Supports For Low-Income Families: States Serve a Broad Range of Families through a Complex and Changing System
Published: 2004-01-26T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Over the last decade, the Congress has made significant changes in numerous federal programs that support low-income families, including changes that have shifted program emphases from providing cash assistance to providing services that promote employment and economic independence. As a result of some of the federal policy changes, the support system is more decentralized than before. This heightens the importance of understanding policy choices and practices at the state and local levels as well as those at the federal level. To provide the Congress with information on this system, GAO agreed to address the following questions: (1) To what extent do states provide supports for lowincome families? (2) How have states structured programs to support low-income families? (3) What changes have states made to supports for low-income families in recent years? Our review focused primarily on supports for which states make many of the key decisions about eligibility, benefit amounts, and service provision. To obtain this information, GAO conducted a mail survey of the social service directors in the 50 states and the District of Columbia; conducted site visits in New York, North Carolina, Oklahoma, Washington, and Wisconsin; and reviewed federal reports and other relevant literature.
section_title: What GAO Found
paragraphs: States use an array of federal and state funds to provide a wide range of benefits and services that can support the work efforts of low-income families, although the types of supports and coverage of the eligible population vary among the states and sometimes within states. For instance, most states subsidize several types of child care, subsidize use of public transportation, and offer employment services in at least one location in the state, but somewhat fewer states subsidize child care for sick children, assist with the purchase of used cars, or offer employment retention bonuses to parents who find and maintain jobs. The five states we visited structured the eligibility criteria and benefits of many supports in ways that allow them to serve a broad range of low-income families, including families on and off welfare and families who are working and those who are not currently working. The specific support structures vary, however, by state and type of support. These differences create a complex national picture of supports that provide an assortment of benefits and services to a range of populations. Over the last several years, many states have expanded the availability of supports that promote employment and economic independence for lowincome families. State officials reported that both the number of support services available and the number of recipients have increased. However, state officials express uncertainty about their continued ability to provide this level of support. As states plan for the future of supports in the current state fiscal environment, officials reported that they are considering changes that could limit the availability and provision of supports for low-income families. Overall, it its probable that the support system will continue to change as the federal and state governments further amend policies and respond to changes in the demand for services and cyclical fiscal conditions.

section_title: Letter
paragraphs: The federal government expends over $100 billion annually to assist tens  of millions of low-income families nationwide through numerous federal  programs and block grants. Over the last decade, the Congress has made  significant changes in this support system. These changes have (1) shifted  program emphases from cash assistance to services that promote  employment and economic independence and (2) provided states greater  authority and flexibility to use funds and structure the design of program  benefits and service delivery. Some of the more dramatic changes  occurred with the passage of welfare reform legislation in 1996. Most  prominently, this legislation ended the 61-year-old federal entitlement to  assistance for eligible needy families with children and created in its place  the Temporary Assistance for Needy Families (TANF) block grant. TANF  provides states with federal funds that are to be used along with states’  own funds for programs and services that help low-income parents  support their families and take steps toward employment. To emphasize  the temporary nature of TANF assistance, the law restricts most families  to a lifetime limit of 60 months of federal cash assistance. This legislation  and other federal policy changes throughout the last decade also modified  the Food Stamp Program, consolidated and expanded child care subsidy  programs, revised and expanded health insurance for children and  families, consolidated employment and training programs, and expanded  support for low-income workers through the tax code.
As a result of some of these federal policy changes, the support system is  more decentralized than before. This heightens the importance of  understanding policy choices and practices at the state and local levels, as  well as those at the federal level, in order to describe the nation’s current  support system for low-income families. To provide you with information  on this system, we agreed with your staff to address the following  questions: (1) To what extent do states provide supports for low-income  families? (2) How have states structured programs to support low-income  families? (3) What changes have states made to supports for low-income  families in recent years?
In addressing these questions, we focused on some of the many federal  and state programs that provide assistance to low-income families. We  selected key supports that include not only those that assist low-income  families by providing cash income but also those that subsidize some of  the expenses associated with work outside of the home, such as child care  and transportation, or help with work and family needs in other ways,  such as by subsidizing utility expenses. Our review focused primarily on  the following programs and types of supports, for which states make many  of the decisions about eligibility, benefit amounts, and service provision:  income assistance provided through TANF cash assistance, TANF  diversion assistance, and state tax credits;  job retention and advancement services;    Medicaid, State Children’s Health Insurance Program (SCHIP), and other  health-related programs, including substance abuse, mental health, and  domestic violence programs;  transportation support services; and    utility assistance.
Our review also discusses the federal earned income tax credit (EITC),  food stamps, and rental housing assistance to some extent because these  are important components of the overall set of supports for low-income  families.
For those programs about which states make key decisions, we obtained  information through a mail survey administered to directors of social  services in all 50 states and the District of Columbia in spring 2003, and  through site visits between December 2002 and March 2003 in five states  (New York, North Carolina, Oklahoma, Washington, and Wisconsin). For  our site visits, we selected states that demonstrated an effort to assist low- income families with support services and that, as a group, were  geographically and programmatically diverse. For those programs about  which states make key decisions, we obtained information directly from  state officials because limited information is collected at the national level  on states’ provision of support services. For other programs, we relied on  a review of federal reports and other relevant literature. In both the survey  and the site visits, we asked officials about recent programmatic changes  that had occurred in their support programs, which we defined as changes  that occurred in these programs since 2000. Although the fiscal climate in  many states changed during this time period, we chose this time period  only to capture program changes that had occurred in the last few years,  not specifically to capture changes related to the fiscal climate. Because of  the changing fiscal conditions, however, some states were in the process  of making programmatic changes at the time of our survey and site visits.  Although we asked officials to report on decisions that had already been  made and, in the site visits, to report on their expectations for the future,  we cannot comment on any actual changes that may have occurred after  our fieldwork was completed in spring 2003. We conducted our work from  December 2002 through November 2003 in accordance with generally  accepted government auditing standards.
subsections: section_title: Background
paragraphs: Supports for low-income families are funded, designed, and administered  by a combination of federal and state governments. Recent changes to  federal laws have modified supports for low-income families in many ways  and, in some cases, have altered the roles of the federal and state  governments in the provision of these supports. Changing economic  conditions have also affected the provision of supports for low-income  families.
