The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) established four purposes for the TANF block grant: 1. provide assistance to needy families so that children may be cared for in their own homes or homes of relatives; 2. end dependence of needy parents on government benefits by promoting job preparation, work, and marriage; 3. prevent and reduce out-of-wedlock pregnancies; and 4. encourage two-parent families. Within these goals, states have responsibility for designing, implementing, and administering their welfare programs to comply with federal guidelines, as defined by federal law and HHS, including imposing a 5- year lifetime limit on many families receiving cash assistance. In addition, the block grant includes a maintenance-of-effort (MOE) requirement, which requires states to maintain a significant portion of their historic financial commitment to welfare-related programs. In fiscal year 2013, states spent a total of $31.6 billion in federal TANF funds and state MOE funds, with federal funds accounting for 53 percent of the total. The federal law that established TANF also created a TANF Contingency Fund that states could access in times of economic distress. In creating the TANF block grant, Congress emphasized the importance of state flexibility, and restricted HHS’s regulatory authority over the states except to the extent expressly provided in the law. In line with the second purpose, a key TANF goal is helping parents prepare for and find jobs. The primary means for measuring state efforts in this area has been TANF’s work participation rate. Generally, states are held accountable for ensuring that at least 50 percent of all families receiving TANF cash assistance and considered work-eligible participate in one or more of the federally-defined allowable activities for the required The law also contains a provision known number of hours each month. as the caseload reduction credit, which allows states to reduce the work participation rate they are required to meet based on reductions in the size of their TANF caseload. In addition, TANF regulations provide that states that spend more than their MOE requirements generally receive an increase in their caseload reduction credit. Our work has shown that over the years, states have engaged about one third of families receiving TANF cash assistance in federally-defined work activities nationwide while still meeting their required work participation rates. Generally, this is because many states have relied on the caseload reduction credit and other allowable options to meet the requirement rather than engaging more families in specified work activities to reach a 50 percent rate. This has raised concerns among some policymakers that states are meeting the letter but not the spirit of the law. PRWORA established higher work participation rate requirements and eliminated many exemptions from these requirements for recipients compared to what was in place prior to TANF. This reflected research that found that mandatory work requirements could reduce welfare receipt and increase employment among single mothers and help address concerns about long-term welfare receipt. In our prior work, we concluded that states’ use of the modifications currently allowed in federal law and regulations, as well as states’ policy choices, have diminished the usefulness of the work participation rate as a national TANF performance measure. The Claims Resolution Act of 2010 required states to report additional information on TANF recipients’ engagement in activities. An HHS report to Congress, based on 2011 state data, found that that 24 percent of work-eligible individuals met federal work participation rate standards, but more than 50 percent of work-eligible individuals had zero hours of participation (see fig. 1). While some of these individuals were exempted from participation or excluded for some other reason such as caring for a child under age one, at least some of these individuals had not been engaged in work activities by the state or local TANF agency.HHS data show that federal and state spending on work-related activities, such as subsidized employment, has declined in the last 3 years for which data are available (fiscal years 2011-2013) and has been under 8 percent of total TANF spending in each of these years. Almost half of individuals meeting the work participation rate standards did so through unsubsidized employment—working in a regular job while receiving cash assistance. This suggests that states’ ability to meet the work participation rate relies heavily on the activities of individuals who are already able to work rather than providing special assistance to those who have the most difficulty finding and keeping jobs. In fiscal year 2011, unsubsidized employment was the most common work activity among individuals participating in at least one hour of a countable work activity per month. Job search and job readiness assistance, followed by vocational education training, were the next most common activities (see fig. 2). Between 1987 and 1996, there was considerable experimentation with welfare-to-work programs under TANF’s predecessor program, Aid to Families with Dependent Children (AFDC), as HHS granted waivers to states to test and evaluate new approaches. A body of HHS-sponsored research resulted, showing that welfare-to-work programs can increase employment and reduce welfare receipt. This research helped inform the creation of TANF. Between 1987 and 1996, 46 states received waivers from existing AFDC requirements to test and evaluate new approaches to improve employment outcomes for people on welfare. These initiatives were referred to as section 1115 waivers because they were granted under section 1115 of the Social Security Act. According to HHS officials, HHS required states that applied for and received waivers from federal program requirements to have an independent organization evaluate its program change, supported by HHS and state funding. These waiver initiatives included placing time limits on the receipt of benefits and strengthening work requirements, among others. According to HHS, many of the policies and concepts included in state waiver requests were later incorporated into TANF. States that received section 1115 waivers under AFDC were allowed, under PRWORA, to continue to operate under these waivers until their expiration. However, the last of these waivers expired in 2007, and no provision in law allowed these AFDC waivers to be extended. Questions have been raised as to whether HHS