Welfare Reform: HHS' Progress in Implementing Its Responsibilities
Published: 1998-02-02T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Pursuant to a congressional request, GAO reviewed the Department of Health and Human Services' (HHS) implementation of the mandates resulting from the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, focusing on the: (1) extent to which HHS reduced its full-time equivalent (FTE) staff levels to the levels prescribed by the law; (2) clarity, timeliness, and usefulness of HHS' guidance and technical assistance to the states in implementing the Temporary Assistance for Needy Families (TANF) program; (3) status of HHS' work in establishing performance measures to use in implementing the high-performance bonus program; and (4) status of HHS' welfare research and evaluation efforts.
section_title: What GAO Found
paragraphs: GAO noted that: (1) between August 1995 and July 1997, HHS reduced by 245 its authorized FTE level for programs that were connected to block grants, and it reduced its authorized FTE level for managerial positions by more than 60 within the Department; (2) HHS achieved the 245 FTE reductions by reassigning almost three-quarters of them to other programs; (3) through GAO's survey, it found that states are generally satisfied with HHS' guidance but are concerned about the delay in TANF regulations, which HHS plans to issue in spring 1998; (4) HHS concedes that its rulemaking process to issue the regulations is lengthy because it requires the Department to obtain comments from many interested groups; (5) in the absence of regulations, states reported difficulties in designing and implementing their programs; (6) HHS missed the statutory deadline for implementing the high-performance bonus program; (7) while the law requires HHS to have implemented this program by August 1997, HHS is still writing regulations that will define the specific measures against which states are to be assessed; (8) HHS does not expect to issue final rules for the high-performance bonus program until the end of fiscal year (FY) 1998; (9) HHS attributes the delay to the inherent difficulties in developing performance measures; the large number of groups with whom HHS consulted, including advocacy and local government groups; and its limited number of staff with which to develop both TANF and bonus program regulations; (10) however, to be eligible for FY 1999 bonus money--the first year bonuses will be distributed--states are required to submit FY 1998 data; (11) HHS' funding for its welfare research generally follows the mandates outlined in the law; (12) a key effort for HHS in meeting these mandates is continuing the evaluations of state programs that were granted waivers from requirements that applied under the Aid to Families with Dependent Children program; (13) of the $44 million appropriated to Administration for Children and Families in FY 1997 for research, approximately $9 million has been awarded to 17 states for waiver evaluations; (14) several of these states will be evaluating the effect of time limits and mandatory work requirements on their programs, as well as other topics; (15) in addition to the waiver evaluations, HHS has awarded approximately $12 million for studies of employment issues focused on welfare and former welfare clients; and (16) technical assistance to states and child impact studies are other areas of research that were funded.

section_title: Letter
paragraphs: The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 fundamentally changed the nation’s welfare policy, ending individual entitlement to welfare benefits under the Aid to Families With Dependent Children (AFDC) program. The act established Temporary Assistance for Needy Families (TANF), a block grant program for which federal funds are capped at $16.4 billion a year through fiscal year 2002. Through these block grants, the new law granted broad discretion to the states for designing their welfare programs. The law also limited the Department of Health and Human Services’ (HHS) regulatory authority over the states’ welfare programs.
The new welfare law, however, still requires HHS to fulfill many important mandates. Among these new mandates, it directs HHS to reduce its staffing level by 245 full-time equivalent (FTE) positions for those programs converted to block grants under the law—essentially the AFDC and Job Opportunities and Basic Skills Training (JOBS) programs—and to reduce its FTE levels for managerial positions by 60 within the Department. And while the law significantly narrowed HHS’ regulatory authority, HHS remains the primary federal agency responsible for providing oversight of states’ welfare programs. For example, HHS is responsible for developing regulations for specific areas, including establishing various state reporting requirements and penalties for noncompliance with the law. The law also requires HHS to develop a formula to reward “high performing” states—those that achieve the goals of the law. In addition, HHS is to conduct research on the benefits, costs, and effects of the new welfare law. The Department may also assist states in developing innovative approaches for reducing welfare dependency and increasing child well-being and is responsible for evaluating these approaches.
Given the significant change in HHS’ role, you asked us to review HHS’ implementation of the new mandates. Specifically, you asked that we report on (1) the extent to which HHS reduced its FTEs to the levels prescribed by the law; (2) the clarity, timeliness, and usefulness of HHS’ guidance and technical assistance to the states in implementing TANF; (3) the status of HHS’ work in establishing performance measures to use in implementing the high-performance bonus program; and (4) the status of HHS’ welfare research and evaluation efforts.