subsections: section_title: Roles of Federal and State Governments in Providing Supports for Low-Income Families
paragraphs: Both the federal and state governments are involved in the provision of  supports for low-income families, but the relative roles that the federal and  state governments play with regard to funding and design vary by the type  of support. Specifically, supports for low-income families vary in terms of  whether they are funded with federal funds, state funds, or a combination;  whether funding is fixed; and the extent to which the federal government,  state governments, or a combination is responsible for determining  eligibility rules, availability, and benefit structures. In addition, some  supports, such as food stamps and Medicaid, are entitlements, for which  eligible applicants are guaranteed receipt. For other supports, such as  subsidized child care and transportation assistance, provision of the  supports is not mandatory and receipt is not guaranteed. Table 1 illustrates  the relative roles of the federal and state governments in the funding and  design of supports, and indicates whether the supports are entitlements.
section_title: Changes in Programs for Low-Income Families
paragraphs: Several federal programs for low-income families have been enacted or  significantly revised in the last decade, as detailed below and in figure 1:    1990—Federal EITC expansion—In 1990, as part of the Omnibus  Budget Reconciliation Act (1990 OBRA), the Congress changed the  qualification standards and substantially increased the size of the EITC, at  least in part to increase the progressivity of the overall federal tax system  by reducing the federal tax burden of qualified low-income workers. In  1991, the first year that these changes were in effect, the number of  families receiving the EITC increased by 1.4 million families to a total of  13.9 million, and they claimed a total of $11.2 billion in credits, which was  an increase of $3.8 billion over 1990.   1993—Federal EITC expansion—As part of the August 1993 Omnibus  Budget Reconciliation Act (1993 OBRA), the Congress increased the size  of the maximum EITC for families with children, beginning in 1994, and  extended coverage to very-low-income workers without children. The  number of taxpayers claiming the EITC and total program costs increased  steadily between tax years 1990 and 1994, partly because of both the 1990  and the 1993 OBRA expansions.    1996—PRWORA—With the enactment of the Personal Responsibility and  Work Opportunity Reconciliation Act of 1996 (PRWORA), the Congress  made sweeping changes to federal welfare policy for needy families.  PRWORA ended the Aid to Families with Dependent Children program  and authorized the TANF block grant to states at $16.5 billion annually.  TANF provides temporary cash assistance and emphasizes work and  responsibility over dependence on government benefits. PRWORA also  combined several existing child care programs into one program designed  to provide states with more flexible funding for subsidizing the child care  needs of low-income families who are working or receiving education or  training in preparation for employment. In fiscal year 2003, the Child Care  and Development Fund (CCDF) provided states with up to $4.8 billion in  federal funds for these purposes. In addition, PRWORA severed the link  between cash assistance and Medicaid benefits and restricted legal  immigrants’ access to public welfare benefits.   1997—SCHIP—The State Children’s Health Insurance Program (SCHIP)  was created under Title XXI of the Social Security Act for states to offer  coverage to children in families with incomes up to 200 percent of the  federal poverty level (FPL) who do not qualify for Medicaid. Congress  appropriated $40 billion in federal funds over 10 years (from fiscal year  1998 to 2007), to provide each state an annual allotment, which can be  spent over 3 years, for SCHIP expenditures. State SCHIP expenditures are  matched by federal payments up to the state’s annual appropriated  allotment. The federal share of each state’s SCHIP expenditures ranges  from 65 to 83 percent; the federal share of total SCHIP expenditures is  about 72 percent. In designing their SCHIP programs, most states chose to  establish separate, stand-alone components, often concurrent with a  Medicaid expansion.   1998—WIA—The Workforce Investment Act (WIA) was passed in 1998 to  consolidate services of many employment and training programs,  mandating that states and localities use a centralized service delivery  structure – the one-stop center system – to provide access to most  federally funded employment and training assistance. Under WIA, the  federal government appropriates funds to states each year, and states have  three years to spend those funds. In each fiscal year from 2000 to 2002,  approximately $3.9 billion in federal WIA funds was appropriated to the  states.   1998—Quality Housing and Work Responsibility Act—Under the  1998 Quality Housing and Work Responsibility Act, provisions were put in  place to provide public housing agencies with increased flexibility while  also increasing accountability. In addition, the Act facilitated the  implementation of mixed-income communities, aimed to reduce the  concentrations of poverty in public housing, and created incentives and  opportunities for residents to work and become self-sufficient. Further,  the Act introduced a new Section 8 housing voucher program designed to  be more market-driven and accommodated the replacement or  revitalization of severely distressed public housing projects. Most  provisions in the Act became effective October 1, 1999.   2001—Economic Growth and Tax Relief Reconciliation Act—As part  of the 2001 Economic Growth and Tax Relief Reconciliation Act, the  Congress introduced several marriage tax penalty relief provisions,  including one that affects the structure of the EITC. This provision  increased the EITC phase-out start and end points for married couple joint  tax returns by $3,000, with the increase phased in over a 7-year period  starting in calendar year 2002.   2002—Farm Bill Changes to Food Stamps—The Farm Security and  Rural Investment Act of 2002, reauthorized the Food Stamp Program  through fiscal year 2007. The law also introduced a variety of changes to  the Food Stamp Program, including the expansion of eligibility for certain  groups of noncitizens, the addition of a provision that allows states to  provide “transitional” food stamp benefits for up to 5 months for families  leaving TANF, and the addition of a number of other state options to ease  access to the program and administrative burdens on applicants/recipients  and program operators.
section_title: Changing Fiscal Conditions
paragraphs: Though the last decade brought significant economic expansion across the  country, recently states have dealt with changing fiscal conditions, and  consequently, states are now facing one of their most challenging  budgetary situations in years. Most states are required to balance their  operating budgets, and since their revenues have been much lower than  forecast, state officials have struggled to bring expenditures into line with  available resources. A state’s need to cut spending or increase revenues  can be mitigated if it has accumulated surplus balances in reserve. States  accumulated significant reserves during the late 1990s. However, these  reserves have dropped appreciably as states address their fiscal crises.  Because of the recent fiscal changes at both federal and state levels,  support programs have also undergone cyclical spending changes in  recent years. For example, because the amount of the TANF block grant is  fixed, as caseloads decline—as they did in all states through the late  1990s—states have additional resources to expand their programs and  create reserves. However, as caseloads increase—as they have in some  states since 2000—or other factors cause program costs to rise, states bear  most of their TANF program’s fiscal risks.