continues to have the authority under section 1115 to waive certain TANF program rules; this report does not address this issue. Under law, HHS is required to conduct TANF and related research and the agency supports a broad array of research and evaluations. See appendix III for a list of relevant recent and ongoing HHS-funded evaluations. Since the 1996 welfare law replaced AFDC with the TANF block grant and gave states flexibility to set spending priorities, they have used a smaller share of the grant to provide cash assistance. Within the first 5 years of TANF, the number of families receiving cash assistance declined by over half and states shifted their TANF priorities to other forms of aid, or non-cash services. These can include any other services meeting TANF purposes, such as job preparation activities, child care and transportation assistance for parents, out-of-wedlock pregnancy prevention activities, and child welfare services. In fiscal year 1997, nationwide, states spent about 23 percent of federal TANF and state MOE funds on non-cash services. In contrast, states spent more than 66 percent of federal TANF and state MOE funds for these purposes in fiscal year 2013. While the TANF block grant still serves as the nation’s major cash assistance program for low-income families with children, states have also increasingly used it as a flexible funding stream for supporting a broad range of allowable services. However, we previously reported that the accountability framework currently in place in federal law and regulations has not kept pace with this evolution. Our prior work found that TANF’s accountability framework provides incomplete information on how states’ non-cash services are contributing to TANF purposes. We noted that Congress may wish to consider ways to improve reporting and performance information so that it encompasses the full breadth of states’ uses of TANF funds. The composition of the overall TANF caseload has also changed, with the percentage of “child-only” cases increasing from about 23 percent in fiscal year 1998 to about 46 percent in fiscal year 2011. These cases consist of families receiving cash assistance on behalf of children only, in contrast to other cases in which adults in the families also receive benefits on their own behalf. According to HHS, the increase in the percentage of child-only cases was primarily due to a sharp decline in the number of TANF cases with an eligible adult, rather than an increase in the number of child-only cases. Some TANF cash assistance recipients are work-ready while others face challenges that make them harder to employ. According to the preamble to a TANF final rule from 1999, several provisions of the law, including time limits, higher participation rate requirements, and fewer individual exemptions from participation requirements, taken together, suggest that states should serve more clients beyond just those who are job-ready. However, some state TANF officials we interviewed for a 2012 report said the pressure to meet TANF work participation rate requirements causes them to focus on the “ready-to-work” cash assistance population, which can leave the “hard-to-employ” population without services. Health issues, disability, substance abuse, criminal records, domestic violence, limited education, and responsibilities for disabled children or parents can all constitute employment challenges for TANF recipients, who may need enhanced assistance to prepare for, find, and keep jobs. States may generally only count a family’s participation in job readiness assistance, which can include mental health and substance abuse treatment, towards the work participation rate for up to 12 weeks in a year. A body of rigorous research points to four approaches that can be used to increase the employment and earnings of TANF cash assistance recipients: subsidized employment, treatment and employment services, career pathways, and modified work-first.this research is based on programs that operated, at least in part, during TANF’s predecessor program, AFDC, and have since ended; and some of these older studies focused on programs that predominantly targeted women. Some prior studies have also focused on individuals with education levels that are higher, on average, than the TANF population. Evaluation of Florida’s Back to Work program Florida’s Back to Work program used American Recovery and Reinvestment Act of 2009 funding to create subsidized jobs. Administered by regional workforce boards, it operated in 2010 and placed about 5,600 individuals in subsidized jobs. For-profit, non- profit, and public sector employers received subsidies that covered 80 to 95 percent of program participants’ wages for 6 months. For-profit organizations were asked to commit to hiring the participants after the subsidy ended and non-profits were encouraged to do the same. Program participants experienced significantly greater increases in unsubsidized employment compared to individuals who were eligible but did not take part in subsidized employment. Participants experienced a nearly $4,000 average increase in earnings over their prior earnings compared to about a $1,500 average increase for the comparison group. the use of public funds to create or support temporary work opportunities for people who might otherwise be unemployed. One model of subsidized employment—transitional jobs—focuses on the hard-to-employ by providing temporary, wage-paying jobs, support services, and job placement help to individuals who have difficulty getting and holding jobs in the regular labor market. Subsidized employment programs have been used for decades to provide income support for people who are unable to find jobs in the regular labor market and improve employability for people with limited work experience. These programs can vary, for example, in terms of the amount of wages that are subsidized; prospects for permanent, unsubsidized employment; the degree of worksite supervision provided; and whether the worker is employed directly or through an intermediary (see fig. 3). Research has shown that subsidized employment can increase employment and earnings, although some studies suggest that these gains may not last beyond the subsidized position. Nevertheless, these programs can provide individuals who are hard to employ with work experience and can have indirect effects, such as reduced recidivism among former prisoners. Subsidized employment programs in the 1970s and 1980s, during the time of TANF’s predecessor program, yielded positive results