To address these objectives, we conducted interviews with staff from the budget and program offices in HHS’ Office of the Secretary and Administration for Children and Families (ACF) and staff from national state association groups headquartered in Washington, D.C. We also reviewed fiscal year 1995, 1996, and 1997 documentation from these offices. To address the first objective, we reviewed time and attendance data and staff rosters from the Office of the Secretary and ACF and personnel data from the Office of Personnel Management (OPM). Since the law does not specify how HHS was to accomplish its FTE reductions, we ascertained HHS’ interpretation of the law and the actions it took to accomplish the reductions and analyzed and verified the reductions that it made. Principles of administrative law generally allow the executive agency charged with carrying out the law to interpret the legislation. To address the second objective, we examined HHS’ policy memorandums, letters to states, and other written material and discussed state issues about the guidance with national state associations. We also surveyed state welfare directors in the 50 states and the District of Columbia to gather their opinions about HHS’ guidance and help. State responses reported in our study reflect states’ opinions prior to HHS’ issuance of proposed TANF regulations in November 1997. For objective three, we examined concept papers by HHS, the American Public Welfare Association (APWA), and the National Governors’ Association (NGA). To address objective four, we reviewed research funding announcements and descriptive compendiums and budget documents. To augment our work at the national level, we conducted site visits with two of HHS’ regional offices and one state in each of the two regions. Appendix I provides additional details about the scope and methodology of our work. Our work was conducted between April and November 1997 in accordance with generally accepted government auditing standards.
subsections: section_title: Background
subsections: section_title: Administration of HHS’ Welfare Programs
paragraphs: While the law shifted responsibility to the states for designing and implementing TANF programs, HHS remains the primary federal agency responsible for assisting states with the development of these programs. ACF administers and oversees TANF and other programs related to the economic and social well-being of families, children, and individuals. Oversight of TANF is carried out through ACF’s Office of Family Assistance (OFA), which previously had administration and oversight responsibility for AFDC and JOBS, the predecessors to TANF. HHS provides help and oversight to the states through staff located at its headquarters office in Washington, D.C., and HHS’ 10 regional offices.
section_title: Mechanisms for Providing Assistance to States: Guidance and Regulations
paragraphs: Federal departments and agencies develop regulations and guidance to provide states and the general public the agency’s interpretation of a statute’s provisions and to assist them in complying with the law. Regulations are first issued in draft form to allow interested groups to provide comments, which the agency must consider before publishing the final rule. Final rules carry the force of law; for example, states could be penalized for not complying with them. The time it takes an agency to develop regulations depends on a number of factors, such as the complexity of the statute, the number of comments an agency receives, and the length of time it takes for the Office of Management and Budget (OMB) to review and approve them.
To help ensure states comply with a statute as they develop or change their programs, states and the general public need basic information about the agency’s interpretation of the statute’s provisions prior to the regulations’ publication. Agencies may provide such information through guidance to states and others, which can be both written and oral. For example, guidance can be provided through written memorandums distributed to all states; agency-sponsored conferences; or responses to individual inquiries by phone, letter, or the Internet. However, guidance does not have the force of law as regulations do; essentially, it is the agency’s opinion or answer at that time, which could change during the regulatory process as the agency gathers and assesses the comments of knowledgeable parties.
section_title: HHS Reduced FTE Levels for Welfare Programs and Management Positions
paragraphs: While the 1996 welfare reform law requires HHS to reduce its FTE levels by specific amounts, it does not direct HHS on how to implement this requirement. To address this provision, HHS reduced by 245 its authorized FTE levels within OFA. These reductions were achieved primarily through reassigning staff to other programs and eliminating vacant positions. HHS also reduced FTE levels by more than 60 in the Office of the Secretary to satisfy the mandated reduction in managerial positions. These reductions were achieved primarily through relocating organizational units within the Office and their staff to other places in HHS.
subsections: section_title: Reductions in OFA Made Primarily Through Reassignments
paragraphs: HHS reduced authorized FTE levels in OFA by 245 between August 1995 and July 1997. While the law did not specify start and end dates for these reductions, the Department used August 1995 as the base year for calculating its reductions. HHS used July 1, 1997, as the target date for reducing FTE levels because that date is the final submission date for all TANF state plans and, thus, the effective starting date for TANF. As shown in table 1, ACF had reduced the number of authorized FTEs by 245 in OFA by July 1997 for headquarters and regional offices but had reduced actual FTE levels by 199.5 FTEs. Approximately two-thirds of the number of authorized and actual FTEs were eliminated from the regional offices, commensurate with the FTE distribution for headquarters and regional offices.
HHS accomplished reducing the number of authorized FTEs by 245 primarily by reassigning 176 FTEs to other program offices and eliminating 45.5 that represented vacant FTE positions; an additional 21 FTEs were reduced through staff resigning or retiring. Figure 1 provides further details of these numbers for headquarters and regional offices.
Overall, the Child Support Enforcement program acquired 37 FTEs, the largest proportion—about 21 percent—of reassigned FTEs. The distribution among programs of reassigned FTEs differed, however, between headquarters and the regional offices. At headquarters, 22 FTEs, or 38 percent, went to the Child Support Enforcement program; in the regional offices, approximately half of the FTEs were reassigned to the Child Care and Head Start programs. (See table 2.)
section_title: Managerial FTE Levels Reduced in the Office of the Secretary
paragraphs: While the law does not define “management,” HHS considered that all staff in the Office of the Secretary satisfied the term because of the Office’s general management responsibility for the entire Department, including TANF and its predecessor programs, AFDC, and JOBS. Using this definition, HHS considered that it had met the requirement to reduce FTE levels for managerial positions by 60 through staff reductions in the Office of the Secretary.
