worth and independence for these families.

46

This sense of self-worth and independence, if encouraged and supported, will enable poor families to continue on toward self-sufficiency.

Welfare reform has taken the first step of moving many families

from welfare to work. However, welfare reform caused the average

income of poor single mothers to drop and halted progress in reducing child poverty according to a report from the Center on Budget

and Policy Priorities. The poorest single parent families, those at

55 percent of the Federal poverty level, experienced an income loss,

even with the income of all others in the household accounted for.

Many former welfare clients have gone into minimum wage jobs

with no benefits. I’m going to say that again. Many former welfare

clients have gone into minimum wage jobs and I underscore with

no benefits. These jobs do not pay a living wage that would allow

them to support their families in dignity and decency.

These people are often without very real choices between paying

their rent and feeding their families. And I have to say that there

is no coincidence between the soaring demand at food banks

nationwide and the decline of welfare rolls.

Also, a recent GAO report strongly suggests that the basis for

the dramatic decline in food stamp participation is, in large part,

due to the movement of poor families from welfare to work and

their belief that they are no longer eligible for food stamps. Likewise, the uncoupling of welfare and Medicaid has led to a decline

in Medicaid participants and has placed an increasing number of

poor children at risk due to lack of health care.

We talked in the earlier testimony about barriers and so we all

know that there are a lot of multiple barriers and I will skip over

that. We might get to that in the question period.

One thing to comment is on a new study by the Urban Institute

prepared for the Labor Department shows that welfare recipients

who are required to work should receive ongoing education and

training. And the Urban Institute study found that TANF provides

a strong incentive for local officials to implement post-employment

services which include individual work requirements, mandated

participant rates for State caseloads and the 5-year lifetime limit

on individuals.

Few recipients qualify for stable, good-paying jobs with advancement potential. The study noted that many have fairly low reading

and mathematic ability and lack strong education and occupational

credentials. Many also have personal and family problems that can

interfere with the work. Thus they tend to find low-wage, low-skill

jobs and have difficulty keeping those jobs and remain stuck at the

low end of the labor market.

The labor market trends suggest that without further education

and training, many welfare recipients may be trapped in low-wage,

low-skill jobs. Manufacturing jobs that once offered good pay to

poorly-educated workers have largely vanished, replaced by service

sector jobs. Today’s high paying jobs require technical skills.

Solutions. The Greater Erie Community Action Committee has

been involved in the antipoverty movement for 35 years. During

that time some overriding principles have become evident. And I’ll

hurry through this. No. 1, local flexibility to design programs to fit

local needs is critical. No. 2, in-home case management over the

47

long term is critical to the client’s success. No. 3, a gradual reduction of benefits is necessary to help former welfare clients’ transition from welfare to work. Transportation is a critical need that

needs to be addressed.

And I’m going to skip on over to—private industry has seen the

need for transportation. Some of the temporary agencies in the

county either own or lease buses or vans to transport clients to and

from work. Workers pay for rides to work. However, once a worker

becomes a permanent employee they are on their own to find transportation. There must be a better-coordinated way to get workers

from the inner city to the jobs in the outlying areas.

As a result of the new flexibility in Federal regulations and guidance, TANF funds and State Maintenance of Effort funds may be

used for an array of initiatives to help low-income working families

meet work expenses, basic needs and participate in education or

training to advance in the work force. These changes enable States

to provide services and benefits outside of the basic welfare program and help low-income families with income above the welfare

eligibility, whether or not they are actually receiving welfare.

Many States continue to view TANF as a program of basic cash

assistance and a set of initiatives to help families enter the work

force. They have been unsure what was allowed under Federal

guidelines, or concerned that proposed regulations presented significant difficulties in using TANF or Maintenance of Effort funds

for new initiatives to address the needs of low-income working families. Final TANF regulations contain a narrow definition of TANF

assistance. Work subsidies, support services, child care and transportation, refundable earned income tax credits, contributions and

distributions from Individual Development Accounts, such as counseling, case management, peer support, child care and referral, job

retention, job advancement and other employment-related services

are not included in the definition. Thus States may use TANF or

Maintenance of Efforts fund to fund these benefits.

Before the concept of self-sufficiency became a part of the rhetoric of human services and welfare reform, the mission of Community Action was to move families from self-sufficiency to sufficiency.

In our 35-year history, we have provided thousands of families with

a hand up, not a hand out to maintain them in poverty. Community Action agencies in general and GECAC in particular stand

ready to partner with Federal, State and local Governments to ensure that those families that welfare reform has weaned from dependency on public assistance do not remain in the ranks of the

working poor.

GECAC and its more than 1,000 community partners believe in

a simple philosophy that can be summarized that everyone who

can work should work. Those who do work should earn sufficient

income to provide for their family’s basic needs. Those who are unable to work, or who work but do not earn enough to provide for

their families, should be assisted by policies and programs to meet

their basic needs and secure safe and decent housing.

And I wanted to thank you for the invitation to appear here

today. And in closing that I would basically just say with the personal responsibility to work in consolidation, we have been around

the block, we’ve been in a cycle. And I think as the Secretary said

48

we’ve learned a lot from it and the news is not all bad news. I

think we just need to work harder to improve in those areas where

we know now that there are going to be shortcomings.

Mr. ENGLISH. Thank you, Mr. Wiley. We really appreciate—

knowing the depth of your experience, we appreciate your testimony here today.

[The prepared statement follows:]

Statement of R. Benjamin Wiley, Chief Executive Officer, Greater Erie

Community Action Committee

Many times the question is asked has the welfare reform act been successful? If

the goal of welfare reform was to move people off the welfare rolls, then yes, it has

been an overwhelming success. However, if the question is asked, are those who

moved off welfare better off than they were before, the answer is no. The people who

moved off welfare did not move into the middle class. They are still poor, often time

desperately poor.

The Greater Erie Community Action Committee and the network of nearly 1000

Community Action Agencies across America believe that everyone who can work

should work. Millions of families have been caught for generations in the cycle of

poverty. The move from dependency on government assistance to gainful employment is an important step in the development of self worth and independence for

these families. This sense of self worth and independence, if encouraged and supported, will enable poor families to continue toward self-sufficiency.

Welfare Reform has taken the first step of moving many families from welfare to

work. However, welfare reform caused the average income of poor single-mother

families to drop and halted progress in reducing child poverty according to a new

report from the Center on Budget and Policy Priorities. The poorest single parent

families, those at 55% of the federal poverty level, experienced an income loss, even

with the income of all others in the household accounted for.

Many former welfare clients have gone into minimum wage jobs with no benefits.

These jobs do not pay a living wage that would allow them to support their families

in dignity and decency. These people are often faced with the very real choices between paying their rent and feeding their families. There is no coincidence between

the soaring demand at food banks nationwide and the decline of the welfare rolls.

A recent GAO report strongly suggests that the basis for the dramatic decline in

Food Stamps participation is, in large part, due to the movement of poor families

from welfare to work and their belief that they are no longer eligible for Food

Stamps. Likewise, the uncoupling of welfare and Medicaid has led to a decline in

Medicaid participants and has placed an increasing number of poor children at risk

due to lack of health care.

Many former welfare clients are faced with multiple barriers to work. These include lack of education, limited job history, inadequate transportation, no childcare,

substance abuse, poor parenting skills, mental health issues, inadequate health

care, motivation and lack of multi-generational support. Many former welfare clients

have critical immediate needs such as food, housing, clothing and serious family

debt. There is often a need for family counseling, problem solving, motivation, sensitivity, stress management, life skills, budget counseling, social relations, self concept

development and nutrition education.

It is the presence of these barriers that prevent former welfare clients from moving into better employment without some form of support. Often these barriers

make it impossible to even hold a minimum wage job over the long term. The work

first strategy has doomed multitudes to a cycle of employment, unemployment and

re-employment—all at the minimum wage. This cycle will only last as long as the

economy is booming. As long as former welfare clients cannot overcome their employment barriers, they will not be able to move to the next rung of the employment

ladder. When the economy slows, as it inevitably will, these former welfare clients

will be the first to become unemployed. It is at this point that the clients will either

return to welfare in large numbers or they will be faced with welfare’s built in eligibility time clock and find they are not eligible for benefits. Even in today’s good

economy, of those welfare clients who have found employment 19 to 30 percent return to welfare within 15 months, another 20 percent have no job and are not living

with anyone who has a job.