section_title: States Provide a Wide Range of Supports to Low-Income Families although Extent of Receipt Varies
paragraphs: States draw on a mixture of federal and state funds to provide low-income  families with a wide range of supports, although the specific types of  supports offered and the extent to which eligible families are able to  receive the supports they seek vary by state and sometimes within states.  The supports available to low-income families range from those that  address basic needs to those intended to promote economic  independence, and include subsidized child care, cash assistance,  transportation support services, utility assistance, health services, job  retention and advancement services, and tax credits, as well as various  other supports. As shown in table 2, state officials responding to our 50- state survey reported using state funds and federal TANF funds for most  or all of the supports listed, but they also used other federal funding  sources specific to each type of support. In particular, states used Child  Care and Development Fund (CCDF) and Social Services Block Grant  (SSBG) funds for subsidized child care, Job Access and Reverse Commute  (JARC) funds for transportation support services, Low-Income Home  Energy Assistance Program (LIHEAP) funds for utility assistance, and WIA  funds for both job retention and advancement services and transportation  support services. State officials also reported that county or local funds  were used for transportation support services. Clearly, of the supports  listed in the table, transportation support services draw on the largest  number of different funding sources, and of the federal funding sources  identified, TANF funds appear to be the most flexible, as states are using  them to provide several different types of supports in addition to cash  assistance.
Supports for low-income families are also administered at different levels  of government within each state. In most states, officials reported that  supports were administered at the state level, although in some states,  county or local governments administered supports, as shown in table 3.
States offered a wide variety of supports, although not every specific type  was offered in every state, according to officials responding to our 50-state  survey. (See table 4.) For example, most states subsidized several types of  child care, subsidized individuals’ public transportation costs, and offered  employment services in at least one location in the state, but somewhat  fewer states subsidized child care for sick children, assisted with the  purchase of used cars, or offered employment retention bonuses to  parents who found and kept jobs. Many of the state officials responding to  our survey also indicated that when their states do provide supports, the  supports are often not available in all areas of the state, although most  officials reported that there were not differences in access to supports in  urban and rural areas. In several instances, state officials were not able to  provide complete information on the extent to which supports were  offered.
According to data collected through our survey, although states may offer  supports, not all eligible families who apply for supports receive them, as  illustrated in figure 2. For the most part, state officials who could provide  the data reported that a majority of eligible families who applied for  supports did receive them, especially subsidized child care and utility  assistance. However, it is worth noting that officials in some states  reported that less than half of eligible applicants received certain types of  transportation support services and job retention and advancement  services. For nearly every type of support, an official in at least one state  reported that less than half of eligible applicants received that type of  support. The most common reasons cited for eligible applicants not  receiving supports were an insufficient supply of services, insufficient  state or federal funding, and the applicants’ physical or logistical  difficulties gaining access to the supports that were offered. Figure 2 also  illustrates that several officials responding to our survey did not know the  extent to which eligible applicants received some types of supports. The  officials reported, most frequently, that the reasons they did not have this  information were that services varied broadly by locality and that data  were not available or not complete at the state level. Further, figure 2  refers only to the eligible families who apply for supports and does not  include families who would be eligible but who do not apply for them.
In some cases, whether a family receives support services may depend on  whether the family is receiving cash assistance. In the past, receipt of  support services sometimes was linked to receipt of cash assistance, and  as a result, cash assistance recipients may have been more likely to  receive supports than other low-income families. However, as the  emphasis of support programs has shifted toward promoting employment  and economic self-sufficiency for a broader population, states have  targeted some supports to low-income families who are not receiving cash  assistance. In our 50-state survey, only a limited number of state officials  were able to provide information on the extent to which low-income  families receiving each type of support were also currently receiving TANF  cash assistance. Among those who did provide this information, most  reported that transportation support services and job retention and  advancement services were received primarily by families also receiving  TANF cash assistance, while subsidized child care and utility assistance  were received primarily by families not receiving TANF cash assistance.
In addition to the supports discussed above, states offer several other  supports to low-income families. In particular:    TANF cash assistance is provided in all states for eligible low-income  families.
Short-term cash benefits are provided to low-income families in 39 states,  according to our survey. These benefits are provided through TANF  diversion programs, state emergency assistance programs, or other  programs. TANF diversion programs provide low-income families who are  eligible for TANF cash assistance with short-term cash or in-kind benefits,  on a case-by-case basis, in lieu of TANF cash assistance. State emergency  assistance programs provide similar short-term support outside of TANF.
State tax credits for low-income families were offered by almost half of the  states in 2002, according to our survey, with the most frequently provided  type of state tax credits—child care tax credits—provided by 23 states. In  addition, 19 states reported offering a state earned income tax credit, and  7 states reported offering a housing credit.
While Medicaid and SCHIP services are offered in nearly all states, 12  states reported in our survey that they offered additional health insurance  programs so that low-income families not eligible for Medicaid or SCHIP  could obtain health insurance for a reduced fee.
Some other key supports for low-income families are available nationally,  such as food stamps, the federal EITC, and housing assistance.