Between fiscal years 1995, 1996, and 1997, the Office of the Secretary reduced its authorized FTE level by 613; its reduction in the number of actual FTEs was approximately 354. This reduction in FTE levels resulted from a number of changes initiated before and after the passage of the welfare reform law. These changes included the Federal Workforce Restructuring Act of 1994, which required agencies governmentwide to reduce their workforce, and major restructuring efforts that occurred in HHS’ Office of the Secretary during this period, such as separating the Social Security Administration from HHS; consolidating the Office of the Assistant Secretary for Management and Budget and the Office of the Assistant Secretary for Personnel Administration; abolishing the Office of the Assistant Secretary for Health and creating a new Office of Public Health and Science; and transferring responsibility for personnel, finance, and contract operations from the Office of the Secretary to HHS’ new Program Support Center.
By March 1997, the numerous downsizing and reorganization efforts within HHS had affected the number of staff in the Office of the Secretary holding senior and mid-level management responsibility. Between September 1995 and March 1997, there was a net increase in the number of staff with senior management responsibility, but there was a net reduction in the number of staff with mid-level management responsibility, as shown in table 3. By March 1997, there were 15 more of the most senior management staff than in September 1995 and 94 fewer staff with mid-level management responsibility, including 57 fewer staff in grades 14 and 15 and 27 fewer in grades 12 and 13. (See tables 3 and 4.)
Unlike in OFA, HHS reduced staff in the Office of the Secretary primarily through discharging staff who did not have permanent appointments and realigning entire units of staff by moving them to other locations in HHS. All discharges occurred, however, among staff considered nonmanagerial by civil service definitions. Among staff with senior management responsibility, 80 percent left by retiring or resigning. Of the mid-level management staff, 54 percent left as part of the realignments and 21 percent retired. (See table 5.) Overall, 1,640 staff left the Office of the Secretary between September 1995 and March 1997—174 of whom held positions defined as senior and mid-level management. Of these 174 staff, about half were relocated elsewhere in the Department while almost one-third retired or resigned.
section_title: States Concerned About Lack of TANF Regulations but Generally Satisfied With HHS Guidance Provided
paragraphs: Although states are concerned that TANF regulations are not yet published, they are generally satisfied with HHS’ TANF guidance, both written and oral.Due to the amount of time the regulatory process takes, HHS does not expect to issue final TANF regulations until spring 1998—more than 18 months after some states began implementing their new welfare programs. States reported difficulties in designing their programs without the final regulations; they also are concerned about the possibility of being penalized for actions that they took in the absence of regulations or incurring additional costs to restructure their data systems to meet the requirements of the published regulations.
subsections: section_title: HHS Expects Regulations to Be Issued in 1998
paragraphs: HHS plans to issue regulations related to data collection, reporting, penalties, and bonuses. While the law does not specify a date by which the regulations must be promulgated, HHS expects that final regulations will be published in spring 1998. Department officials are expecting to receive thousands of comments on the proposed rules from states, local governments, advocacy groups, and other interested parties, which they must read and consider in drafting the final regulations. HHS officials noted that they are using the standard rulemaking process in order to consider comments from the many interested parties and that this process takes time to carry out.
section_title: Lack of Regulations Causes States Difficulties in Designing Programs; Raises Concerns About Needing to Redesign Programs and Incurring Penalties
paragraphs: Twenty-nine of the 49 states responding to our survey reported that the lack of regulations was causing them moderate to very great difficulty in designing or implementing their programs. For example, one state reported difficulty determining which clients to select for placement in a state-funded TANF program because HHS guidance has been unclear as to whether clients in such a program would still have to meet certain TANF requirements, such as time limits or work hours. HHS’ final regulations on such requirements could change the type of client the state would select for such a program. Twenty-nine states also reported design and implementation problems for data collection and reporting. For example, one state official listed a number of unanswered questions that remained because of the absence of regulations regarding data collection and reporting, sampling, consequences of leaving reporting fields blank, and how to provide in the interim required data elements that the state’s current system does not capture.
States were also concerned about the potential cost of having to redesign their information systems that collect and report data for managing their program if such action is needed to come into compliance with HHS regulations when they are published. Twelve states commented specifically that they wanted to avoid the expense of designing their systems twice yet assumed they will need to make modifications once the regulations are published. One state official explained to us that his state was converting to an automated data system and that modifications to the system would be expensive, but he is assuming they will have to make some once the final regulations are issued. According to a state welfare director, lead time is needed to develop the automated systems, given the type and amount of data to be reported under TANF. He said that “historically, state data systems were developed to generate checks to clients and to perform quality control functions.  there are enormous data and reporting requirements in the . Most states don’t have the information systems available to collect data such as whether a client has been on welfare before. This requires data systems to communicate across counties and across states.”