on employment and earnings. One such demonstration project tested a model in which 10,000 welfare recipients in seven locations received 4 to 8 weeks of training and spent up to one year in subsidized positions as home health aides. Most of the subsidized employment programs that produced long-term employment gains targeted women; disadvantaged men experienced fewer positive results following the period of subsidized employment. Following welfare reform, transitional jobs gained traction as a strategy to increase the employability of TANF recipients. The theory behind this approach is that people best learn to work through working. Program staff can observe and coach participants on skills such as developing good work habits and dealing with coworkers to improve their future success in an unsubsidized job. Participants may be able to subsequently acquire jobs they would not otherwise have access to. Recent studies of transitional jobs programs have not shown sustained increases in employment, although these programs had indirect effects of reducing recidivism and reliance on welfare receipt. As part of the American Recovery and Reinvestment Act of 2009, Congress provided funding through the TANF Emergency Contingency Fund that in part helped states cover the costs of increased expenditures for subsidized employment programs. Thirty-nine states and the District of Columbia reportedly used $1.3 billion from the Emergency Contingency Fund to create 260,000 subsidized jobs, according to research. Although these efforts were not focused solely on TANF cash assistance recipients, experts we spoke with said the availability of additional funds renewed interest among states in subsidized employment. According to one study, these efforts involved the private sector in creating subsidized positions to a greater extent than in the past. The American Recovery and Reinvestment Act of 2009 created a $5 billion Emergency Contingency Fund for state TANF programs, available in fiscal years 2009 and 2010. Pub. L. No. 111-5, § 2101(a)(1), 123 Stat. 115, 446. Evaluation of New York City’s Personal Roads to Individual Development and Employment (PRIDE) New York City’s PRIDE was a large-scale welfare-to-work program for recipients with work-limiting medical or mental health conditions. This program operated from 1999 to 2004, and served more than 30,000 people. Staff performed in-depth assessments of participants’ work and education histories and medical conditions, then assigned them to activities—including unpaid work experience, education, and job placement assistance— that took account of their medical conditions. An evaluation of 3,000 randomly-assigned participants found that PRIDE significantly reduced the amount of welfare that participants received, in part because it generated increases in employment. Thirty-four percent of participants worked in jobs covered by unemployment insurance within 2 years after entering the study, compared to 27 percent of the control group. However, about two- thirds of participants never worked during the 2-year study period. Demonstration is evaluating seven subsidized employment programs that target current, former, or potential TANF recipients, low-income noncustodial parents, and others. The Department of Labor-funded Enhanced Transitional Jobs Demonstration is evaluating seven sites for which it has provided grants for transitional jobs programs that target either non-custodial parents or former prisoners. HHS and the Department of Labor entered into a memorandum of agreement to coordinate these studies through shared data collection instruments and evaluation sites and coordinated reporting efforts. Both projects incorporate lessons from earlier research on transitional jobs and test whether providing subsidies to private employers can be effective for less job-ready participants. Reports on the results of these studies are scheduled for 2015 through 2018. Treatment and employment services – This approach provides treatment for mental health needs, substance abuse, or a physical disability as well as employment services in different combinations and sequences (see fig. 4). The theory behind this approach is that treatment can help to stabilize a health condition to make steady work possible, while work experience can help participants learn how to manage problems that could otherwise prevent them from retaining a regular job. Rigorous research has shown some limited impacts for this approach. Evaluation of one program that offered a mix of unpaid work experience, educational activities, and job search assistance to TANF recipients with work-limiting health conditions and disabilities showed, to some extent, increased employment that lasted for two years. Another evaluation for a program in which staff visited participants’ homes to teach them life skills showed substantial increases in employment and earnings for those considered very hard to employ, but the larger population of participants receiving services experienced only small increases in employment and earnings. In terms of future research possibilities, HHS is considering whether emerging research from the fields of psychology and neuroscience on executive functioning—which is related to behaviors such as goal- setting, self-regulation, planning, and problem-solving—could help If so, it may have applications for adults succeed in employment.TANF. Career pathways – This approach has been defined in different ways, but can involve providing contextual learning to prepare individuals of various skill levels to advance in a high-demand occupation or industry. Reading, writing, and math skills are taught using real-life materials and situations from the industry in which they will be used. Employers in the targeted sectors help to determine what skills are required for participants to become employed and advance their careers in growing industries. Workers of varying skill levels can use multiple entry or exit points to advance within a specific sector or occupational field and gain industry-recognized credentials through a clear sequence of education, training, or a combination of education and training. Participants are provided career counseling and other support services (see fig. 5). This approach builds on results from a random-assignment evaluation of sector-based employment, indicating that programs offering sector- specific training can increase the employment and earnings of low- income individuals. The approach is also informed by lessons from prior research showing that adult basic