```

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

 
                             WELFARE REFORM

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

                                HEARING

                               before the

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             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

                     U.S. GOVERNMENT PRINTING OFFICE
65-693 CC                    WASHINGTON : 2000

                      COMMITTEE ON WAYS AND MEANS

                      BILL ARCHER, Texas, Chairman

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

                     A.L. Singleton, Chief of Staff

                  Janice Mays, Minority Chief Counsel

                                 ______

                    Subcommittee on Human Resources

                NANCY L. JOHNSON, Connecticut, Chairman

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

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

                            C O N T E N T S

                               __________

                                                                   Page

Advisory of 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

                             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:]

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.
      

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.
      

                                

    Chairman Johnson. We are here this afternoon to bring this 
hearing of the Human Resources Subcommittee of the Ways and 
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.
    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 welfare 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 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 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 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 
able-bodied 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 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:]
    [GRAPHIC OMITTED]
    
    [GRAPHIC OMITTED]
    
    [GRAPHIC OMITTED]
    
    [GRAPHIC OMITTED]
    
    [GRAPHIC OMITTED]
    
    [GRAPHIC OMITTED]
    
    [GRAPHIC OMITTED]
    
                                

    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 
report 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 Opportunity 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 low-income 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.
    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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    Mr. English. And with that let me welcome Secretary 
Houstoun with whom I have worked extensively over the last few 
years on 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 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 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.
    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 self-sufficiency. 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.
    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.
    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.

                                

    Mr. English. Thank you, Madam Secretary. I'll let you 
submit the balance of your testimony to the record. And I will, 
if I may, 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 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 services. 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 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 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?
    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, welfare-to-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 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-selection. 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. 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 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 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:
     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.
    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 in-home 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 better-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.

                                

    Mr. English. Mr. Gamble.

  STATEMENT OF THOMAS J. GAMBLE, DIRECTOR, MERCYHURST 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 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 in-depth 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 policy 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.
    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 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.
    Thank you.

                                

    Mr. English. Mr. Cervone will come forward and testify.

  STATEMENT OF GARY A. CERVONE, CHIEF ADMINISTRATIVE 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 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 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, 
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.

                                

    Mr. English. Ms. Bechtold, thank you for being here and I'd 
like to yield to you for your testimony.

  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 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 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
    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
                                                     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.
    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 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 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.
    Please do not hesitate to contact me for questions or 
additional information.

                                

    Mr. English. Do any of the panelists have any idea what a 
single mother, single parent in this region here pays for 
weekly child care programs per week?
    Ms. Bechtold. Per week? Average per month was anywhere 
between $325----
    Mr. Coyne. Would you speak up?
    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.
    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. 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 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 long-term 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, 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.
    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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