A new study by the Urban Institute (UI) prepared for the Labor Department

shows that welfare recipients who are required to work should receive ongoing education and training. UI’s study found that:

49

• The Temporary Assistance for Needy Families program (TANF) provides strong

incentives for local officials to implement post employment services which include

individual work requirements, mandated participant rates for State caseloads and

the 5-year lifetime limit on individuals. • Few recipients qualify for stable, good paying jobs with advancement potential.

The study noted that many have fairly low reading and mathematics ability and

lack strong education and occupational credentials. Many also have personal and

family problems that can interfere with work. Thus they tend to find low-wage, low

skill jobs, have difficulty keeping those jobs, and remain stuck at the low end of the

labor market. • Labor market trends suggest that without further education and training many

welfare recipients may be trapped in low wage, low skill jobs. Manufacturing jobs

that once offered good pay to poorly educated workers have largely vanished replaced by service sector jobs. Today’s high-paying jobs require technical skills.

SOLUTIONS

The Greater Erie Community Action Committee has been involved in anti-poverty

movement for more than thirty-five years. During that time some overriding principles have become evident.

1. Local flexibility to design programs to fit local needs is critical.

2. In-home case management over the long term is critical to the client’s success.

3. A gradual reduction of benefits is necessary to help former welfare clients’ transition from welfare to work.

4. Transportation is a critical need that needs to be addressed.

The welfare reform tenet of work first has been interpreted in many states to

mean ‘‘work exclusively.’’ The initial charge of welfare reform was to move welfare

recipients into jobs, and in many cases, any job would do. TANF and various Welfare to Work programs from the State and Federal level have sought to provide

short-term services for clients to get them to work. Little has been done to address

the long-term barriers that held clients on the welfare rolls. When programs have

been developed to look at retention or job enhancement, rules and restrictions have

limited their usefulness. Large surpluses of TANF dollars at the State level do not

mean that there is a lack of need. These surpluses are emblematic of the restrictive

nature of program eligibility, which ultimately constrict clients’ participation.

Research shows that the most successful programs combine work first and education or training. Most programs to aid welfare clients are not locally designed.

While statewide programs now have greater flexibility to design programs that meet

their own needs; they must also meet several federal requirements designed to emphasize the importance of work and the temporary nature of TANF aid. These programs do not take local needs into account. The result is that programs are overly

prescriptive of who can be served and how they can be served. Consequently, client

needs are not being met as dollars meant to help them go unspent.

One such state-designed program is intended to support people as they move into

the work force. There are five (5) different categories of people who can be served

and five different funding streams to pay for the services. For example five persons

who are TANF can be served and six persons who receive food stamps only and

eleven able-bodied persons and seven persons who are post 24 month and eleven

who are stand alone can be served. If there are too many clients from one category

and not enough from another, clients in need go unserved and dollars intended to

help go unspent. This eligibility and accounting structure makes the program needlessly difficult to operate.

The Work Activities Expansion Stand Alone Design program is funded at $1.2

million for Erie County. So far this year because of restrictive eligibility only two

clients have been found in Erie County for this program; neither was interested in

participating. This program could have provided over $6000 each for 200 families

to participate in education and job training helping to make their transition from

welfare to work a little easier.

With final TANF rules broadening the range of services for which states can use

TANF and State Maintenance of Effort (MOE) funding, and with the majority of

states having substantial amounts of unspent TANF funds, the time is right to expand the purpose of welfare reform beyond caseload reduction. The role of welfare

reform must now be broadened to include the assurance that families leaving welfare are equipped to advance along the continuum toward self-sufficiency. All of

us—government, community action and business share in the responsibility of ensuring that families who leave the welfare rolls for work are able to earn money

they need to provide for them selves and their families and obtain jobs which offer

health care benefits.

50

GECAC has long believed in the value of in-home case management. In-home case

management is designed to provide intensive outreach into the community to find

clients and intensive home-based case management to help people move from welfare to work. In-home case management acts as both a recruitment and support

service. It is a long-term program that can stay with the client throughout the transition from dependency to self-sufficiency. It is designed to help families carry out

long term strategies beyond the first job (i.e., secondary education or employer supported on-the-job training.)

In-home case managers go to the client; the client does not come to them. The

in-home case managers provide families with whatever level of service they require,

empowering them and promoting self-sufficiency. The in-home case managers assess

the family with the head of household’s help. An agreement of mutual responsibility

is developed between the in-home case manager and the family. Some family agreements will only consist of strategies to connect them to the world of work. Other

family agreements will include child and family needs.

The goal of the case-management staff is to coordinate all services being provided

to the family. The in-home case managers use an ongoing assessment of families

to determine needs. One of the results is to help families overcome the small problems that occur almost daily and become a true deterrent to self-sufficiency. Families in these situations long ago stopped functioning at the level needed to solve

small problems before they become major issues. One of the major goals is to teach

families to identify these problems early and develop and use both personal and professional support systems that keep them on the road to self-sufficiency.

Many welfare families are receiving services from multiple service providers to

meet their various complex needs and to overcome their barriers to self-sufficiency.

Families can become fragmented by service providers’ competing requirements. It is

the role of the in-home case manager to be the coordinator for all services. The inhome case manager will facilitate staffing among and between agencies to develop

a coordinated plan to move the family from welfare to self-sufficiency.

GECAC has found that clients are most at risk the first day they begin work. For

many welfare clients the world of work is a new experience filled with pit falls. Long

developed patterns of behavior must be altered and new patterns substituted. New

skills must be used for the first time. The former client must find childcare and

transportation. They need to get up and out of the house and deal with coworkers

and supervisory personnel. This is the time they need the most support, and it is

the very same time, many, if not all welfare to work programs, declare success and

terminate the client from the program. Not only is the client’s support system terminated; as soon as they get a job, both monetary and other benefits are removed.

Support systems need to be maintained until the client has stabilized in his or

her new situation. Using a 50-cent on the dollar reduction in welfare benefits as clients get their first job is a disincentive to work. Clients are often not making

enough money to secure childcare and transportation. Work must pay. Many times

the former client is worse off than before due to the new expenses. This is especially

true if medical benefits are removed before the new worker can find a job with benefits.

Transportation is another critical area of concern for families transitioning from

welfare to work. The County Board of Assistance (CAO) provides allowances of up

to $750 for the purchase of and up to $400 for the repair of a vehicle. This is a positive, important aid to employment. However, the reliability of $750 cars is less than

stellar. The $400 repair allowance can very quickly be expended. The CAO also provides $36 per month for gas or a bus pass until work is secured. The CAO provides

an unlimited ride bus pass for those individuals who do not have a vehicle but only

until they get a job. A major problem is the times the busses run and the extent

of their routes. The busses in Erie run between 6:00 AM and 10:00 PM. This is not

a problem if someone is working a first or early second shift job. If they work a typical second shift, usually 3:00 PM–11:00 PM or 4:00 PM–12:00 AM, they face relying

on someone for a ride home or calling a taxi. If they work a third shift, they would

have to arrive at work an hour or more before their scheduled start time.

Increasingly, the Erie Mass Transit Authority (EMTA) offers limited routes.

EMTA has decreased or eliminated less profitable routes over the years. There are

major employers, i.e., Bush Industries and several motels, that are located beyond

the bus routes. Several of these employers report that they have difficulty finding

and retaining employees for various reasons, including the lack of reliable transportation.

Private industry has seen the need for transportation. Some of the temporary

agencies in the county either own or lease busses or vans to transport clients to and

from work. Workers pay for rides to work; however once a worker becomes a permanent employee they are on their own to find transportation. There must be a betterVerDate 20-JUL-2000 07:30 Sep 20, 2000 Jkt 060010 PO 00000 Frm 00054 Fmt 6633 Sfmt 6602 K:\HEARINGS\65693.TXT WAYS1 PsN: WAYS1
51

coordinated way to get workers from the inner city to the jobs in the outlying areas

of the county.