In our site visits, several states mentioned other supports they consider to  be important for low-income families, namely, before- and after-school  programs and child support enforcement programs. Oklahoma contracts  with several different organizations to provide after-school programs that  focus on mentoring, teen pregnancy prevention, drug abuse prevention,  and the overall goals of promoting child well-being and strengthening  families. Several states consider child support to be a significant income  support for welfare families. Wisconsin has established a unique program  through waivers that allows welfare recipients to receive the entire  amount of child support collected on their behalf each month. Though  several states mentioned before- and after-school programs and child  support efforts as important supports for low-income families, some of the  states we visited noted supports that were more distinctive. For example,  Oklahoma has gained national prominence because of its efforts to create  programs that focus on supporting marriage and family formation through  welfare reform.
section_title: Selected States Have Structured Supports to Serve a Broad Range of Low-Income Families in a Coordinated Manner
paragraphs: On the whole, the five states we visited structured their supports to serve a  broad range of low-income families in a coordinated manner, although the  specific structures varied by state and type of support. Officials reported  that they structured the eligibility criteria and benefits of many supports in  ways that allow them to serve families with different levels of income and  employment. For example, while the income eligibility criteria for  supports like TANF cash assistance typically limit receipt to families with  the lowest incomes, the states we visited reported that for other supports,  such as subsidized child care and transportation support services, the  maximum income eligibility thresholds are often set at higher income  levels in order to provide support for a broader range of low-income  families, including some with earned income. Families with higher  incomes, though, might receive smaller benefit amounts or might be  required to pay for part of the cost of a service. State officials in the five  states we visited also reported that they have made efforts to deliver  supports to low-income families in a coordinated manner, such as by  allowing families to access multiple supports through a single caseworker  or a single application form.
subsections: section_title: States We Visited Have Structured Supports to Serve a Broad Range of Low-Income Families
paragraphs: The five states we visited established income eligibility criteria that allow  a broad range of families with different levels of income to gain access to  supports. Because each state establishes its own maximum income  eligibility levels for many supports, such as subsidized child care and  utility assistance, the population eligible for each support differs across  the states. As shown in table 5, in Oklahoma, families with incomes below  110 percent of the FPL are eligible for utility assistance, while in  Wisconsin, families with incomes up to 150 percent of the FPL are eligible  for this support. Overall, the five states we visited set the maximum  income eligibility levels for many supports at 200 percent of the FPL or  higher, as shown in table 5. In fiscal year 2003, 200 percent of the FPL was  equivalent to approximately $31,000 for a family of three, which means  that families whose annual incomes were less than or equal to $31,000  would be eligible for these supports as long as they met other eligibility  criteria, such as having dependent children or not having other means of  support. Setting higher income eligibility thresholds for some supports  allows states to serve both families with very low incomes as well as  families who may be working and earning somewhat higher incomes,  which can assist families transitioning from welfare to work as well as  other working families who have not received welfare.
While New York, North Carolina, and Wisconsin set 200 percent of the FPL  as the maximum income eligibility level for several supports, in Oklahoma  and Washington, income eligibility criteria varied widely by support. These  two states set the maximum income eligibility level at 200 percent of the  FPL or higher for subsidized child care but set it lower for other supports.  Washington officials reported that income eligibility criteria for supports  in their state were deliberately graduated to ensure that as families’  incomes rose, they would not lose eligibility for several supports  simultaneously. According to officials, this approach attempts to minimize  the potential work disincentive associated with losing eligibility for several  supports at once, as families with increasing earnings instead lose  eligibility for supports gradually.
Across the five states we visited, the form of supports for low-income  families and the frequency of provision varied by state and support.  Supports for low-income families can take several different forms,  including cash benefits, vouchers, in-kind benefits, and services. For  example, families might receive cash benefits through TANF cash  assistance, vouchers to pay for public transportation, wood to heat their  homes in the winter, or job-search assistance services. In addition, the  frequency of support provision, or how often a family receives a support,  varies depending on how the support is structured. Some supports, such  as TANF cash assistance, are provided on a monthly basis, while other  supports, such as utility assistance and tax credits, are provided on a one- time basis or once annually.
When structuring supports, states also make decisions about the benefit  amounts provided to eligible families. In the five states we visited, the  average benefit amount provided to support recipients varied by state and  support, as shown in figure 3. For example, though in all five of the states  we visited the average monthly benefit for subsidized child care was larger  than the average monthly benefits for other supports, the benefit value  differed across states, with the most significant difference between two  states equaling approximately $300. Although average benefits provide  some idea of the value of each support to a recipient family, because many  supports are structured to provide benefits to a broad range of families  with different income levels and family sizes, individual family benefits  often differ from the average family benefit.
To determine each individual family’s benefits for supports, such as  subsidized child care and TANF cash assistance, states often use a sliding  scale, which adjusts the benefit amount received based on a range of  factors, including family size and income. By using a sliding scale to  determine benefit amounts, states are able to serve a broader range of low- income families with varied benefits. For other supports, such as utility  assistance, while some states use a sliding scale method to determine each  family’s benefit, other states provide each family with a flat grant. For  example, North Carolina determines the flat grant for utility assistance  recipients by dividing the number of eligible applicant families into the  total funding available each year.
When structuring benefit amounts, states also make decisions about the  structures of payments to service providers and cost-sharing with  recipient families. Though families receive benefits directly from the state  for some supports, such as TANF cash assistance, states pay benefits  through vouchers or directly to service providers for several other  supports, such as subsidized child care and utility assistance. These  provider payments consist of the family’s calculated benefit amount, and  payments are also typically based on the rate charged by the provider for  the service. For example, federal regulations direct states to pay market  rates to child care providers receiving child care subsidies, but each state  is responsible for completing its own market rate survey and determining  what rates will be paid to each provider. In North Carolina and Oklahoma,  child care centers are assigned “star” ratings based on quality and other  factors, and the state sets provider payment rates based on type of  provider, market rates, and star levels, such that higher-quality providers  receive larger payments relative to other providers.
Concerning cost sharing, state policymakers sometimes require families to  pay part of the support cost, or a copayment, for services, as shown in  figure 4. In the five states we visited, states typically pay a portion of each  family’s cost for subsidized child care and SCHIP services, but some or all  recipient families must also pay copayments for these services. By having  either some or all recipient families pay copayments, the state is likely  able to serve a broader range of families with available funds. For  example, Wisconsin’s BadgerCare program, which provides health  insurance for families whose incomes make them ineligible for Medicaid,  requires recipients with incomes over 150 percent of the FPL to pay  monthly premiums as well as copayments for certain BadgerCare services.
section_title: Selected States Deliver Supports in a Coordinated Manner
paragraphs: Each of the five states we visited made efforts to deliver supports in a  coordinated manner. In each of these states, several supports for low- income families were colocated at local offices, thereby providing families  with a single access point for a variety of supports. Across the five states,  supports that were typically colocated in local offices included TANF cash  assistance and TANF diversion, subsidized child care, transportation  support services, food stamps, Medicaid, and SCHIP. For example, in  North Carolina, each local social service office includes staff members  who assist with applications and determine eligibility for food stamps,  TANF cash assistance, TANF diversion, subsidized child care, Medicaid,  SCHIP, utility assistance, transportation support services, and emergency  assistance. This colocation of supports at local offices is similar to our  previously reported findings on the colocation of support services, such as  food stamps, TANF cash assistance, and Medicaid, at WIA one-stop  centers, which provide employment and training assistance. Though this  trend toward increased colocation of supports seems to be taking place in  many states in a variety of local offices, officials in several of the states we  visited reported that housing assistance often is not colocated with other  supports for low-income families, in some cases because the supports are  administered by separate state or local agencies.