education alone has not been successful in connecting low-skilled individuals to jobs. Research on education-oriented welfare-to-work programs that operated in the 1980s and 1990s showed that the most successful programs offered short-term assignments that did not allow participants to “languish” in activities without making progress. This is in contrast to remedial education and GED preparation programs that either had difficulty retaining participants or kept them for years without clear progress. These prior findings informed a call for training that promotes career advancement, integrates basic education and skills training, and engages local employers, while providing support services to TANF recipients to improve program retention. Public/Private Ventures’ Sectoral Employment Impact Study Results from Public/Private Ventures’ Sectoral Employment Impact Study based on follow-up interviews 24 to 30 months after random assignment suggest that sectoral programs can increase the employment and earnings of traditionally disadvantaged workers. The study, launched in 2003, evaluated three sectoral programs that train workers for skilled positions in a range of industries, including healthcare, manufacturing, information technology, and construction. The study assessed impacts on employment, earnings, hourly wages and access to work-related benefits. Programs included in the study offered training that was focused on a specific sector or sectors and that took no more than a year to complete. Over the follow-up period, treatment group participants were employed an average of 1.3 months more than individuals in the control group. Individuals enrolled in training also earned about $4,500 more than individuals in the control group over a 2-year period and were also more likely to work in jobs with higher wages and benefits. As confirmed by HHS officials, there are no completed rigorous experimental impact studies of a comprehensive career pathways program, but HHS is funding relevant ongoing evaluations, as part of an inter-agency effort with the Departments of Education and Labor to promote the use of career pathways. One of the studies, known as the Innovative Strategies for Increasing Self-Sufficiency project, is a nine-site, random assignment evaluation of career pathway programs. Initiated in 2007, the study will last 10 years, and early results are expected in the next 2 to 3 years. HHS also has a research portfolio for evaluating health care-related education and training programs operated with Health Profession Opportunity Grants (HPOG). These grants are targeted to TANF recipients and other low-income individuals and aim to prepare them for occupations in the health care field that pay well and are expected to either experience labor shortages or be in high demand. Three of the HPOG grantees are to have site-specific impact evaluations as part of the Innovative Strategies for Increasing Self-Sufficiency project with reports expected in 2016. An interim analysis of the impacts of HPOG is expected in June 2016. HHS expects that further follow-up analysis of both Innovative Strategies for Increasing Self-Sufficiency and HPOG impacts will be released in 2018. Research Snapshot: Modified Work-First Approach The National Evaluation of Welfare-to- Work Strategies (NEWWS) NEWWS examined the long-term effects of 11 mandatory welfare-to-work programs, in seven sites, on welfare recipients and their children. These programs took different approaches to helping welfare recipients find jobs, advance in the labor market, and leave public assistance. During the 1990s, more than 40,000 single-parent families were tracked over 5-year follow-up periods. A Portland, Oregon program outperformed the other programs that were examined. It offered education or training to some participants, depending on the caseworkers’ assessment of the individuals’ skills and needs, and encouraged all participants to hold out for jobs that paid better than the minimum wage and offered stable employment. In the program’s fifth year, it produced a 6.4 percent increase in employment and 14.6 percent increase in average earnings, compared to the control group. responses to the Request for Information. According to HHS officials, this information will yield insights on (1) the benefits of and challenges to aligning diverse funding streams, programs, and stakeholders around career pathways systems; and (2) the current and potential future use of career pathways systems to help at-risk populations, including TANF cash assistance recipients, gain skills and access the middle class. Modified work-first – This approach entails a strong work focus and some upfront education or training, as needed (see fig 6). Research on welfare-to-work programs during the 1990s sought to test the effectiveness of programs that emphasized rapid employment (“work first”) through mandatory job search compared to those that focused first on mandatory education and training. One program combined aspects of both of these approaches: it included a strong employment focus, the use of both job search and short-term education or training, and an emphasis on holding out for a good job, as opposed to participants taking the first job they were offered. Research shows that programs using this approach increased employment and earnings and reduced welfare receipt. This approach appears more effective than programs that focus solely on education and training or solely on job search. We examined 10 ongoing programs that all help TANF cash assistance recipients to gain employment, using various different elements of the above cited promising approaches to meet a range of participant needs (see table 1). These populations included those whose limited prior work experience prevented them from gaining employment on their own, those with one or more work-limiting characteristic such as a mental or physical disability or substance abuse problem, and those in need of additional skills to enter a new field or to increase their employability. All of the selected programs serve TANF recipients: 5 of the 10 serve TANF recipients exclusively, while the other programs serve a broader population. Some of the programs we examined offered subsidized employment to those whose limited prior work experience prevents them from gaining employment on their own. For example: San Francisco’s Jobs Now! program uses a community jobs model similar to a transitional employment program to place participants in employment positions. The program includes 6 months of subsidized