As a result of the new flexibility in federal regulations and guidance, TANF funds

and State Maintenance of Effort funds may be used for an array of initiatives to

help low income working families meet work expenses, meet basic needs, and participate in education or training to advance in the workforce. These changes enable

states to provide services and benefits outside of the basic welfare program and help

low income families with income above the welfare eligibility whether or not they

ever actually received welfare.

Yet many states continue to view TANF as a program of basic cash assistance

and a set of initiatives to help families enter the workforce. They have been unsure

about what was allowed under federal guidelines, or concerned that proposed regulations presented significant difficulties in using TANF or MOE funds for new initiatives to address the needs of low income working families. Final TANF regulations contain a narrow definition of ‘‘TANF assistance.’’ Work subsidies, support

services (child care and transportation), refundable earned income tax credits, contributions to and distributions from Individual Development Accounts, services such

as counseling, case management, peer support, child care information and referral,

job retention, job advancement and other employment related services are not included in the definition. Thus, states may use TANF or MOE monies to fund these

benefits.

Before the concept of self-sufficiency became a part of the rhetoric of human services and welfare reform, the mission of Community Action was to move families

from poverty to self-sufficiency. In our 35-year history, we have provided thousands

of families with a hand up, not a hand out to maintain them in poverty. Community

Action Agencies in general and GECAC in particular stand ready to partner with

federal, state and local governments to ensure that those families that welfare reform has weaned from dependency on public assistance do not remain in the ranks

of the working poor.

GECAC and its more than 1000 Community Action partners believe in a simple

philosophy that can be summarized as:

Everyone who can work should work. Those who do work should earn sufficient income to provide for their families’ basic needs. Those who are unable to

work or who work but do not earn enough to provide for their families should

be assisted by policies and programs to meet their basic needs and secure safe

and decent housing.

Thank you for the invitation to appear before you and we welcome the opportunity

to help.

STATEMENT OF THOMAS J. GAMBLE, DIRECTOR, MERCYHURST

Mr. ENGLISH. Mr. Gamble.

f

COLLEGE CIVIC INSTITUTE, AND MERCYHURST CENTER

FOR CHILD AND FAMILY POLICY

Mr. GAMBLE. Thank you, Representative English. My name is

Thomas Gamble. I’m director of the Mercyhurst College Civic Institute. Mercyhurst’s College is a Catholic liberal arts college founded

by the Sisters of Mercy. I’ve also been the director of child welfare

services in Erie County. I appreciate the opportunity to address

you about this important policy issue.

There’s no question that welfare reform has been one of the most

significant social policy initiatives. Most Americans believe that

family self-sufficiency through productive labor is dignified and dignifying and that responsible social policy should encourage it.

The impact of welfare reform in this regard is clear. Currently

the United States is experiencing the lowest percentage of families

on welfare since 1967. Erie has also experienced significant declines in the welfare caseload subsequent to the implementation of

welfare reform. Between February 1997 and September 1999, Erie

52

County has experienced a decline of just over 50 percent in the

number of families receiving cash assistance. This community

should be commended for its role in helping to design this important bipartisan policy shift.

Now without intending the imprudence of attributing all good

things to one cause, it may be worth mentioning that many social

indicators have been moving in a positive direction over the last

several years in Erie and as well as in the Nation. Teen pregnancy

and births have declined. Crime by both juveniles and adults has

declined with particularly steep drops in violent crime. Violence in

schools is down, and substantiated child abuse is down.

However, we would be remiss not to mention that Erie County

still has the highest rate of child poverty of any third class county

in Pennsylvania.

I want to focus my specific comments very briefly on three issues

related in particular to poor children and their families.

First, I want to discuss life after welfare reform. This is the title

of a research paper by Laura Lewis, a colleague and faculty member at Mercyhurst College. She has been conducting a series of indepth interviews with 42 single mothers who have left welfare for

the work force since the implementation of welfare reform.

Some mothers in Lewis’ research report benefits of welfare reform. Many study participants stated they want to work, feel better

about themselves as a result of working, and express a preference

for working over receiving cash assistance despite facing continued

economic difficulties.

Many mothers reported a sense that they are now better role

models to their children and that their children respect them more.

Many hope for a better future for themselves and their children as

a result of their entry into the work force.

However, we cannot ignore the fact that these mothers and their

children still face serious economic challenges. Over 40 percent of

the subjects in the study—remember, these are all women who

have left welfare for work—had earnings below the poverty threshold and over 80 percent had incomes below 125 percent of the poverty threshold.

The second issue I want to address has to do with the effects of

welfare reform on child development. Research from both

neuroscientists and developmental psychologists agree that young

children who are exposed to socially, linguistically and cognitively

deprived environments have strong disadvantages in school readiness and subsequent opportunities for a positive and productive

life. Assuring a minimally adequate early day care experience for

the children of the single mothers we require to work is not only

our moral duty but sound social policy as well. One way this can

be accomplished is by expanding Head Start or similar programs

such as the Perry Preschool program, and by encouraging such providers to also be licensed as day care providers.

As an example of the effects of such programs a recent RAND

analysis reports that by age 27 those who participated in the Perry

Preschool program had incomes 60 percent higher than similar individuals who did not receive the preschool services.

A very important policy aspect of welfare reform is the trade-off

between block grant flexibility and uncapped entitlements. Our polVerDate 20-JUL-2000 07:30 Sep 20, 2000 Jkt 060010 PO 00000 Frm 00056 Fmt 6633 Sfmt 6602 K:\HEARINGS\65693.TXT WAYS1 PsN: WAYS1
53

icy position served by welfare reform was that those closest to the

problems could solve them more efficiently if given flexibility in the

use of Federal funds. One can consider this a good news/bad news

arrangement. The bad news is that States and localities no longer

have uncapped entitlements at their disposal. The good news is

that the capped block grants which replaced them allow for greater

flexibility. However, recent Federal regulations appear to be undermining that arrangement.

Federal bureaucrats have promulgated regulations that will require child-specific eligibility determination for the use of TANF

funds on behalf of abused or neglected children. Child-specific eligibility is, of course, the hallmark of the uncapped entitlement days.

To invoke it under a block grant policy is contrary to the spirit and

intent of the new Federal/State partnership. This move will make

it extremely difficult to use these funds on behalf of abused or neglected youth. It will greatly expand the administrative and bureaucratic costs associated with using the funds and as a result

leave fewer funds available to actually help abused children.

I would like these very brief comments to be considered from the

perspective that the social contract by which free people endow a

government with power and responsibility requires both parties to

the contract to live up to their commitments. Women leaving welfare for work have demonstrated their willingness to uphold their

part of the contract. Now we have to make welfare reform work for

them and their children in order to uphold our end. Thank you

very much.

Mr. ENGLISH. Thank you, Mr. Gamble.

[The prepared statement follows:]

Statement of Thomas J. Gamble, Mercyhurst College Civic Institute, and

Mercyhurst Center for Child and Family Policy

Good Afternoon Madame Chairman, and Members of the Subcommittee on

Human Resources of the Committee on Ways and Means.

My name is Thomas J. Gamble. I am Director of the Mercyhurst College Civic institute and Mercyhurst’s Center for Child and Family Policy. I have also been the

director of child welfare services for Erie County. Thank you for the opportunity to

address you this afternoon about this very important social policy.

There is no question that welfare reform has been one of the most significant social policy initiatives in recent years. Most Americans believe that family self sufficiency through productive labor is dignified and dignifying and that responsible social policy should encourage it. Almost everyone would agree that a connection to

the workforce is a social value for which we should strive. In general it is good for

society, good for individuals and good for families.

The impact of welfare reform in this regard is clear. Nationwide the welfare caseload fell by 6.8 million recipients from 14.1 million in January 1993 to 7.3 million

in March 1999.

Currently, the United States is experiencing the lowest percentage of families on

welfare since 1967. While the strength of the economy played a role in that, the

Council of Economic Advisors have concluded that welfare reform played a more significant role.

Erie has also experienced significant declines in the welfare caseload subsequent

to the implementation of welfare reform. Between February 1997 and September

1999, Erie County has experienced a decline of just over 50% in the number of families receiving cash assistance, from 14,375 to 7,152.

Without intending the imprudence of attributing all good things to one cause, it

may also be worth mentioning that many social indicators have been moving in a

positive direction over the last several years in Erie as well as in the nation. Teen

pregnancy and births have declined, crime by both adults and juveniles has declined

with particularly steep drops in violent crime, violence in schools is down, and substantiated child abuse is down.