When supports are colocated in a single location, it is likely that  caseworkers also help coordinate the provision of supports for low- income families. In each of the five states we visited, state officials  reported that the delivery of supports was sometimes coordinated among  multiple caseworkers or directly coordinated by a single caseworker who  provides families with case management services, assistance in identifying  support needs, and eligibility determination. States cited several examples  of coordinated case management, including the following:  In Washington’s local offices, a single caseworker determines an applicant  family’s eligibility for TANF cash assistance, food stamps, General  Assistance, emergency assistance, and health insurance programs, such  as Medicaid and SCHIP.
North Carolina and Washington colocated substance abuse caseworkers in  the local offices that provide TANF cash assistance in order to improve  caseworkers’ abilities to coordinate the delivery of these services for  families who need services from both programs. In contrast to these  efforts to improve coordination between substance abuse caseworkers  and staff delivering other supports for low-income families, Washington  officials noted that less coordination existed between mental health staff  and staff delivering other low-income supports.
Wisconsin provides a case management program that assists low-income  families not receiving TANF cash assistance with the coordination of  supports. Wisconsin implemented this case management program in order  to improve access and delivery of supports to low-income families who  have left TANF cash assistance or are not receiving TANF cash assistance,  as many studies have reported that these families are less likely to receive  the supports for which they are eligible than are families receiving TANF  cash assistance.
To provide coordinated case management and streamlined supports,  states typically combine funding streams from several different programs,  which can prove challenging. For example, in 2002, Oklahoma combined  funding streams from several different programs when the state adopted a  “one family, one caseworker” philosophy for low-income families  receiving TANF cash assistance, food stamps, and subsidized child care.  Oklahoma officials reported that although they initially faced the challenge  of determining how to allocate caseworker costs to each separate support  program, officials addressed this challenge by surveying caseworkers  engaged in the provision of these supports at several points in time to  determine the amount of time they spent delivering each support.
In three of the five states we visited, officials reported that integrated  applications, which allow a family to apply for several supports at once,  and integrated computer systems, which store information on recipients of  several different supports, have been implemented to help coordinate the  delivery of supports. In particular, families in Oklahoma apply for TANF  cash assistance, subsidized child care, Medicaid, and food stamps through  a single, comprehensive application. Further, though some state officials  noted that the development of computer systems that simultaneously  comply with the rules of several federal programs continued to be a  challenge, Washington officials reported that they designed both an  integrated application and a single computer system to coordinate the  delivery of several supports for low-income families and to gather data on  support recipients. In addition, Wisconsin has implemented a computer  system that allows simultaneous application and eligibility determination  for many supports for low-income families, excluding housing assistance  and utility assistance. Concerning utility assistance, Wisconsin officials  noted that the use of both a separate computer system and application  somewhat prohibits its coordination with other supports, but the ease of  applying for utility assistance on a straightforward application that gathers  only the information related to a family’s eligibility for utility assistance  may also improve families’ ability to access this support.
In the states we visited, the delivery of some supports is also coordinated  through categorical eligibility rules, which make recipients of certain  supports automatically eligible to receive other supports. For example, in  North Carolina, families who receive food stamps are automatically  qualified to receive utility assistance and federal telephone assistance.  Further, in Washington, families who receive any of the support programs  administered by the Washington Department of Social and Health Services  are automatically eligible to receive state-funded telephone assistance.  This direct link between receipt of two or more separate support programs  can facilitate low-income families’ access to these supports.
Although efforts to deliver supports for low-income families in a  coordinated manner were under way statewide in the five states we  visited, because of local variation in offices and staff, the level of support  coordination might differ within the state. For example, North Carolina  officials reported that variation exists in how counties organize and  coordinate the provision of food stamps with other support services. In all  counties, food stamps are colocated in the same local offices with other  supports. However, in some counties, separate staff provide each type of  support, while in other counties individual staff provide both food stamps  and other supports. Also, though efforts to coordinate the delivery of some  supports were apparent in all five of the states we visited, state officials  also reported instances where support coordination was not occurring or  had been reduced and cited challenges to support coordination, such as  the complexities of combining multiple funding streams and satisfying the  various requirements of separate federal programs.
section_title: Many States Have Expanded Supports in Recent Years, but Express Uncertainty about the Future
paragraphs: Over the last several years, states have made substantial changes in their  supports for low-income families, with most of these changes expanding  the provision and receipt of supports, but state officials expressed  uncertainty about their continued ability to provide the current level of  support. Though many federal policy changes affecting support programs  have occurred in the last decade, welfare reform played a central role in  changes to a broad range of supports for low-income families. States made  significant changes to the structure of their welfare programs in order to  focus their new TANF cash assistance programs on the goals of  employment and economic independence. To further this effort, states  began spending increased amounts of funds on work supports for a broad  range of low-income families. Since 2000, states have implemented many  programmatic changes that affect the availability of supports for low- income families. While, in general, the availability of supports has  increased during this time period, according to officials, as states have  responded to recent fiscal constraints, they have made additional changes  that limit the provision of some supports to low-income families. Further,  as states plan for the future of supports in the current fiscal environment,  officials reported that they are considering changes that would likely limit  the availability and provision of supports for low-income families.
subsections: section_title: Welfare Reform Played an Integral Role in the Expansion of Supports for Low-Income Families
paragraphs: Since the enactment of PRWORA, welfare caseloads have fallen  dramatically, and TANF spending on support services for low-income  families has increased. Under TANF, states have the flexibility to provide  both income maintenance and work support services that help low-income  families find and maintain employment. In addition, as allowed under the  TANF block grant structure, states are also able to set aside or reserve  TANF funds for use in later years. Figure 5 shows that as states  implemented their TANF programs during the strong economy of the late  1990s, the number of TANF cash assistance recipients decreased  significantly, while the annual amount of federal funds provided to the  states for TANF remained constant, as provided for under the fixed  amount of the block grant. This resulted in a significant amount of funds  available to states for supports and other services or saving for future use.