In addition to program design and implementation problems, states are concerned about being penalized for noncompliance with the regulations for program decisions they made before the final issuance of the regulations. In our survey, 14 states mentioned this specific concern. They told us that the potential difficulty with the lack of regulations is that HHS will provide its own interpretation of the law through the regulations, which may be inconsistent with the approaches states took. According to HHS officials, interim guidance distributed in a January 1997 policy announcement signaled to states that penalties will not be imposed for early program decisions if they were based on a reasonable interpretation of the law and that before a final rule is available, penalties will be imposed only for violations of the statute. Further, the guidance specifies that statutory interpretations in the final rules will apply prospectively only.
section_title: States Report General Satisfaction With HHS Guidance
paragraphs: HHS’ guidance to the states since August 1996, the date the new welfare reform law was enacted, has been provided through a variety of means, including its January 1997 policy announcement, letters to state directors providing HHS’ answers to frequently asked questions, conference calls to groups of states, conferences, and one-on-one calls between states and their respective HHS regional representatives. In considering HHS guidance, both written and oral, 33 of the 49 states responding to our survey reported that the guidance, for the most part, met their needs for information.
For issues covered by HHS’ written guidance, the states were particularly satisfied with guidance for process-related issues. For example, 37 of 44 states indicated that HHS’ guidance mostly or completely met their needs for information about what must be described in a state TANF plan for HHS to consider the plan complete, as required by TANF. Similarly, HHS guidance on how it calculated the amount of each state’s block grant met the information needs of 37 of 41 states, and guidance on prorating the amount of states’ TANF block grant based on when their plan was submitted and deemed complete met the information needs of 32 of 39 states. States were least satisfied with HHS’ guidance on financial management controls; only 13 of 30 states indicated that HHS’ guidance on this subject mostly or completely met their information needs.
State welfare directors and national organizations we contacted mentioned other issues of significance to the states that were not covered by HHS’ written guidance. Among these issues were the application of minimum wage laws to TANF participants, exempting domestic violence victims from time limits, and TANF requirements for a cap on administrative costs. From our survey, we determined that at least 25 states received no guidance from HHS on these issues. Of those states that reported receiving oral guidance, most said the guidance met their needs for information. For example, 9 of 13 states that reported receiving oral guidance regarding the application of minimum wage laws to TANF participants stated that the guidance met their state’s information needs. Similarly, for 16 states that received oral guidance about the time-limit exemption for domestic violence victims, 10 reported that it met their needs. For the remaining issue—TANF requirements for a cap on administrative costs—18 of 24 said their information needs were met.
section_title: State Associations Raise Concerns About Decisions Reflected in HHS Guidance
paragraphs: Although states generally indicated in our survey that they were satisfied with the clarity, timeliness, and usefulness of the HHS guidance they received, national associations indicated that the states are struggling with certain positions taken by HHS in its guidance. NGA and APWA stated that some of the positions taken that may adversely impact states included the application of minimum wage laws to welfare clients who obtain work; requirements for receiving, or “drawing down,” TANF funds; and the methods for allocating administrative costs for the TANF program. In general, NGA and APWA believed that certain of these positions limit the flexibility that the law intended to provide states in developing their new welfare programs and, in some cases, may significantly increase the costs to states of implementing these programs.
section_title: High-Performance Bonus Measures Not Specified by Deadline
paragraphs: Under the new welfare law, $1 billion is to be awarded over 5 years to high performing states, beginning fiscal year 1999. The awarded bonuses will be based on a set of measures to be developed by HHS. Although the law requires HHS to develop these measures no later than August 1997—1 year after enactment of the law—HHS has not yet specified how states’ performance will be assessed or how bonus funds will be distributed. Given that the first bonus funds are to be awarded in fiscal year 1999, states are concerned that they will not have enough time to either design their program activities or collect the data necessary to compete for the bonuses.
HHS expects to have a final rule on bonus regulations by the end of fiscal year 1998. Having elected to develop the performance measures through regulations, HHS is still in the initial stage of writing the regulations. HHS asserts that the delay in issuing regulations is due to the complexities in developing performance measures, the need to consult a number of groups in the process, and HHS’ limited staff resources to work on both TANF and bonus program regulations. HHS, APWA, and NGA have developed concept papers that generally agree on the key measures to be used, but they differ about the source of the data to assess states’ achievement of the measures.
subsections: section_title: Final Bonus Regulations to Be Issued in 1998
paragraphs: While HHS developed a preliminary proposal for performance measures in July 1997, it does not expect to have its notice of proposed rulemaking ready for comment until March 1998 and a final rule published until the end of fiscal year 1998—over a year after the statutory deadline for implementing the high-performance bonus program. These time frames are of significant concern to APWA officials and its member state officials. They stated that since the regulations will be final so late in fiscal year 1998, states will have little time to develop their TANF programs or data collection systems to compete for the bonus money. According to APWA officials, states suggested to HHS that it develop early interim measures to assess states for the first year’s bonus money so that states would have time to collect data and then modify them, as needed, once final measures were implemented.