54

However, we would be remiss not to mention that Erie County still has the highest rate of child poverty of any third class county in PA.

Significant change to social policy is never easy and it is particularly difficult

when different parties control the legislative and executive branch. This committee

should be commended for its role in helping to design this important bipartisan policy shift.

I want to focus my specific comments on three issues related to poor children and

their families.

LIFE AFTER WELFARE REFORM IN ERIE

First, I want to discuss ‘‘Life After Welfare Reform.’’ This is the title of a research

paper by Laura Lewis, a colleague and faculty member at Mercyhurst College. She

has been conducting a series of in-depth interviews with 42 single mothers who

have left welfare for the workforce since the implementation of welfare reform in

Pennsylvania.

Some mothers in Lewis’ research report benefits of welfare reform. Many study

participants stated they want to work, feel better about themselves as a result of

working, and express a preference for working over receiving cash assistance despite

facing continued economic difficulties.

Many mothers reported a sense that they are now better role models to their children and that their children respect them more. Many hope for a better future for

themselves and their children as a result of their entry into the workforce.

However, we cannot ignore the fact that these mothers and their children still

face very serious economic challenges. Over 40% of the subjects in the study (these

are all women who have left welfare for work) had earnings below the poverty

threshold and over 80% had incomes below 125% of the poverty threshold. The average salary for these women six months after leaving welfare was below $7.00 per

hour.

Many mothers voiced concerns about day care. While the total number of slots in

Erie appears to be adequate, availability of second and third shift day care is a

problem. Also transportation is a serious challenge for many of these mothers. Those

of us with children can just imagine having to wake the children up each night after

they fall asleep to take them to their child care arrangements.

AVAILABILITY OF QUALITY OF DAY CARE AND ADULT SUPERVISION

The second issue has to do with the effects on TANF on child development. The

strong and growing research linking the quality of early environment to later social

and cognitive outcomes should not be ignored. Many neuroscientists and most developmental psychologists agree that very young children who are exposed to socially,

linguistically and cognitively deprived environments have strong disadvantages in

school readiness and subsequent opportunities for a satisfying and productive life.

Assuring a minimally adequate early day care experience for the children of the single mothers we require to work is not only our moral duty, but sound social policy

as well. One way this can be accomplished is by expanding Head Start or similar

programs such as the Perry Preschool program, and by encouraging such providers

to also be licensed as day care providers. As an example of the effects of such programs a recent RAND analysis reports that at age 27 participants in the Perry Preschool program had incomes 60% higher than similar individuals who did not receive the preschool services.

It is also clear that there is a strong relationship between parental supervision

and child behavior problems and delinquency. Children from families in which parents know where they are, whom they are with, what they are doing and when they

will come home are far less likely to engage in delinquent behavior. Research also

suggest that children are most likely to engage in high-risk behaviors after school

and before their parents are home from work. Allowances should be made for after

school programs for preadolescent and adolescent children whose parents are still

at work when they get home from school.

WELFARE REFORM AND CHILD PROTECTION

A very important policy aspect of welfare reform was the trade-off between block

grant flexibility and uncapped entitlements. The policy position served by welfare

reforrn was that those closest to the problems could solve them more efficiently if

given flexibility in the use of federal funds.

One can consider this a ‘‘good news, bad news’’ arrangement. The bad news is that

states and localities no longer have uncapped entitlements at their disposal, the

55

good news is that the capped block grants, which replaced them, allows for greater

flexibility.

Many have seen this as a rational tradeoff, and the sense is that it has been

working well. The federal government is protected from unlimited expenditures that

could result from uncapped entitlements and states gain the ability to flexibly respond to their needs.

However, very recent federal regulations appear to be undermining that arrangement. Federal bureaucrats have promulgated regulations that will require child specific eligibility determination for the use of TANF funds on behalf of abused or neglected children. Child specific eligibility is of course a hallmark of the uncapped

entitlement days. To invoke it under a block grant policy is contrary to the spirit

and intent of the new federal-state partnership. This move will make it extremely

difficult to use these funds on behalf of abused or neglected youth, it will greatly

expand the administrative and bureaucratic costs associated with using the funds

and as a result leave fewer funds available to actually help abused children.

I would like these brief comments to be considered from the perspective that the

social contract by which free people endow a government with power and responsibility requires both parties to the contract to live up to their commitments’. Women

leaving welfare for work have demonstrated their willingness to uphold their part

of the contract, now we have to make welfare reform work for them and their children in order to uphold our end.

STATEMENT OF GARY A. CERVONE, CHIEF ADMINISTRATIVE

Thank you.

Mr. ENGLISH. Mr. Cervone will come forward and testify.

f

OFFICER, MERCER COUNTY COMMUNITY ACTION AGENCY,

SHARON, PENNSYLVANIA

Mr. CERVONE. Thank you. Madam Chair, Members of the Subcommittee, good afternoon. My name is Gary Cervone, I am the

chief administrative officer for the Mercer County Community Action Agency, located in Sharon, Pennsylvania. First, let me thank

the Subcommittee for bringing this hearing to Erie and let me commend Congressman Phil English for his work on this Committee

and his work on behalf of his constituents.

MCCAA is a 501(c)(3) private, nonprofit corporation and is part

of the national community action network. We were founded in

May 1966 and operate multiple programs with a budget in excess

of $4 million. Those programs include Head Start, weatherization,

low-income housing, consumer protection, utility assistance and

employment case management. It is our experience in this last

area that brings us here today.

We receive two specific grants related to welfare reform efforts.

The Commonwealth of Pennsylvania awards us a grant under its

supported work program. Our local Private Industry Council, and

now the subsequent Work Force Investment Board, awards us a

welfare-to-work grant. It is our experience in these two programs,

along with our 33 years working with poor people that form the

basis of our comments today.

First and foremost, community action agencies believe that the

best programs are those which are designed locally and which

allow the greatest flexibility. Unfortunately, that is not the case

with the current Federal welfare-to-work programs. Two barriers

make it difficult to achieve success. First, the eligibility guidelines

are too restrictive. Since we received the welfare-to-work grant, our

local County Board of Assistance has been able to send us five reVerDate 20-JUL-2000 07:30 Sep 20, 2000 Jkt 060010 PO 00000 Frm 00059 Fmt 6633 Sfmt 6602 K:\HEARINGS\65693.TXT WAYS1 PsN: WAYS1
56

ferrals. When asked about this, they told us that the guidelines require that referrals meet multiple criteria and that they must meet

the majority of those criteria.

Rather than bore you with specific regulatory references, the

ideal client by regulation for this program would be a TANF recipient with a below ninth grade reading level who is a drug user and

who has been receiving welfare for 30 months.

It is not enough to be just a recipient; it is not enough to just

be struggling at a below ninth grade level. It is not enough to be

just a drug user. The regulations require that you must be all

three. The first message we wish to deliver today is that these regulations need change. The word ‘‘and’’, which connects these multiple criteria must be changed to the word ‘‘or’’ so that clients can

be served and placed in jobs.

Let me now move to my second point. Listen to this list. Supported Work, Single Point of Contact, Welfare to Work, Rapid Attachment, Work Activities Expansion, Upfront Job Placement, Upfront Directed Search. These, and there are even more, are all

names of programs funded to address welfare reform and job placement. There are just too many programs all attempting to recruit

the same clients. And that means multiple bureaucracies and systems.

The Commonwealth of Pennsylvania has instituted the Supported Work Program. Although complex, it has two overriding

principles. Let’s get people working first and let’s provide them

with ongoing support while they are working. MCCAA has placed

75 percent of the clients that have completed this program in jobs.

And they are still in those jobs 90 and 180 days later. Sixteen (16)

of those individuals have become self-sufficient and no longer receive any public assistance.

We believe that welfare reform should look at this model. You

learn about work by working. However, you must have a human

being that you know will be there for you when you get frustrated

over transportation or child care or a multitude of other problems

that might occur. Supported work provides that ongoing follow-up

and assistance. We believe supported style programs should be the

focal point of welfare reform efforts.