As TANF cash assistance caseloads fell, states shifted their spending  priorities from cash assistance to support services. As illustrated in figure  6, states decreased the share of TANF expenditures for cash assistance  between fiscal years 1998 and 2002 and increased the share spent on  services. Specifically, spending on cash assistance decreased from 58  percent of TANF expenditures in fiscal year 1998 to 33 percent in fiscal  year 2002. Over the same time period, the proportion of TANF  expenditures on child care increased from 9 percent to 19 percent. The  proportion of TANF expenditures for workforce development also  increased, from 7 percent in 1998 to 10 percent in 2002. In addition to this  increased emphasis on spending on supports, states reported leaving some  TANF funds unspent, although the amount varied by state.
Consistent with figure 6, several state officials reported that their support  program expansions in the last several years were often funded with TANF  dollars that the states had accumulated as a result of falling TANF cash  assistance caseloads. However, some state officials responding to our  survey indicated a reversal in this spending trend, which may be due in  part to increasing cash assistance caseloads. Approximately half of the  state officials responding to our survey reported that since 2000 the  number of TANF cash assistance recipients had increased (23 states),  while about half of the officials reported that the number of recipients had  decreased (24 states). Officials from two states reported no change in the  number of recipients. Officials from 9 states with increased cash  assistance caseloads reported that between 2000 and the time of survey  completion in spring 2003, funding of other supports was reduced in order  to redirect funds to TANF cash assistance. Among these 9 states, TANF  funding was most commonly reduced for job training, basic education for  adults, and transportation, while funds were less often redirected from  child care, job search, and case management, as table 6 displays.
During our site visits, several officials explained that they no longer have  sufficient TANF funds set aside to continue to fund support programs at  current levels, which is consistent with TANF spending trends at the  national level. As shown in figure 7, since 2001, states have spent more  TANF funds than they received in their annual awards. To support this  level of spending, states are drawing more heavily upon their TANF  balances.
section_title: Many States Have Expanded Supports since 2000
paragraphs: Many states reported in our 50-state survey that the availability of supports  and the number of families receiving supports have increased since 2000.  Figure 8 shows that in most states the number of families receiving  assistance with child care, transportation, utilities, and job retention and  advancement increased. While the number of recipients can increase as a  result of changes in the needs of the population, it can also increase  because of changes in state policies that affect the availability of supports.
States can expand or limit the availability of supports by increasing or  decreasing the number of benefits and services available or the types of  services provided. Most states reported that the number or types of child  care subsidies, transportation support services, and job retention and  advancement services stayed the same or increased between state fiscal  year 2000 and spring 2003, an outcome that we have characterized as  causing the availability of these supports to stay the same or increase, as  shown in figure 9. Few states decreased the number or type of services  provided, with the notable exception of Medicaid services, which were  decreased in 16 states.
Few changes were reported in the provision of state tax credits. According  to officials responding to our 50-state survey, none of their state earned  income tax credits, child care tax credits, or housing credits were  eliminated, reduced, or suspended between state tax years 2000 and 2002.
States can affect the availability of supports indirectly by changing low- income families’ awareness of supports through outreach efforts, such as  billboards, fliers, and radio announcements. By increasing or decreasing  outreach efforts, states may affect low-income families’ awareness of  supports and the number of low-income families applying. States’ outreach  efforts for most supports increased or stayed the same between state  fiscal year 2000 and spring 2003, an outcome that we have characterized as  causing availability to increase or stay the same, as shown in figure 10.  Outreach efforts for Medicaid and SCHIP, however, decreased in 11 and 15  states, respectively. Officials in one of the states we visited explained that  they had cut back on outreach efforts for their Medicaid and SCHIP  programs because of budget constraints and a decrease in the number of  doctors who would accept patients covered by Medicaid or SCHIP.
Since 2000, states generally have modified income eligibility criteria in  ways that expanded the availability of support services. However, some  states reported changes to income eligibility criteria in recent years that  limited the availability of some supports. (See fig. 11.) Changes to  eligibility criteria often affect the number of families receiving supports, as  such changes affect the size of the eligible population. In our site visit  states, officials often noted that recent changes in federal support policies,  such as those for Medicaid, SCHIP, and food stamps, have allowed states  to expand their income eligibility criteria to cover a broader range of low- income families with these supports. Further, as shown in figure 11, most  states responding to our 50-state survey reported that as a result of  changes in income eligibility criteria between state fiscal year 2000 and  spring 2003, the eligible populations for utility assistance, Medicaid, and  SCHIP increased. For other supports, such as subsidized child care,  transportation support services, and job retention and advancement  services, survey responses were mixed, and though several states reported  that the eligible population increased because of changes in eligibility  criteria between state fiscal year 2000 and spring 2003, a substantial  number of states reported that changes in eligibility criteria caused the  eligible population to stay the same or decrease, as shown in figure 11.  These mixed responses concerning changes in subsidized child care  income eligibility criteria are similar to those we previously reported in  May 2003. In that study, we surveyed subsidized child care officials  directly about changes to income eligibility criteria between state fiscal  year 2001 and the spring of 2003, and a majority of respondents reporting  changes noted that these resulted in narrowed coverage.
See U.S. General Accounting Office, Child Care: Recent State Policy Changes Affecting  the Availability of Assistance for Low-Income Families, GAO-03-588 (Washington, D.C.:  May 5, 2003), p.26. figure 12. A majority of the states responding to our 50-state survey  reported that provider payments for SCHIP, Medicaid, job retention and  advancement services, utility assistance, and subsidized child care  increased between state fiscal year 2000 and spring 2003, though some  states reported that provider payments for many of these supports  decreased during the same time period.