employment and is targeted to those with limited experience or exposure to work. Some participants are placed in public service training programs where they are employed with the local human services agency or other city departments like the Office of Parks and Recreation. Other participants who are more job ready are placed in a wage-subsidy program with private businesses. Under this program tier, Jobs Now! subsidizes 100 percent of the wage for the first month, 75 percent for the second month, and $1,000 for the next 3 months. Employers also agree to make a good faith effort to retain the employee after the subsidy ends. Administrators reported that the retention rate with private employers—once the subsidy ends—is between 75 and 80 percent. Similarly, Erie County, New York’s PIVOT wage subsidy program requires a commitment from employers to hire participants after the wage subsidy ends. PIVOT is designed to serve those TANF recipients who are among the more work-ready, but who did not find jobs on their own during previous job search activities. When participants are referred to the program through the local TANF agency, they receive a skills assessment and enter a job-readiness training program for 45 days while their eligibility is being determined. Participants are screened to match their skill levels with employer needs. PIVOT places participants in local employment—in industries such as banking, hospitality, legal services, manufacturing, health, and childcare—for 6 months during job training. Participants’ days are typically split between a work experience program and other work activities such as GED classes or barrier remediation, such as English lessons for refugees with language barriers. Los Angeles County’s large subsidized employment program includes a component in which participants can gain work experience with for- profits, nonprofits or government agencies, and an on-the-job training component that places participants with private sector employers. For the latter, a subsidy for the participants’ wages is sent to a private job provider during the first two months of employment. After those 60 days, the wage is paid directly by the employer, who receives $350 for each part-time employee and $500 for each full-time employee. Three of the ten programs we examined used the treatment and employment services approach to serve participants with one or more physical or mental disabilities, substance abuse, or other work-limiting characteristics. Utah’s Licensed Clinical Therapist program provides services for clients with substance abuse, domestic violence, and mental health problems. An administrator said participants often enter the program under emotional turmoil that—if untreated—would prevent them from gaining stable employment. To address this need, clients receive a clinical assessment to diagnose mental health problems and they can participate in clinical therapy sessions offered by the program in combination with job search and resume building activities. New York City WeCARE was designed to provide comprehensive services to hard-to-employ clients with mental or physical health needs or substance abuse problems. The program uses an in-house comprehensive assessment of physical, psychological, and social needs by a board-certified doctor and social worker to determine whether a client is fully employable, can participate in work-related activities with limitations, needs treatment to stabilize a condition before engaging in work-related activities, or if the client could be eligible for federal disability benefits. One important program element is flexibility. For example, participants have a window of several days to make a scheduled appointment. A contractor told us that by offering flexibility, the program is better able to engage participants whom other programs might automatically sanction for non-participation. Ramsey County, Minnesota’s FAST program is a partnership between agencies that co-locate services like mental health treatment, vocational rehabilitation, community health care, and TANF employment supports. Administrators said with the right supports and an individualized service plan, clients with mental or physical health or substance abuse problems –who are not eligible for federal disability benefits—can gain employment. FAST contracts services with Goodwill/Easter Seals, which provides day-to-day supervision of participants and facilitates the individual placement and supports created for them. Home visits are used as needed to assess families’ needs, and family supports, including employment retention services, can last up to 9 months or longer. Three of the ten programs we examined used multiple elements of the sector-based career pathways approach to increase the skills of participants looking to enter a new field or increase their employability. Washington State’s I-BEST program was developed to help participants increase their literacy and basic skills while earning certificates or degrees in order to qualify for in-demand jobs. The program is offered in 34 community and technical colleges in the state. The program curriculum is based on regional job market demands and resources. A college must demonstrate local demand for a career program and show that those who complete the program will be able to exit it and receive an average wage of $13/hour or more. Program administrators said they believe their program is successful because of its team-taught, integrated service delivery model. Within I-BEST classrooms, two instructors work together to bolster basic skills while integrating career-related content into students’ curriculum. Since the program’s founding about 10 years ago, more than 200 career programs in fields such as health care, early childhood education, and advanced manufacturing have been approved by the Washington State Board for Community and Technical Colleges. The Minnesota FastTRAC program aims to move low-wage, low- skilled adults into credit-bearing training. Participants typically enter the program after being referred by various sources including local TANF and workforce programs. Participants are screened to determine their education level and needs. Similar to the I-BEST program, clients then go to classroom-based programs, in which instruction in math and reading is provided within the context of a profession like healthcare. Clients may also participate in some job shadowing during this period. Similarly, Kentucky officials perceived a need to increase educational attainment among the TANF population