It is our intent to keep our comments brief today and our message simple. Loosen the current eligibility criteria. Stop creating

new programs that complicate the system. Increase funding to existing programs that have a proven track record.

I thank you for this opportunity and would be glad to answer any

questions to the best of my ability.

Mr. ENGLISH. Thank you, Mr. Cervone.

[The prepared statement follows:]

Statement of Gary A. Cervone, Chief Administrative Officer, Mercer County

Community Action Agency, Sharon, Pennsylvania

My name is Gary Cervone. I am the Chief Administrative Officer of the Mercer

County Community Action Agency, located in Sharon, Pa. First, let me thank the

Subcommittee for bringing this hearing to Erie, Pa. and let me commend Congressman Phil English for his work on this committee and his work on behalf of his constituents.

MCCAA is a 501(c)(3) non-profit corporation and is part of the national community action network. We were founded in May of 1966 and operate multiple programs with a budget in excess of $4 million. Those programs include Head Start,

57

weatherization, low-income housing, consumer protection, utility assistance, and employment case management. It is our experience in this last area that brings us here

today.

We receive two specific grants related to welfare reform efforts. The Commonwealth of Pennsylvania awards us a grant under its supported work program. Our

local Private Industry Council, and now the subsequent Workforce Investment

Board, awards us a Welfare-to-Work grant. It is our experience in those two programs, along with our 33 years working with poor people that form the basis of our

comments today.

First, and foremost, community action agencies believe that the best programs are

those which are designed locally and which allow the greatest flexibility. Unfortunately, that is not the case with the current federal welfare to work programs. Two

barriers make it difficult to achieve success. First, the eligibility guidelines are too

restrictive. Since we received the Welfare-to-Work grant, our local County Board of

Assistance has been able to send us five (5) referrals. When asked about this, they

told us that the guidelines require that referrals meet multiple criteria and that

they must meet the majority of those criteria.

Rather than bore you with specific regulatory references, the ideal client by regulation for this program would be a TANF recipient with a below 9th grade reading

level who is a drug user and who has been receiving welfare for 30 months. It is

not enough to be just a recipient; it is not enough to just be struggling at a below

9th grade level; it is not enough to be just a drub user. The regulations require that

you must be all three. The first message we wish to deliver today is that these regulations need changed. The word ‘‘and’’ which connects these multiple criteria must

be changed to the word ‘‘or’’ so that clients can be served and placed in jobs.

Let me now move to my second point. Listen to this list: Supported Work; Single

Point of Contact; Welfare to Work; Rapid Attachment; Work Activities Expansion;

Upfront Job Placement; Up Front Directed Search. These, and there are even more,

are all names of programs funded to address welfare reform and job placement.

There are just too many programs all attempting to recruit the same clients. And

that means multiple bureaucracies and systems.

The Commonwealth of Pennsylvania has instituted the Supported Work Program.

Although complex, it has two overriding principles. Let’s get people working first

and let’s provide them with ongoing support while they are working. MCCAA has

placed 75% of the clients that have completed that program in jobs. And they are

still in those jobs 90 and 180 days later. Sixteen (16) of those individuals have become self sufficient and no longer receive any public assistance.

We believe that welfare reform should look at this model. You learn about work

by working. However, you must have a human being that you know will be there

for you when you get frustrated over transportation, or child-care, or a multitude

of other problems that might occur. Supported work provides that ongoing follow up

and assistance. We believe supported style programs should be the focal point of

welfare reform efforts.

It is our intent to keep our comments brief today and our message simple. Loosen

the current eligibility criteria. Stop creating new programs that complicate the system. Increase funding to existing programs that have a proven track record.

I thank you for this opportunity and would be glad to answer any questions to

the best of my ability.

to yield to you for your testimony.

Mr. ENGLISH. Ms. Bechtold, thank you for being here and I’d like

f

STATEMENT OF KAREN L. BECHTOLD, OWNER/OPERATOR,

MCDONALD’S, ERIE, PENNSYLVANIA

Ms. BECHTOLD. First of all, I’d like to thank you for inviting me.

I don’t have a lot of prepared work. My experience and my testimony is going to be more or less from the employer’s point of view,

what happens to these people when they leave the program when

they go out to work. My experience was that everything that has

been said here today is virtually true. They come into our programs. The first thing they do is they start working. They cost me

58

just off the street as a crew person $550 just to train a crew person. I have a management program that I’ve been working with

and developing for the last 5 years. It takes time to become a restaurant manager, anywhere from 2 to 5 years.

And my opinion on that is we have to be able to work with these

people as employers. We have to be able to support them so if we

have a young mother with children it’s going to take her longer to

go through this program which has flexible hours. She’s got a lot

of learning to do. And one of the big problems that I run into, especially for young mothers, is the medical and the child care. Mothers

come to work. Unfortunately their kids get sick, and who’s going

to watch their kids?

Once they start averaging a weekly schedule of over 22 to 25

hours, the first big problem that comes up is I cannot work more

than this because that seems to be the point where the benefits

start to drop. It’s the child care and the medical and that because

of the income. Because it’s not what people think, it’s not really the

hourly wage that they earn. It’s the accumulation of wages. Once

they start making the—and it’s not even a good salary or a good

wage—once they start to accumulate the annual income, that’s

when you start losing benefits. My request for you people is to

please find a way to work with these people on training programs.

If I need 3 to 5 years to train a person, they have to be able to

rely on these benefits 3 to 5 years.

Now, I’ve known a lot of training programs through the years

that the State of Pennsylvania has run. I’m not saying they’re bad

programs but they’re not for everyone. Jobs in my industry are

very specialized. You know, you can’t go to a training program and

come to be a manager at McDonald’s. McDonald’s managers are

specially trained. I think McDonald’s and a lot of businesses like

us have quite a few people out there. Over 40 percent of the population at one time has worked at McDonald’s. The benefit to that

is the flexible hours. We have people who come through our doors

that have worked nights and weekends and gone on to college and

we really are very proud of where some of our persons have gone.

I have got people in my restaurants right now that it’s quite a

struggle on how much they make. You know, when can they work

and not work because of this benefit.

The other thing that I would like to bring to your attention is

that some of these programs are costing us as employers. There’s

the welfare-to-work program, there’s the job tax credit programs. I

myself am not using any of them. I’m a small business. I can’t keep

up with the paperwork. I’ve literally hired a person to do nothing.

Three days a week she just simply fills out wage information and

all the other forms that come from all over, you know, different departments. Paperwork is killing me. I know many small businesses

will tell you that. We turn in these quarterly reports on computer

disks. We’ve done everything that the Government has asked of us.

Why do I have to have somebody sitting there?

I get anywhere from 15 to 30 envelopes in 3 days of forms that

we filled out on individuals. I don’t understand when I’m turning

in all those tax reports why you can’t simply press a button on a

computer. I could sit in my office from my home for that matter

59

on my computer and see what’s going on in my restaurant. I am

just a small person. Why can’t the Government help me out here?

I think the other thing is that I really would like to see a partnership between the Government and employers to help to train

these people, especially employers like myself who are willing to

work with young mothers and help them get into programs.

McDonald’s is not just an entry-level job like what most people

think. I can tell you that most of the people that I know that are

anywhere in the position like mine or my husband’s, started out as

a crew person. Those jobs end up being careers. And that’s pretty

much what I had to say and I’d be happy to answer any questions.

[The prepared letter follows:]

MCDONALD’S

Erie, PA, November 9, 1999.

The Honorable Nancy L. Johnson

Chairman, Committee on Ways and Means

U.S. House of Representatives

Washington, D.C.

Dear Chairman Johnson:

In response to your request for a written statement, I respectfully submit the following. I have never attempted anything like this before so please forgive the format.

Welfare Reform in this country is a subject very near and dear to my heart. I

have either worked with, personally know, employed or have been related to many

young women desperately looking for ‘‘a way out.’’ What happens to many of these

young people, unfortunately, happens when they attempt to go to full-time employment.

Most all of my experience is with the Pennsylvania Department of Welfare. Once

a young mother finds a job (and there are many entry-level positions out here), the

first obstacle they face is a reduction in related benefits. The biggest of which is

health care for themselves and their children. Most of the women coming to us are

unskilled. I, as an employer, must spend a lot of time and money training them.