HHS officials acknowledged missing the deadline stipulated in the law. However, they contend that the development of the performance measures is very complex with difficult measurement and data problems and limitations to address. For example, HHS and those with whom they are consulting are having difficulty determining how to measure increases in “child well-being”—one goal of the new welfare reform law—and whether national data sets exist that would enable states to make such measurements. Officials also stated that the process is taking time because HHS’ consultations with APWA and NGA, a requirement of the law, have been thorough. HHS also consulted with representatives of the states and other groups to ensure that any technical problems with the proposed measures were solved and that agreement was reached with TANF stakeholders. Officials also noted that HHS management had to decide which set of regulations—TANF or the bonus formula—would receive priority, given the agency’s staffing. Since TANF became operational before the bonus formula, HHS focused first on TANF guidance and regulations.
section_title: HHS and State Groups Agree on Most Measures but Disagree on Data Sources
paragraphs: APWA and NGA have drafted a joint proposal for the high-performance bonus program, which generally agrees with HHS’ concept paper about what the measures should emphasize—work and self-sufficiency—and what the key measures should be. However, HHS’ paper and the joint proposal by APWA and NGA differ about which sources of data should be used for measuring performance. HHS believes that the Bureau of Labor Statistics’ (BLS) unemployment insurance (UI) database should be used for the work measures, while APWA and NGA think that state administrative data should be used.
According to HHS’ paper, the UI database provides an “objective data source that would be less subject to reporting bias . . . and is uniformly collected across states.” It further states that UI data would allow states to track people who have left the welfare rolls and thus provide states with data about the continued self-sufficiency of their clients. States would be able to track clients by matching the social security numbers of clients who have left with those in the database. Finally, HHS argues that using the UI database would avoid creating an additional administrative burden on states for data collection.
APWA and NGA cited states’ concerns that UI data would not be an accurate measure. One problem with the UI database is that it does not capture information for seasonal or state government employees or for clients in subsidized jobs or community service. Another problem is that some states’ laws prevent the use of UI data for privacy reasons; this is the case in New York and Minnesota. States that would need to change their laws to gain access to these data are also concerned about the time available to collect the data. Because many state legislatures are out of session, states would need to wait for a new legislative session to address these issues. Moreover, there is no guarantee that enabling legislation would be enacted. HHS officials acknowledge the UI database’s limitations and are contracting for a study of its limitations and gaps.
APWA and NGA have suggested that state TANF administrative data or a combination of UI and administrative data be used instead of UI data. These groups believe that states’ administrative data are a viable alternative and are now available to all states. APWA officials contend that state administrative data will be used by HHS to sanction states for noncompliance; hence, they could also be used for awarding bonus money. However, HHS is concerned that the uniformity and regularity of state administrative data across all 50 states have not yet been documented.
section_title: HHS Research Funding Follows Mandates
paragraphs: HHS’ funding of its welfare research generally follows the research and evaluation requirements described in the new welfare law. The Congress appropriated a total of $44 million to HHS, in part, to conduct research on the benefits, effects, and costs of the state programs funded under the new law and to evaluate innovative programs designed to decrease welfare dependency and increase child well-being. HHS’ key effort in pursuing this mandate is its continued funding of evaluations of waiver programs. These evaluations were approved under the previous welfare law to assess state performance of innovations to their welfare programs, such as time-limited benefits and work requirements. In addition to the waiver studies, HHS is funding research efforts on employment-related issues of welfare clients, various technical assistance grants to help states obtain needed expertise or technical assistance to develop their welfare assistance programs, and child well-being studies. Table 6 shows the general areas of research that HHS funded with the $44 million for fiscal year 1997.
subsections: section_title: HHS Evaluations of Innovative Programs Focus on Waiver Studies
paragraphs: HHS is pursuing its research and evaluation mandates, in part, by providing states approximately $9 million in fiscal year 1997 to continue their evaluations of their waiver programs, which is specified as an allowable area of research under the new law. Under section 1115 of the Social Security Act, HHS was authorized to grant states waivers of certain statutory requirements that governed AFDC programs. While this authority gave states flexibility to test innovations, it also required them to have an independent organization rigorously evaluate the outcomes of these innovations. According to HHS officials, the waiver programs were a key area of research because they implemented some of the ideas that were subsequently embodied in the new law, such as time limits and work participation requirements. Moreover, because many states have chosen to structure their TANF programs to fully or mostly continue their waiver program policies, HHS officials assert that the information collected from the waiver evaluations will provide early information about welfare programs being implemented under TANF.
A number of states had not completed their evaluations before the enactment of the new welfare reform law but were interested in doing so. Hence, HHS organized its continued funding of these evaluations in two tracks. Under track one, selected states could receive an initial award for a 12-month period; under track two, states could receive a two-phased award, with an initial award for a planning period of up to 6 months followed by a second award to fund the first 12 months of the actual evaluation. Track one proposals are a continuation of a state’s original waiver evaluation with minor research modifications. Track two funding is used when a state proposes to make substantial modifications to the waiver evaluation, significantly modifying either the evaluation scope or methodology—or, in some cases, both—originally prescribed in the waiver terms and conditions. Nine states have been approved to fully continue their current evaluations as part of ACF’s track one research program, and 10 states have been approved for track two funding.