to improve their employability and launched the Ready to Work program about 16 years ago. The program is run statewide through the Kentucky Community and Technical College System. Unlike the I-BEST program, which focuses specifically on high-demand occupations, Ready to Work allows participants to select classes from the full catalogue of local courses. However, the program does offer counseling on job prospects in various career tracks. Participants also engage in on- or off-campus work study positions with public and private employers that are subsidized using TANF funds and connected to each participant’s program of study and career goal. All of the programs we examined used some form of assessment to identify participants’ service needs. Across the programs, factors assessed included skill levels, work history, interests, and physical and mental health. Additionally six of the 10 programs structured services or program offerings in two or more tiers or employment tracks for the purpose of better targeting the needs of participants. For example, the D.C. TANF program, which uses elements of a modified work-first approach, was redesigned in 2008-2009 in response to complaints that under the program’s “one size fits all” service delivery model, job-ready clients and those with significant barriers to employment were receiving the same services. Under the redesign, a continuum of services is available based on the client’s needs at assessment. Clients are categorized into a service delivery tier based on their education, experience, and skills, as well as barriers they may face (see fig 7). Although the programs we examined were all focused on work, they varied in the extent to which they were structured to help their states meet TANF’s work participation rate requirements, according to state and program officials. Contributing to the work participation rate, such as by requiring participants to meet specific federally-defined hours and activities requirements, was a goal of 5 of the 10 programs, for at least some portion of the participants served. For example, a Kentucky Ready to Work program administrator said its work study component is its biggest asset for meeting the work participation rate requirements. Students are placed in private-employment positions when possible and when positions are not available, administrators said students can work on campus or in volunteer positions to meet their hours requirements. In the D.C. TANF program, participants have different requirements depending on their service delivery tier. For example, job-ready participants are expected to meet both hours and activity requirements that are consistent with the federal work participation rate standards. Those who are less job ready must meet the hour requirements but may participate in any mix of activities even if it they do not count toward the District’s work participation rate. An administrator told us the D.C. TANF program was designed based on what they thought would work best to get participants employed and with the expectation that this will also result in meeting the work participation rate requirements. The work participation rate requirement was given less emphasis by the other five programs we examined, according to state and program officials. These administrators said their programs did not emphasize the work participation rate because of a conscious choice to prioritize other program goals, or because their programs served too few work-eligible TANF recipients to affect the state’s rate. Nearly all (9 of the 10 programs we examined) were components of larger TANF programs, meaning that states and localities may have a variety of other mechanisms for meeting the work participation rate requirements beyond these programs. Even without a strong emphasis on the work participation rate, these programs—like those that did emphasize the work participation rate—still maintained an employment focus and some offered activities that at least partially counted toward the work participation rate. Administrators in Los Angeles County’s subsidized employment program said they do not over-emphasize contributing toward the work participation rate requirements, but instead focus on placing participants in work. Similar to the D.C. TANF program—where addressing participants’ barriers and progressively increasing their engagement over time is thought to contribute to the work participation rate and increase long-term stable employment—Los Angeles County officials said if participants can be placed in employment, meeting the requirement is typically not an issue. Additionally, administrators said that because California allows clients to participate in some activities for longer durations than can be counted toward the federal requirement, they focus on keeping people engaged in work-related activities under the state rules. GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999). regarding how activities related to the career pathways approach may be allowable under TANF rules could address misperceptions and encourage more widespread use of this approach by state and local TANF agencies. Nearly all of the 10 programs we examined that currently use elements of promising approaches drew on expertise beyond the state or local TANF agency (see table 2). Nine of these programs involved partnerships with organizations and agencies such as community college systems, workforce agencies, and nonprofit organizations or contracted vendors. These partnerships provided the selected programs with access to the experience and expertise of a range of partners. For example: Officials with the Los Angeles County TANF agency noted that partnership with a local workforce agency is a key facilitating factor in its subsidized employment program. The workforce agency has acted as the employer of record for payroll and insurance purposes, and had existing employer relationships, so the TANF agency did not need to develop these capacities. While Kentucky’s Ready to Work program is entirely funded by TANF, the program is administered by the state’s community college system, and its case managers are located on campus and familiar with the college environment. According to program officials, clients generally pay their tuition through federal Pell Grants, so Ready to Work case managers help clients complete financial aid applications and ensure they remain eligible for the grants. Officials with Ramsey County, Minnesota’s FAST program that seeks to engage individuals with disabilities in work reported that the