Regarding changes to copayments, most states responding to our survey  reported that families’ copayments for SCHIP, Medicaid, and subsidized  child care stayed the same between state fiscal year 2000 and spring 2003,  while some states reported that families’ copayments increased during  that time. We have classified increases in copayments as decreasing the  availability of supports because as families’ copayments increase, fewer  families may be able to afford to participate in the support program. (See  fig. 13.) Both North Carolina and Washington officials reported in our site  visits that since state fiscal year 2001, they have increased families’  copayments for subsidized child care. These findings are similar to those  we previously reported that showed several states increased families’  copayments for subsidized child care between state fiscal year 2001 and  the spring of 2003, resulting in decreased availability of subsidized child  care.
State officials also reported a few changes to the delivery of supports since  2000 in both written responses to our 50-state survey and our five site  visits, and of those who reported changes to delivery, most of the changes  expanded the provision of supports to low-income families. For example,  Washington officials reported that the number of family violence  counselors colocated in local offices with other supports for low-income  families increased between state fiscal year 2000 and the spring of 2003.  Similarly, South Carolina officials responding to our survey noted that they  have expanded utility assistance delivery in recent years by adding more  offices and staff and by colocating staff in WIA one-stop centers.  Concerning transportation support services for low-income families,  officials from both North Carolina and Georgia reported that they have  made efforts to expand and coordinate services in recent years. In  contrast, North Carolina officials also reported during our site visit that  the number of substance abuse caseworkers colocated in local offices  with other supports for low-income families was reduced in 2002 because  of budget cuts.
section_title: States Are Considering Changes That Would Limit Supports in the Future
paragraphs: During our site visits, officials expressed concern that the progress they  have made in recent years to promote employment and economic  independence for low-income families may erode, given the fiscal crises  that states currently face. Officials in several of the states we visited  explained that their support program expansions in the last several years,  which were funded with TANF dollars that the states had accumulated  because of falling TANF cash assistance caseloads, may be at risk. These  states reported that without sufficient TANF funds to continue these  efforts, some support programs face elimination. Oklahoma officials  explained that their budget cuts are due not only to declining TANF  reserves, but also to decreased state revenues. Although Oklahoma still  has TANF reserves, officials there stated that these would probably be  depleted soon and they, too, might need to cut back on services that had  been expanded.
Many states added written comments to our 50-state survey that expressed  concern about the future of supports. Half of the states surveyed reported  that the current economic, budget, or funding situations in their states  might limit the provision of supports in the near future. In addition, a small  number of states reported that decisions had already been made to  implement changes in supports between the summer of 2003 and the end  of their state’s fiscal year 2004. These changes include reducing the  number or type of services offered, changing the eligibility criteria to limit  the number of families eligible for supports, decreasing payment amounts  made to service providers, increasing the copayment amounts that families  pay, and decreasing outreach efforts. Planned changes were particularly  prevalent for Medicaid and subsidized child care programs.
section_title: Concluding Observations
paragraphs: Overall, supports for low-income families have undergone many changes  over the past several years, and they will likely continue to evolve as  federal and state governments further develop policies and respond to  cyclical fiscal conditions and changes in the demand for services. With a  focus on promoting employment and economic independence, states have  adjusted support programs to provide not only services to families  receiving TANF cash assistance but also services to other low-income  families not receiving TANF cash assistance. States have used TANF funds  to experiment with new support programs and have recognized that  supports like subsidized child care are an increasingly important support  for low-income working families. Most recently, states have faced fiscal  crises and tough choices about reducing their supports for low-income  families. The emphasis on moving people into work, though, remains a  priority. As states continue to adjust supports for low-income families in  efforts to move forward with the reforms of the last decade and improve  efficiency, access, and coordination, they will also continue to face the  pressures of competing priorities and fiscal constraints.
section_title: Agency Comments
paragraphs: We provided a draft of this report to the Department of Health and Human  Services (HHS) for the department’s review and comment. HHS agreed  with the findings and conclusions of the report. HHS also noted that to  address the fiscal uncertainty that some states face, reauthorization of the  TANF and child care programs by the Congress will enable states to know  with certainty the level of federal TANF and child care resources that will  be available to support low-income families over the next 5 years.  HHS’s  written comments appear in appendix IV. HHS and an expert on supports  for low-income families also provided technical comments, which we have  incorporated where appropriate.
We are sending copies of this report to the Secretary of HHS, relevant  congressional committees, and others who are interested. Copies will be  made available to others upon request, and this report will also be  available on GAO’s Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  on (202) 512-7215. Additional GAO contacts and acknowledgments are  listed in appendix V.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: We designed our study to provide information on (1) the extent to which  states provide supports for low-income families, (2) how states have  structured programs to support low-income families, and (3) the changes  states have made to supports for low-income families in recent years. To  obtain information about these objectives, we conducted a mail survey of  the social services agency directors in each state and the District of  Columbia, conducted in-person interviews with state officials in five  states, and reviewed information available from prior GAO work and  relevant federal agencies.
We conducted our work between December 2002 and November 2003, in  accordance with generally accepted government auditing standards.
subsections: section_title: Survey of State Social Services Directors
paragraphs: To obtain information on the extent to which states provide supports for  low-income families and how this has changed in the last few years, we  conducted a survey of support programs in each state and the District of  Columbia. We pretested our survey instrument with state social service  directors in four states: Colorado, Delaware, Maryland, and Virginia.  Surveys were mailed to state social service directors in April 2003, and  follow-up phone calls were made to states whose surveys were not  received by May 5, 2003. The survey was addressed to the state social  service agency directors and instructed them to have the staff members  most knowledgeable about their states’ support programs complete the  survey. We received responses from the District of Columbia and all states  except Michigan, providing a 98 percent response rate. We did not  independently verify the information obtained through the survey. Data  from the surveys were double-keyed to ensure data entry accuracy, and  the information was analyzed using statistical software. The survey  included questions about the provision and receipt of the states’ child care  subsidies, transportation support services, utility assistance, job retention  and advancement services, health assistance (including public health  insurance, domestic violence programs, substance abuse treatment  programs, and mental health treatment programs), and income assistance  (including state tax credits, TANF cash assistance, and TANF diversion  programs). The survey also included questions on recent changes in the  availability and structure of these support programs. Respondents who  frequently answered “don’t know” were prompted to answer questions  regarding their reasons for this response. The officials reported most  frequently that the reasons they did not have this information were that  services varied broadly by locality and that data were not available or not  complete at the state level.
section_title: State Site Visits
paragraphs: To obtain information about each assignment objective and, in particular,  to gain a deeper understanding of how selected states have structured  programs to support low-income families, we interviewed state officials in  New York, North Carolina, Oklahoma, Washington, and Wisconsin. In  selecting these states for our in-depth fieldwork, we included those that  appeared, based on their federal and state TANF expenditures, to provide  support services, and we also included states that, when viewed as a  group, provide variation across characteristics such as state median  income, poverty rate, population, and geographic location.