The amount of funding for fiscal year 1997 to each track one awardee ranged from approximately $300,000 to $900,000; track two amounts ranged from $30,000 to over $500,000. The research questions vary, but several states planned to focus their evaluations on the effects of time limits and mandatory work requirements. Other research topics include program effects of family caps, child care services, financial incentives, and limiting benefits to unwed teens.
section_title: Other Research Funding Focuses on Employment, Technical Assistance, and Child Well-Being
paragraphs: HHS’ research efforts related to TANF cover a wide array of topics, including employment, technical assistance, and child well-being. HHS spent approximately $12 million in fiscal year 1997 on four research projects examining employment issues and welfare recipients. These evaluations are (1) the Goodwill Industries demonstration project that places the chronically unemployed into unsubsidized, private sector employment; (2) a 1-year analysis of employment and wage patterns of welfare recipients; (3) a study of four comprehensive, community-based employment programs for public housing tenants, funded by HHS, the Department of Housing and Urban Development, and the Rockefeller Foundation; and (4) the JOBS evaluation, a study examining alternative approaches for moving welfare recipients into work.
HHS also funded a number of technical assistance projects for approximately $2 million in fiscal year 1997 to distribute research and data results as well as to support other areas. The technical assistance projects include activities such as local welfare staff training, conferences of federal and state practitioners and researchers that focus on their research efforts, and community-college-based workshops to design short-term employment training programs for welfare recipients. Some of this money also funds contracts to develop technical assistance networks and advisory group projects, which primarily focus on disseminating research and evaluation findings and transferring successful practices.
Finally, HHS provided funds to sustain an existing research effort to look at child well-being at a cost of almost $1.5 million. The project provides money to selected states with welfare reform evaluations to augment the outcome measures for children and assess the effects of different welfare reform approaches on child well-being. HHS funds other studies that include some research on child well-being, but the dollar amount for the child well-being component could not be determined. These studies are the National Evaluation of Welfare-to-Work Strategies, which examines employment strategies in seven sites; several field-initiated studies; and some of the track one and track two welfare evaluations.
section_title: Conclusions
paragraphs: In response to the new law, HHS has reduced its FTE levels and is pursuing its research and evaluation mandates. However, the Department is having difficulty meeting its responsibility for developing and issuing the TANF and high-performance bonus regulations. While a statutory deadline for the TANF regulations was not provided, the need for HHS to quickly issue the regulations became apparent given that states could, and did, begin implementing their TANF programs shortly after the law was enacted. Yet HHS did not issue proposed TANF regulations until November 1997, and final regulations are not expected to be issued until sometime in spring 1998. This same need for early direction arose with the bonus regulations because states wanted to be sure that the data collection systems they were putting in place would collect the data needed to compete for a bonus. Given the status of states’ implementation of welfare reform, the prompt issuance of the TANF and high-performance bonus regulations is of utmost importance so that states’ investment in systems and programs can be made wisely.
section_title: Agency Comments
paragraphs: HHS commented on a draft of this report and generally concurred with our findings. However, in summarizing our findings regarding the Department’s efforts to reduce its FTEs, HHS’ letter too broadly construed the findings presented by the report. In this letter, HHS states that “GAO was supportive of the Department’s assumptions about the number of FTEs required to be reduced and the time frames.” This is not the case. We did not endorse the manner in which HHS accomplished its FTE reductions but simply determined HHS’ interpretation of the FTE provision, described their interpretation, and analyzed both FTE and staff data in the context of that interpretation and other alternative criteria. Our report also points out that in cases where a statute is unclear, principles of administrative law allow the agency charged with carrying out a law to make such interpretations.
HHS also provided technical comments, which we addressed in the report, as appropriate.
As agreed with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days from the date of this letter. At that time, we will send copies to the Secretary of HHS; Chairmen and Ranking Minority Members of the House Committees on Ways and Means and Education and the Workforce; the Ranking Minority Member of the Subcommittee on Human Resources, House Committee on Ways and Means; Chairman and Ranking Minority Members of the Senate Committee on Labor and Human Resources; and the Ranking Minority Member of the Senate Committee on Finance. We also will make copies available to others on request.
If you or your staff have any questions about this report, please contact me on (202) 512-7215. Other staff who contributed to this report are listed in appendix II.
section_title: Scope and Methodology
paragraphs: This appendix discusses in more detail our approach and methodology for answering our objectives about HHS’ FTE reductions and its guidance and technical assistance to the states.
subsections: section_title: FTE Reductions
paragraphs: The 1996 welfare law directs HHS to reduce the number of FTEs by (1) 245 in the welfare block grant programs and (2) 60 managerial positions in the Department. To determine the extent to which HHS had accomplished these reductions, we analyzed FTE reductions in the Office of Family Assistance (OFA)—which is responsible for the AFDC, JOBS, and Emergency Assistance programs—and both FTE and staff reductions in the Office of the Secretary using the number of staff on board as a surrogate measure for FTEs. We first specified measurement criteria, then collected and analyzed the FTE and staffing data.
subsections: section_title: Criteria for Measuring FTE Reductions
paragraphs: While the law stipulates a precise number of FTEs to be reduced, it does not provide criteria by which to measure whether HHS has achieved the reductions. In order to define the law’s FTE reduction requirement in a way that it could be measured, we considered such additional criteria as (1) the programs subject to the reductions; (2) the type of FTE, either authorized or actual; (3) the start and end dates for measuring the reductions; and (4) the definition of “managerial position.” In addition, when a statute does not include detailed criteria for implementation, under principles of administrative law, the executive branch department is responsible for interpreting the law’s provisions. Therefore, in developing a framework for measuring whether the FTE reductions had taken place, we asked HHS for the Department’s interpretation of the required FTE reduction and used additional criteria that we considered reasonable, as discussed below.