experience and credibility of the initiative’s lead nonprofit partner was a key facilitating factor. They particularly valued the nonprofit’s previous experience working with both rehabilitation and employment services, as opposed to other contractors that have only operated in the TANF employment context. Six of the programs also received technical assistance from a federal agency or nonprofit, such as a policy research organization or foundation. For example, Minnesota officials cited participation in the federal Career Pathways Institute as an important step in the development of the state’s career pathways program.assistance activities connected them with many other programs that influenced elements of their work. Officials in Los Angeles and Ramsey County, Minnesota, said that taking part in an evaluation conducted by a research organization helped inform their program models, and Ramsey County officials said their participation had enabled them to access additional resources, such as training from national experts. Officials said participation in technical Decisions by state and local policymakers to dedicate funds for the selected programs also facilitated the use of promising approaches, according to program officials. We have previously reported that when federal TANF funds are allocated to states, states do not necessarily direct the funding to state welfare agencies, but may allocate funds to support various programs depending on legislative priorities (see fig. 8). Officials with 7 of the 10 programs we interviewed noted that state or local funding decisions had facilitated their use of promising approaches. example, officials with the District of Columbia TANF program noted that the allocation of additional funding has been the key factor that has allowed the agency to continue to support its modified work-first approach. Officials reported that the approach requires more staff resources to assess clients’ work readiness and determine appropriate activities than does the agency’s prior model of “one size fits all.” The allocation of additional resources has allowed the agency to support these staff. The allocation of additional funds by state and local governments also facilitated San Francisco’s use of a subsidized employment approach for TANF cash assistance recipients, according to program officials. They reported that these funds have supported the agency’s ability to increase its wage subsidy in an effort to attract higher- wage employers. In addition to federal TANF funds, selected programs reported receiving funds from state and local sources. However, some of these funds may have included federal TANF funds that were being allocated by state and local entities. In addition, some of these state or local funds may have been used by states to meet their TANF maintenance of effort requirement. As structured, the TANF program lacks incentives to encourage broader adoption of promising approaches by large numbers of state and local TANF agencies. The federal law that created TANF established a goal of increasing job preparation and employment, and included a provision addressing the development and evaluation of innovative approaches for reducing welfare dependency. However, several TANF program characteristics may not encourage states to adopt and test new approaches for increasing the employment and earnings of cash assistance recipients. HHS’s authority over many aspects of TANF is limited and it has not proposed legislative changes to address these areas. Without federal action, adoption and evaluation of promising approaches may continue to be limited to select states and localities, leaving TANF recipients in other locations without access to these promising approaches. 42 U.S.C. §§ 601(a), 617. Accordingly, HHS has limited authority to influence state program choices and cannot compel states to adopt particular approaches for their welfare-to-work programs. funds on a wide range of programs and services that are not necessarily related to welfare-to-work activities, as long as these services support one of TANF’s four statutory purposes. In a 2012 report, we found that states spent significant amounts of TANF funds on services such as child welfare or child care, and that state use of federal TANF funds for these and other services can create tensions and trade-offs in state funding decisions. As a result, any additional resources needed for implementing more costly promising approaches for TANF cash assistance clients may compete with other allowable uses of TANF funds. Officials with three programs we interviewed that exclusively use TANF funds to implement elements of promising approaches noted that their programs had been continuously funded for many years and suggested that it would be difficult to find funding for the programs were they beginning today. Additionally, the federal work participation rate requirements do not necessarily work as an incentive for states to implement certain promising approaches, according to our interviews and prior work. Some experts and HHS officials we interviewed suggested that limits on the amount of time that certain job readiness and training activities may be counted may discourage states from toward a state’s work participation rate pursuing approaches that involve longer-term treatment or education. We have previously reported the concerns of state and local TANF officials that these limits do not allow sufficient time to address barriers to work for clients who have been out of the workforce for an extended period of time or to train clients for higher-wage employment that will prevent them from needing assistance in the future. See 42 U.S.C. § 607(c). Officials with 5 of the 10 programs we interviewed that were using promising approaches also expressed concerns about the limits. For example, officials with Ramsey County Minnesota’s treatment and employment services program said the TANF work activities rules do not provide enough flexibility for families coping with mental illness in that the time limit on job search and job readiness assistance and the 20-hour minimum for core work activities are not realistic for all. As a result, officials said most clients in the program receive cash assistance through a state program rather than through TANF. Yet, serving such clients through a state program instead of TANF likely limits the program’s replicabilty in other state or local TANF agencies, as not all states may be willing to devote state funds for this purpose. Officials with Kentucky’s Ready to Work