The interviews were administered using a semistructured interview guide  that included questions about the structure and receipt of states’ child care  subsidies, transportation support services, utility assistance, job retention  and advancement services, health assistance (including public health  insurance, domestic violence programs, substance abuse treatment  programs, and mental health treatment programs), and income assistance  (including state tax credits, TANF cash assistance, and TANF diversion  programs). The survey also included questions about efforts to coordinate  supports and recent changes in the availability and structure of support  programs. We also encouraged state officials to share information about  any additional programs that they believed were important for low-income  families in their states. During our site visits we spoke with program  administrators or program analysts for each type of support program as  well as budget and data analysts. For example, we spoke not only with  social services officials, but in most states we also spoke with  transportation officials, tax officials, Medicaid officials, and so on, if these  supports were provided by separate state agencies.
To ensure that our understanding of the availability and characteristics of  supports for low-income families was accurate and objective, following  our site visits we conducted phone interviews with advocacy organizations  that either included low-income families in their membership or that work  directly with low-income families in promoting issues related to supports.
Some limitations exist in any methodology that gathers information about  programs undergoing change, such as those included in this review.  Results presented in our report represent only the conditions present in  the states we visited at the time of our site visits, between December 2002  and April 2003. Although, as we have presented, state officials reported on  their expectations of program changes in the near future, we cannot  comment on any actual changes that may have occurred after our  fieldwork was completed. Furthermore, we cannot generalize our findings  beyond the five states we visited, but we have used these data for  illustrative purposes.
section_title: Review of Federal Reports
paragraphs: To obtain information about policies, participation rates, and other  characteristics of the support programs that are administered largely at  the federal level, such as food stamps, rental housing assistance, and the  federal EITC, we reviewed reports and information readily available from  prior GAO work and relevant federal agencies.
section_title: Reliability of Data Obtained from HHS and Treasury
paragraphs: To determine the completeness and accuracy of data obtained from HHS  and Treasury, we reviewed related documentation and conducted tests of  the data for obvious omissions and errors. In addition, we interviewed  knowledgeable agency officials regarding the HHS data. We determined  that the data were sufficiently reliable for use in this report.
section_title: Appendix II: Proportion of Eligible Applicants Who Receive Supports, by State and Type of Support
paragraphs: Tables 7 through 11 display individual state responses to survey questions  regarding the extent to which eligible low-income families who apply for  supports actually receive supports. These data are summarized graphically  in figure 2 in the report.
section_title: Appendix III: Changes in the Number of Recipients and Availability of Supports between State FY 2000 and Spring 2003
paragraphs: Tables 12 through 17 provide information on changes between state fiscal  year 2000 and spring 2003 that states reported in the number of support  recipients and in the number or type of services provided, state outreach  efforts, eligibility criteria, provider payments, and families’ copayments.  The data in these tables are summarized in figures 8 through 13 in the  report.
section_title: Appendix IV: Comments from the Department of Health and Human Services
section_title: Appendix V: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: Kathy Larin, Angela Miles, Cathy Pardee, and Rachel Weber made  significant contributions to this report. In addition, Alison Martin and Elsie  Picyk provided technical assistance in the development and  implementation of the 50-state survey, Patrick Dibattista provided writing  assistance, and Marc Molino and Avy Ashery assisted with the graphics.
section_title: Related GAO Products
paragraphs: Welfare Reform: Information on TANF Balances. GAO-03-1094.  Washington, D.C.: September 8, 2003.
Welfare Reform: Information on Changing Labor Market and State  Fiscal Conditions. GAO-03-977. Washington, D.C.: July 15, 2003.
Transportation-Disadvantaged Populations: Some Coordination Efforts  among Programs Providing Transportation Services, but Obstacles  Persist. GAO-03-697. Washington, D.C.: June 30, 2003.
Child Care: Recent State Policy Changes Affecting the Availability of  Assistance for Low-Income Families. GAO-03-588. Washington, D.C.: May  5, 2003.
Child Care: States Exercise Flexibility in Setting Reimbursement Rates  and Providing Access for Low-Income Children. GAO-02-894.  Washington, D.C.: September 18, 2002.
Workforce Investment Act: States and Localities Increasingly Coordinate  Services for TANF Clients, but Better Information Needed on Effective  Approaches. GAO-02-696. Washington, D.C.: July 3, 2002.
Welfare Reform: States Provide TANF-Funded Work Support Services to  Many Low-Income Families Who Do Not Receive Cash Assistance.   GAO-02-615T. Washington, D.C.: April 10, 2002.
Welfare Reform: States Provide TANF-Funded Services to Many Low- Income Families Who Do Not Receive Cash Assistance. GAO-02-564.  Washington, D.C.: April 5, 2002.
Human Services Integration: Results of a GAO Cosponsored Conference  on Modernizing Information Systems. GAO-02-121. Washington, D.C.:  January 31, 2002.
Means-Tested Programs: Determining Financial Eligibility Is  Cumbersome and Can Be Simplified. GAO-02-58. Washington, D.C.:  November 2, 2001.
Welfare Reform: Challenges in Maintaining a Federal-State Fiscal  Partnership. GAO-01-828. Washington, D.C.: August 10, 2001  Welfare Reform: Improving State Automated Systems Requires  Coordinated Federal Effort. HEHS-00-48. Washington, D.C.: April 27, 2000.