Because our crew and management positions are very specialized, there are few to

no applicants coming to us who can step in and do the job.

If a woman wants a crew position to start, the first accommodation we must make

is to limit the amount of hours she (and sometimes he) can work. If the total hours

worked are in the area of 22 or more, they lose their food stamps, medical coverage

and child care benefits. In some cases, the caseworker is actually encouraging the

person not to work. These people end up back in the ‘‘SYSTEM.’’ This limited time

on the job does not allow us to train and promote at a wage or benefit level we as

a small business can afford. I do offer an insurance program, but even I admit for

the cost to the employee the coverage is very limited.

Childcare needs are put at the bottom of the Title 20 list. Just simply because

they have income. The need for childcare, in the State’s eye is not urgent enough

to help in the beginning.

An objective from an employer’s point of view would be to support both the person

and the employer with the help up front. I have worked with, helped and been part

of the current system for over 25 years. I have seen many training programs over

the years fail only because when the person is ready to work, financially they and

the employer can not afford to make it work.

Employers can be an asset to Reform only if the government allows us to be part

of it by:

1. Entry-level positions

2. On-the job training programs

3. Provide for training and promotion time tables

4. Fair wages, promotions, wage increases and benefits as the person grows with

our companies

5. Providing jobs that become Careers for these people

The government must provide the following for a successful program:

1. Good and immediate childcare until finances allow for private monies

2. Assisting the person with continued medical benefits until they have reached

a position in our company where we can provide for it for them

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3. Continued job-tax credits without expiration dates for us until the training has

been completed

These jobs are available right now throughout this state and the country. We are

all ‘‘hiring above minimum wage.’’ But because the people stand to lose too much,

Reform as it is right now does not allow the employee or the employer the chance

to make it work.

The training program and benefit package I am talking about has been in place

in my company for over 5 years. Right now I have at least 10 to 15 management

trainee positions available. I have seen successful applicants, of whom I am very

proud, but they are far and few between. More often than not, these young mothers

quit, simply because they become discouraged and are financially unable to continue. It should be a crime in this country when we actually hinder people’s chances

to succeed and turn them away from a bright future when all along we make them

feel bad because welfare reform is mandated by our government. All I am requesting of your Committee is to allow a good system to work. I know that through a

partnership between government and private business we can make this work together. When you see the pride and self-confidence these programs provide a person,

success is a wonderful feeling.

Thank you for the opportunity allowing me to express my heart-felt thoughts here

today.

Respectfully submitted,

KAREN L. BECHTOLD

f Owner/Operator

Mr. ENGLISH. Thank you so much. And if you don’t mind I would

like to start with you because you raised an interesting point. The

whole question of are the tax credits effective. We have put into

place a work opportunity tax credit and the welfare-to-work tax

credit that presumably are complementary. I find that a lot of businesses, particularly smaller businesses, get confused over whether,

in fact, an employee is going to be eligible for a tax credit. Is there

a—beyond simply extending the tax credits for a longer period of

time or maybe even permanently, is there a way of making them

or designing them to be more effective? How did you learn about

programs like tax credits? And I guess—is there a better way that

we can share information with the employer?

Ms. BECHTOLD. I learned about the program through McDonald’s

corporate. We’re a networking type of corporation and what they do

they pass it on to us. To make it easier to work with, it’s probably

too much paperwork. I can’t do it. Half the time I can’t figure it

out so I have to send it to a CPA to keep up with it. If I try to

sit and track all that information—I just get lost. I don’t understand it so I pay someone to do it for me. Candidly as far as individuals, the reports come in. I use a company, ABG, or maybe they

were bought out by someone else, who when a person comes in for

an interview, they make a phone call, an 800 phone call then

there’s a series of questions asked. It’s very confidential. There’s

nobody around. The questions are asked. Then the company takes

over from there. You know, they get engrossed with certification

and at the end of the quarter they get that information back.

I will tell you that I have dropped the program because it’s no

longer financially to my benefit. It’s costing me more to keep it

than it is to collect the tax credits. And part of that being we were

getting one credit for Federal amounts limiting the State, and you

know, not knowing whether or not it’s going to be renewed and all

that. That’s just for anybody in here. We don’t have any people

qualified anymore to continue that.

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Mr. ENGLISH. That’s useful. Now, I notice jumping through this

while one of the things you offered as a solution was to more directly—a solution to the problem of leaving the welfare system for

work is to provide better access in a community like this, transportation services. And I was wondering if you might amplify on that

as you did in your submitted testimony. I know that we have a

great transportation company whom I work closely with which has

a limited amount of money for a limited number of routes. I think

that reflects State policy in Pennsylvania on reimbursements. The

bulk only goes from Pittsburgh and Philadelphia. And it’s more difficult for a small company to operate a full set of routes. Is there

a solution and what—I know GECAC is very proactive on these

things. What are you looking to provide as an opportunity?

Mr. WILEY. Well, Congressman, we do a lot of extensive job

training and so we know our employer base in this metropolitan

area in Erie. And we’ve had a lot of employment expansion outside

of the city of Erie. Classics, for example, and other little small

shops. And they have a crying need for workers. They have a crying need for workers, for trained workers. So we are at one end of

the puzzle. We can train them. We can help them with some training, go into a shop, help them with some training, 8 weeks of training and even reimburse them for the training. But what we

couldn’t do was help them get the prospective employee to the job.

So that was a problem for so many of our clients that one of the

things that I did was contacted Senator Santorum and met with

him and then I met with the staff and asked them if they could

help us, on a one-time basis, find some Federal monies to purchase

some maintenance equipment in order to transport these people.

We had employers that could tell you, if you could transport them

out here I will pay you a fee for transporting. So that’s a real problem, particularly in the outlying areas. And I’m hoping that we can

secure some——

Mr. ENGLISH. For a community this size if there were some flexible program that will allow someone to set up this kind of service

aimed at the target population, that might address one of the problems.

Mr. WILEY. I believe so. I believe it would.

Mr. ENGLISH. Mr. Gamble, one of the things that is common in

your testimony, Mr. Wiley’s and Mr. Cervone’s is the value of local

flexibility. Then in your testimony you talk about how some of the

programs that are designed for statewide application really are designed without Erie in mind. Tom, in your testimony you highlight

the value of local flexibility. Starting with Tom and then Gary and

then Ben, do you want to amplify on that and where do you think

the priorities should be in provided local flexibility.

Mr. GAMBLE. Thank you for your question. I really think that

what we have is a situation in which there was, as I said, a good

news/bad news arrangement between the States and Federal Government whether the bad news was you should use that capital entitlement. The good news is you get flexibility, but then the really

bad news is now there’s this sort of attenuation of the flexibility.

Without the flexibility, the law can’t require them, which, of course,

is worse. And so what we really do need is in relationship to both

the State/Federal relationship and the State/local relationship is

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sort of the position of trust that folks closest to the problem are

best able to define that problem and then respond to that problem.

And instead of measuring a whole lot of activities and requirements maybe we could just measure the outcomes of those activities and to see whether or not it’s moving in the direction that we

find useful to the communities and to representatives.

Mr. ENGLISH. Mr. Cervone.

Mr. CERVONE. I concur with Mr. Gamble here. I think providing

us—we know our employers. We know our clients. We know our

community. We’re networking for our community. Providing us

with the flexibility to work these programs in such a manner and

fashion to achieve the highest degree of success would be most beneficial. It’s (outcome management) been federally legislated and we

are part of the results oriented management and accountability

system of evaluation as reported. What Mr. Gamble says is right

on point there. Take a look at the big picture. Focus on the outcomes. Give us the flexibility to achieve those outcomes without

placing any barriers or obstacles and get the job done.

Mr. ENGLISH. Mr. Wiley, any further comments?

Mr. WILEY. One of the things discussed earlier with Secretary

Houstoun just the terms of the welfare reform, welfare and intensive case management, one of the things that the initial county

welfare didn’t provide. I can understand from her perspective looking at a State as big as Pennsylvania walking out in the water and

trying to test it and trying—but when we looked at the initial

realm of the welfare reform, this whole case management, we felt

a lot of the programs wouldn’t do good if they didn’t vote for it.