subsections: section_title: Programs and Offices Subject to FTE Reductions
paragraphs: The law did not name the programs in which 245 FTEs should be reduced but referred to them as programs “converted into a block grant.” Thus, from examining the legislative history and correspondence between the Administration for Children and Families (ACF) and Senator Daniel Patrick Moynihan, we limited consideration of programs subject to FTE reductions to AFDC, JOBS, and Emergency Assistance, which ACF considers part of AFDC when allocating FTEs. Further, because the law allowed HHS to designate the organizational unit or program where the reductions in managerial positions would be made, we measured the reductions in managerial positions only for the Office of the Secretary, the office that HHS had selected for these reductions.
section_title: Authorized and Actual FTE Levels
paragraphs: Neither the law nor the legislative history indicated whether the reduction in 245 FTEs in ACF or the 60 FTEs in managerial positions was to be in authorized or actual FTEs. Because the authorized FTE level establishes an upper boundary or ceiling on FTE usage and the actual FTE level indicates how many FTEs are being used, we measured the reduction in both types of FTEs to determine whether ACF and the Office of the Secretary had reduced the upper boundary as well as the actual number of FTEs.
section_title: Start and End Dates for Reductions
paragraphs: We considered three potential dates as the starting point for the reductions: August 1995, the date of the FTE level for ACF that was reported to Senator Moynihan and the start date that ACF used; August 1996, the date the new welfare law was enacted; and January 1995, the date HHS identified as the initiation of FTE reductions in the Office of the Secretary, which included major downsizing activity under the Federal Workforce Restructuring Act of 1994. HHS counted this reduction as addressing the provision in the federal welfare reform law. We decided to measure the FTE changes in OFA and the Office of the Secretary annually, beginning fiscal year 1995, in order to develop a complete picture of the changes that occurred. We used the month of September as the starting point in each year to establish the end of the fiscal year as a baseline and to make the reduction time periods in these two offices comparable.
With respect to an end date for achieving the FTE reductions, ACF recommended a target date of July 1, 1997. This is the final submission date for all TANF state plans and thus the effective starting date for TANF. The Office of the Secretary did not object to this date, pointing out that most of its reductions had been made during fiscal year 1995. Because the effective starting date for TANF was the effective ending date for AFDC and JOBS, we considered this a reasonable date for completing the reduction of FTEs that the federal welfare reform law deemed were no longer needed to administer the new welfare program. Thus, we measured changes in FTE levels in OFA up to July 1, 1997.
For the Office of the Secretary, we used different end dates because the full year total was not yet available at the time of our review. We measured the Office’s FTE level through September 1997, based on an estimate for the actual FTE total for the last quarter of fiscal year 1997. In addition to FTE data, we examined staffing data as a surrogate measure for the FTEs. The end date used for changes in staff was March 31, 1997—the most current date for which staffing data were available.
section_title: Definition of Managerial Position
paragraphs: The 1996 welfare law does not precisely define the term “managerial position,” which can have more than one meaning in federal civil service. The civil service classification system considers civil service staff in grades 12 and above as eligible for management positions, although not all staff in these grades hold management responsibility. Further, staff in lower civil service grades may serve as supervisors—a position with responsibilities similar to those of managers but which the civil service qualification standard does not classify as “managerial.” However, both managerial and supervisory positions are defined in terms of responsibilities rather than in terms of grade levels. HHS considered all staff positions—regardless of grade level and responsibilities—in the Office of the Secretary to be managerial because of the Office’s general management responsibility for the Department.
The data source we employed to measure changes in the number of staff—the Office of Personnel Management’s Central Personnel Data File (CPDF)—contains separate variables for a staff member’s civil service grade, their level of management responsibility, and the organizational location in which they worked. Use of all three variables allowed us to look at staff changes from three perspectives: changes in the number of all staff in the Office of the Secretary, changes in the number of staff with management responsibility, and the civil service grades of staff that held management responsibility. However, the CPDF variable for management responsibility defined this term very broadly because it included staff in both managerial and supervisory positions.
section_title: Data Sources
paragraphs: To develop our information, we interviewed representatives from ACF and the Office of the Secretary about HHS’ interpretation of the FTE reduction provision, other downsizing and reorganization activities, planned FTE reductions, and data sources. We gathered FTE data from both offices to address our measurement criteria; we also gathered billing data and staff rosters to verify the FTE data. To learn more about federal downsizing, we consulted with federal workforce analysts in GAO’s General Government Division. These analysts also assisted us in using CPDF staff data as a surrogate measure for the FTE data, since the Office of the Secretary did not maintain staff FTE data by civil service grade or level of management responsibility. We also discussed the FTE requirements with officials at OMB and OPM.
section_title: Data Analysis Procedures
paragraphs: To determine the reduction HHS made in the non-managerial FTE level in AFDC and JOBS, we compared the authorized and actual FTE levels for the start date with the authorized and actual FTE levels for the end date, for both headquarters and regional offices and in total. We then tabulated the data ACF provided on the disposition of headquarters and regional office FTEs. To determine the reduction of the managerial FTE level in the Office of the Secretary, we first compared, for all positions, the authorized and actual FTE levels for the start date to the authorized and actual FTE levels for the end date to measure the change in the FTE level in terms of HHS’ definition of managerial positions.
Using CPDF staff data as a surrogate measure for FTEs to identify the number of staff in the Office of the Secretary that were managers in terms of civil service definitions, we first calculated the net change in the number of staff on board, broken out by level of management responsibility. Using cross-tabulations, we then examined the civil service grade distribution for the net change in staff that held mid-level management responsibility—the group of management staff whose numbers decreased. Finally, using cross-tabulations again, we calculated the disposition of staff that had left the Office of the Secretary between the end of September 1995 and March 1997, broken out by level of management responsibility.
section_title: Verifying FTE Levels
paragraphs: To verify FTE information provided to us, we looked at the hours that staff in OFA and the Office of the Secretary charged to the programs affected by the reductions, divided the total hours billed by 2,080—the number of hours in a year for one FTE—and compared it with the values for actual FTEs that ACF and the Office of the Secretary submitted. The hours that HHS staff charged to programs are captured through time and attendance data submitted for payroll purposes and maintained by HHS’ Program Support Center.
section_title: HHS Guidance and Technical Assistance
paragraphs: Our primary method for obtaining state opinions about the clarity, usefulness, and timeliness of HHS guidance to the states was through a mail survey of TANF directors. To develop a list of the critical TANF implementation issues facing states for the survey instrument, we interviewed staff at several associations in Washington, D.C., including the American Public Welfare Association, the National Governors’ Association, the National Association of Counties, the National Conference of State Legislatures, the Council of State Governments, and the Center for Law and Social Policy. We also interviewed agency officials at ACF in headquarters, staff working on TANF in two HHS regions, and state TANF officials in two states—Pennsylvania and Illinois. In addition to our interviews, we reviewed all policy guidance that HHS distributed to the states, including its January 1997 policy memorandum; April 1997 Compilation of Implementation Materials, which included summaries of the various sections of the law, HHS and other federal agency contacts, and letters from the Acting Assistant Secretary for Children and Families answering frequently asked implementation questions; and other miscellaneous program instructions and memorandums to states.
The survey questionnaire asked questions about the timeliness, clarity, and usefulness of HHS’ January 1997 policy memorandum and other HHS guidance that covered issues identified in our review as critical to the states. For some of these critical issues, HHS had not provided any formal guidance to the states. Regarding these issues, the survey asked states if they had received any oral guidance from HHS and whether it was useful. The survey was faxed to the TANF director in each of the 50 states and the District of Columbia; we received 49 responses. In addition to data provided through the survey responses, we also called 11 states to gather more detailed information about some of their answers.
section_title: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Acknowledgments
paragraphs: In addition to those named above, the following individuals made important contributions to this report: Sara Edmondson, Ellen Soltow, and John Vocino took the lead in designing the job, collecting and analyzing data, and writing the report; James Wright and John Smale, Jr., provided survey and design support; Gregory Wilmeth gave analytical and technical assistance in working with OPM’s personnel database; Robert Goldenkoff provided technical advice on FTE data and federal workforce issues; and Robert DeRoy provided the computer programming for analyzing OPM’s database.
section_title: Related GAO Products
paragraphs: Welfare Reform: Implications of Increased Work Participation for Child Care (GAO/HEHS-97-75, May 29, 1997).
Welfare Reform: States’ Early Experiences With Benefit Termination (GAO/HEHS-97-74, May 15, 1997).
Welfare Reform: Three States’ Approaches Show Promise of Increasing Work Participation Rates (GAO/HEHS-97-80, May 30, 1997).
Welfare Waivers Implementation: States Work to Change Welfare Culture, Community Involvement, and Service Delivery (GAO/HEHS-96-105, July 2, 1996).
Employment Training: Successful Projects Share Common Strategy (GAO/HEHS-96-108, May 7, 1996).
Welfare to Work: Approaches That Help Teenage Mothers Complete High School (GAO/HEHS/PEMD-95-202, Sept. 29, 1995).
Welfare to Work: Child Care Assistance Limited; Welfare Reform May Expand Needs (GAO/HEHS-95-220, Sept. 21, 1995).
Welfare to Work: State Programs Have Tested Some of the Proposed Reforms (GAO/PEMD-95-26, July 14, 1995).
Welfare to Work: Most AFDC Training Programs Not Emphasizing Job Placement (GAO/HEHS-95-113, May 19, 1995).
Welfare to Work: Participants’ Characteristics and Services Provided in JOBS (GAO/HEHS-95-93, May 2, 1995).
Welfare to Work: Measuring Outcomes for JOBS Participants (GAO/HEHS-95-86, Apr. 17, 1995).
Welfare to Work: Current AFDC Program Not Sufficiently Focused on Employment (GAO/HEHS-95-28, Dec. 19, 1994).
Child Care: Current System Could Undermine Goals of Welfare Reform (GAO/HEHS-94-238, Sept. 20, 1994).
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