However we needed a little bit more flexibility. I went directly to

her and talked to her about that, you know, and she allowed us

more flexibility. And when you talk about the very hard-to-serve,

the worse cases of the welfare reform, you have to be actively out

there in those homes, because the very person that you’re trying

to reform, help them with their employability skills, help them get

a job, help them overcome living barriers, they’re in a home where

there’s a whole lot of other problems going on. Generally they’re

negative. And so it’s that we were deciding we need to do more

than just work with a client. We need to know what the environment of the client is. So on this conversation of flexibility, well,

that was not something built into the initial welfare reform. When

we went to the Secretary and made a plea, she was very compassionate and listened and we were able to have that flexibility.

Mr. ENGLISH. Thank you. I’d like you to go to Mr. Coyne for

questions.

Mr. COYNE. Thank you very much, Phil. Mr. Cervone, in your

testimony you urged that we would increase funding for those programs that are proven and that have worked. I wonder if you

would cite what they are in your judgment.

Mr. CERVONE. We think that we would be quite successful in operating a welfare-to-work program if we could get the sufficient

number of referrals we would need. We’ve been quite successful in

our State funding supported work programs. To speak to the success of the other programs and to put that into some kind of perspective, I must admit that I’m not familiar with all of the particular workings of those and what their individual success rates

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are. I can provide you with that information, but I’m not able to

comment on that right now.

Mr. ENGLISH. I wish you would be able to submit that. I’d be interested in knowing what you think programs have worked so far

and deserve increased funding.

[The information follows:]

CLARIFICATIONS TO STATEMENT

We are pleased to submit the enclosed clarifications to our testimony.

In response to the Committee’s request for additional information, we submit the

following base line data: This information is for the period of July 1, 1998 to June

30, 1999.

(Note: Cases closed includes clients who have dropped out; clients who are no

longer eligible; clients who have completed activities but not secured employment

and clients who are employed full or part-time, even if case management services

are still being provided.) Percent = number placed/cases closed

Supported Work Program

Enrolled: 67

Cases closed: 61

Number placed: 45

Percent: 74%

Welfare to Work

Enrolled: 8

Cases closed: 6

Number placed: 4

Percent: 67%

Single Point of Contact (SPOC)

Enrolled: 124

Cases closed: 110

Number Placed: 78

Percent: 71%

Upfront Job Placement/Directed Job Search

Enrolled: 75

Cases closed: 69

Number placed: 59

Percent: 86%

Rapid Attachment/Job Advancement (Work Activity Expansion)

Performance based contracts. Services provided by private sector vendor. March

1998 to August 1998

Enrolled: 155

Cases closed: NA

Number placed: 100

Percent: 65%

• Funding sources and amounts vary. • Client eligibility criteria vary. • Services provided and duration of programs vary.

We appreciate the opportunity to provide testimony to the Committee.

gle mother, single parent in this region here pays for weekly child

Please do not hesitate to contact me for questions or additional information.

Mr. ENGLISH. Do any of the panelists have any idea what a sinf

care programs per week?

Ms. BECHTOLD. Per week? Average per month was anywhere between $325——

Mr. COYNE. Would you speak up?

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Ms. BECHTOLD. Average per month for a single mother is anywhere between $325 to $400 a month.

Mr. COYNE. A month?

Ms. BECHTOLD. A month. Yes, and it depends on how many

weeks in a month so——

Mr. COYNE. Is that from your experience?

Ms. BECHTOLD. Yes.

Mr. COYNE. Mr. Wiley, in your testimony you pointed out that

welfare reform caused the average income of poor single-mother

families to drop and halted progress in reducing child poverty according to a new report from the Center of Budget and policy priorities. Of course, single parent families, those at 55 percent of the

Federal poverty level experience an income loss even with the income of all the others in the household accounted for. We’re citing

the study of the Center of Budget and Policy Priorities, but I wonder if it is your experience that that would be the case and the rest

of the panelists to take care of the Commonwealth.

Mr. WILEY. Representative, in my testimony the only reason why

I used that information is because a lot of what we were finding

out in the programs that we were implementing here in Erie. And

being a person in Erie around town and knowing a lot of people,

I run into mothers almost on a daily basis. All I have to do was

just walk up the street. I run into mothers on a daily basis who

have this problem. Now they’re working but they can’t make

enough money to make ends meet. The child care is killing them.

Finding the resources to pay for child care while they’re working

is a big thing.

Mr. COYNE. Well, of course, that’s why Chairman Johnson and

Phil English tried to be here in Erie for people to be better served,

not only in Erie but across the country. And it’s important to know

from people who work in the field every day, who deal with these

areas of problems what progress is being made and what we need

to improve. So thank you for your testimony.

Mr. ENGLISH. Thank you. Madam Chair?

Chairman JOHNSON. Yes. Thank you, panel, for those comments.

They’ve been very helpful. Mr. Wiley, it’s my understanding that

in Pennsylvania a woman on welfare with two children gets cash

assistance and food stamps worth about $8,500.

Mr. WILEY. That’s correct.

Chairman JOHNSON. If she were to work full time at minimum

wage she’d earn about $10,000 a year, she’d still be eligible for food

stamps. She’d get $4,000 in earned income tax credits so she’d have

an income of about $15,000 here. Why is she not better off than

on welfare?

Mr. WILEY. Because of the—I think the way you described it, the

way we described it was written is not the way when we implemented the program that it actually worked with people in Erie.

We have women in Erie who were coming off the welfare rolls

going onto employment and automatically losing 50 percent of their

benefits.

Chairman JOHNSON. But if they’re getting a check that’s more

than 50 percent of the benefit, that will grow and they’re better off.

Mr. WILEY. Well, it depends on what category you’re in.

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Chairman JOHNSON. Like our research—our data nationally are

that if you work half time and the State delivers the benefit that

welfare reform contained, which includes food stamps and Medicaid

for 2 years, you are definitely better off. So I really regret that your

testimony indicates you’re worse off now. It appears to me as a national overseer of this plan that some States are not being—not

able to deliver food stamps and Medicaid, and I’m glad to see you

picked up on that program and are turning that around. I consider

that just a problem of change. The States—I have written to them

as chairman and I see most States turning it around, but we’re

going to hold some hearings on this in February as well. But it is

not the law that’s at fault. That’s a system change problem.

I think it is important to have on the record that any woman in

this area of Pennsylvania that moves from welfare to a minimum

wage job goes from an income of $8,500 to an income of $15,000

and for 2 years is guaranteed Medicaid benefits. I think the problem you’re seeing and the stress created on women is day care. The

subsidy dollars for day care are there. There’s $8 billion in TANF

money that the States have not drawn down.

It’s hard to get a new program in place, but the Welfare Reform

Law is really an incredibly good law. You just have to figure out

how to use it. And day care subsidies, one of the reasons that Congress is appropriating more dollars for day care is because the dollars haven’t been drawn down across the Nation.

We have allocated a lot more money for Head Start, for Early

Start, for preschool education because I think the point—I think it

was Mr. Gamble that made the point that parental involvement,

that supervision of children was terribly important. And Head

Start and some of our preschool programs involve parents. These

programs can go to full day programs. It is extremely important for

them to succeed in welfare reform in getting those pieces synchronized at the local level. Of course, one of the things we heard

today that was very distressing and we are hearing nationwide is

the difficulty of putting in place a day care, especially in swing

shifts and dealing with problems of sick children. I do hope that

we can make some advancement in that mostly at the State level.

That leads me back to this transportation issue. I was very interested that one of you testified that the temporary agency—I think

it was you, Mr. Wiley, the temporary agencies were pretty good at

providing money for transportation to clients as long as they were

in their payroll. There is no barrier to the State continuing to pay

those transportation costs. And yet they’ve got a contract with a

temporary employment agency to continue to provide the transportation after the agency is no longer involved for that case. Because

you’re absolutely right, the support services and expanding them

and tailoring them out at the same rate we tailor them a more permanent solution, is really critical. But there is no barrier in Federal law to continuing those transportation subsidies after the contracted agency just as it was possible to reimburse probably 100

who contracted with that agency. And I did appreciate your testimony, Mr. Cervone is it?

Mr. CERVONE. Cervone (corrects pronunciation).

Chairman JOHNSON. In regards to other programs I think it’s

very important not to create a new program for every little sector.

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Some of your comments, those of you who commented on regulatory

complexity that’s driving you batty and created programs and then

can’t find anyone to participate, you will be happy to know that

last week on the floor of the House we did change those ‘‘ands’’ to

‘‘or’’. And we did open up that 30 percent so it’s far more flexible

and even can serve people below 100 percent poverty income who

are not on TANF. One of the inequities we created was better services for poor people who went on welfare and poor people who

couldn’t go on welfare but have the same income.

So we do have to try to get that through the Senate. We hope

that that will happen this week and if not then it would happen

in the early months of next year. But I think you’ll find that in

welfare-to-work issues that we are creating the flexibility we need

and at the State level I think we all need to think about the outcome. How often are you creating new programs as you meet new

problems rather than just keeping flexibility within your own program.

I did want to mention that really all of that data shows that people are much better off working even if they’re working half time

and on welfare half the time. And if they’re not doing better as opposed to having higher income it’s because we aren’t delivering the

Medicaid benefits they’re eligible for. We aren’t delivering the day

care subsidies that they’re eligible for. And, in fact, with welfare,

if the casework drops 40 percent that’s big money. Even if every

one of those 40 percent people are still on half their benefit subsidy, you still have that whole half subsidy for day care and transportation and job training. So, I think when we see people not

happy, when we see them not making progress, we have to ask ourselves what do we do different because the data is just overwhelming that when you say are those people better off on welfare

and the answer is no. I ask that the answer is yes.

The national data is that poverty has declined every year for 4

years in poverty among children. This is unprecedented. I’m not

just saying this because I like to hear myself talk.

We have got to understand this is the first social program ever

to emanate in America that actually has reduced poverty among

children. And poverty among minority children last year, the most

of any group. So it is having an effect. Now, that doesn’t mean it

can’t do a lot better. It doesn’t mean it can’t do better particularly

in terms of the future and the idea of career development and salary growth so that you aren’t just struggling, barely surviving.

I did appreciate some of your comments, Mr. Gamble and Mr.

Cervone, you both mentioned that children are not getting good

role models of self. So I believe the testimony of Mr. Wiley about

all of the benefits of their parents feeling a lot better about themselves. So there are an enormous number of benefits here and we

need to make sure that we acknowledge those benefits, so we don’t

discourage people or discourage ourselves. And so that we restore

people’s faith in the partnership between government and people.

That really is what freedom is all about. This is a big win. This

is a big win for government in partnership between government

and people. Now it does have problems, but it’s a far better solution

that I think we have come across. So I appreciate your comments

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and also appreciate the opportunity to put on the record the enormous progress that has been made.

Let me also say that I am one that’s very interested in case management and I enjoyed your comments on that. It also is an approach that isn’t necessary for a lot of folks. So you do have resources. You can do that. The law is flexible now so you can—and

just this week you already have mental health benefits and I notice

your youth program really was focusing on some of that. That challenge of identifying the critical families or the families with complex needs, therefore they need case management, is just really—

you have the right to do that. I’m sure you’ll have the resources

to address that.

Last, let me say to the panel, that it’s so discouraging to hear

that we can’t take advantage of the work opportunities. We’ve tried

over and over again to simplify it.

When we do the extender package we’re trying to get a longer

extension. So even though we can certainly—when we’re working

toward 5 years, whether we make it this year, but we hope at least

by next year, to get an extension in there that will give you longterm confidence. And then you can take advantage of a lot of it, because we have simplified the eligibility criteria. So that you hopefully won’t need to hire a company, but just your local welfare office will be able to tell you, hopefully through the electronic system,

whether somebody is eligible or not.

It is important that we recognize your tax liability for training

you provide to entry level people because you are one of the ones,

that offers career ladder, and that is very important.

I would also just say at this problem of the 22-hour limit. We

need to sit down with the welfare people about that because there’s

nothing like that in the law. What’s happening is this issue of

being scared—if I go further this will or that will happen. And as

part of this support system being clear enough to the recipient and

visible enough that people will move forward. It used to be that you

lost your day care that day and then you had to stand in line for

benefits in the next line. That’s why people didn’t want to take that

risk. That State actually has just changed that so the continuity in

the benefits that you have now, and in the next program will be

there to make that confidence that was there. So I think you will

find that—and I think the people need to know that if they go back

and talk to their worker, that 22-hour barrier is not a barrier. And

they should be able to move forward. So we will take back all the

comments you made about flexibility and new challenges and day

care and transportation challenges and think about those as we

work on this program next year.

Mr. ENGLISH. Thank you, Madam Chair. Let me state our time

has now expired, so I want to thank the panelists. Mr. Wiley.

Mr. WILEY. I just have one comment in response to the panel.

Now, I think that in the Commonwealth of Pennsylvania we have

come a long way. We have done a lot in a short period of time in

the area of welfare reform and there are probably some things that

we can do better. But I know now that the State has had a chance

to look at all of our initiatives the first time around and I’m sure

that some of what you’ve heard from us today will be responded to,

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and some of it as we speak and responded to it. So I’m very encouraged and I have high hopes here in Pennsylvania.

Mr. ENGLISH. Well, we appreciate your testimony and that of all

of the panelists. I also want to thank Secretary Houstoun for participating today and giving us an extraordinarily detailed outline of

what the State is doing. It’s a very impressive record in dealing

with the subject that requires the wisdom of Solomon and we appreciate what you’re doing more than anyone because of our involvement in the welfare reform process from the legislative end,

which is actually much easier.

I want to thank Chairman Johnson for bringing the Subcommittee to Erie and hearing first hand how welfare reform has

progressed and I want to thank my colleague, Mr. Coyne, for coming up from Pittsburgh and taking time out from his busy schedule

to participate.

I want to thank everyone in the audience for coming here and

listening and let me say although our time now has expired, I

would like to invite all of you who have feelings on this subject who

have experienced this or are aware of this problem and have your

own take on it to submit a statement to my office in the next week

and I will make sure that it is passed on to the other Members of

our Subcommittee.

I also want to extend that to those in our listening audience who

have been following this hearing. My phone number at my local office is 456-2038. That’s 456-2038. I would welcome your comments

in writing or in person and we will make sure that all of the Members of the Subcommittee have the benefit of them.

I would also, in conclusion, like to thank several other people.

Doctor Ron Haskins (phonetic) who did a lot of the staff work and

who heads our staff for the Human Resources Subcommittee, who

has been an enormous font of information on this subject and is

really committed to seeing welfare reform through and making it

work.

From my staff, Jennifer Krause, who I’m sorry to say is going to

be leaving by the end of the month to go to work for the Governor.

Vicky Steiner from my staff, who’s been very helpful today and I’d

also like to thank the city of Erie and especially Mr. Gary Portland,

the mayoral assistant, for arranging this hearing and also the Erie

County Board of Assistance for allowing Chairman Johnson and me

earlier today to come down, tour their headquarters and meet some

of the people who are directly involved in helping people get out of

the welfare system.

This has been a real eye opener for us and we very much appreciate the opportunity to have been able to do this today. This has

been an effort that will yield many results in Washington and we

thank the Madam Chair and with that I close this hearing.

Chairman JOHNSON. May I just kind of—before you close the

hearing one person you didn’t thank was yourself and I realize

that’s awkward and I would like to just say to the audience we

have Members of Congress who have an enormous number of responsibilities in defense technology and strategy and across the

board tax policy and trade policy and education and health care

and a whole array of issues.

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And my colleague, Mr. English, has simply taken an unusually

deep interest in these issues. And it’s because he does, in the normal course of his life, visit these agencies, talk with people he met

with today and follow your thinking of these matters throughout

the course of the hearing that we are here today. That kind of

member can afford us the opportunity to come into a community

for a few hours and we really get very good testimony and very

good frontline advice. And I really appreciate his dedication and

the in-depth work he does year in and year out because it is as a

consequence of that that we are here. We could not do this hearing

in every district, but we get out of this what we need to help direct

national policy. So, Phil, I thank you very much for not only working to make this hearing possible but for your service as a congressman on our Subcommittee.

Mr. ENGLISH. Thank you. And with that the record is closed.

Thank you.

[Whereupon, at 2:11 p.m., the hearing was adjourned.]

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