program reported that the 12-month limit on counting vocational educational training toward the work participation rate has caused the program to rely more heavily on its work-study subsidized employment component, which has increased the program’s cost. Further, one official said that while the subsidized work-study component is a critical program feature, the expectation that clients will work at least 20 hours a week once they have exhausted their allowable full-time education may affect academic outcomes. The work activity limits only apply to what states may count toward the work participation rate and do not prevent states from allowing clients to engage in these activities for longer periods of time. However, several experts we interviewed explained that many state policies on activities that are available to clients are shaped by the work participation rate requirements. That is, some states may design their programs to provide and support only those activities that count toward the work participation rate, while other states also provide and support activities that do not count toward the rate. In addition, we have previously found that states have relied on a combination of factors allowed in law to reduce the percentage of families they needed to engage in work to meet their work participation rate requirements. According to the most recent data available from fiscal year 2011, 23 states used these factors to reduce their required work participation rate for all TANF families from 50 percent to 0 percent. As a result, states may have less incentive to use promising approaches to engage hard-to-employ individuals in work activities, as they can meet their work participation rate requirements without engaging these individuals. In 2013, we noted that the work participation rate is complex and that any potential changes to the measure would likely have a profound impact on state TANF programs. Finally, interviews conducted for this report and our previous work indicate that state and local TANF agencies have little incentive to test the effectiveness of new approaches. While several program administrators cited short-term or anecdotal evidence that their programs may contribute to increases in employment and earnings, only 4 of the 10 programs had undergone or were currently involved in a rigorous impact evaluation. States are not required to conduct impact evaluations of their TANF programs under federal TANF law, although these evaluations can provide useful information on program effectiveness. A rigorous evaluation impact study with a random assignment design allows for comparison with a control group in order to distinguish the program’s influence from other factors. Officials with some of the programs that had not undergone rigorous evaluations said they had not participated in these studies because of concerns about administrative burden, the newness of the program, or that a portion of their caseload would not receive services or count toward the work participation rate. Local Minnesota FastTRAC contractors said long-term follow ups with clients who had left the program would be burdensome to staff, who need to focus on newer or existing participants’ needs. An official with the D.C. TANF program said it had not yet been evaluated formally because the program had only recently been redesigned. A Kentucky Ready to Work administrator said the program has not been rigorously evaluated through a random assignment study. The administrator said this was because the state TANF agency does not want to deny services to anyone who is eligible as a result of being assigned to a control group or miss an opportunity to contribute toward the work participation rate. An administrator at one site that was undergoing a rigorous impact evaluation said that because only half of study participants would be selected for the program, recruitment for the study was challenging. We have previously found that although HHS has a strong tradition of leading and supporting rigorous welfare research, there are fewer incentives for states to evaluate their programs under TANF than existed under the previous welfare program with its evaluation and funding provisions. Indeed, although HHS maintains an active research agenda, TANF agency participation in some recent and ongoing HHS evaluations has been limited. For example, none of the four sites in the recently- completed Enhanced Services for the Hard-to-Employ Demonstration and Evaluation were TANF agencies. In addition, in two ongoing evaluations of career pathways programs, participating sites consist primarily of community colleges and workforce agencies. According to HHS, these sites vary in the extent to which they serve TANF cash assistance recipients. An HHS official we interviewed reported that engaging TANF programs in evaluations of promising approaches is difficult because of the administrative burden on the state or locality. Officials added that HHS has no authority to require state agency participation in research and evaluation and no dedicated funding to provide states or localities incentives to participate. However, HHS officials also noted that often entities beyond TANF agencies serve TANF cash assistance recipients and research findings are still relevant for these partners. HHS has also taken steps to share research findings with local TANF programs, welfare researchers, and policymakers. For example, the agency has sponsored an annual Welfare Research and Evaluation Conference to share evaluations of welfare reform and formulate ways to incorporate these findings in the design and implementation of programs since 1998. HHS also makes research results available through presentations at other conferences related to welfare and low-income issues, their agency websites, and online announcements sent to subscribers. While the 10 state and local programs we examined are making use of some promising approaches for moving TANF recipients into employment and increasing their earnings, incentives are lacking for large numbers of state and local TANF agencies to adopt and test such approaches under the structure of the TANF program. This suggests a loss of opportunity. Data already suggest that state TANF programs currently engage recipients in a relatively limited range of activities and that more TANF recipients could be engaged in activities that are work-related. TANF’s goals include ending needy families’ dependence on government benefits by promoting work. However, the program’s block grant structure means that many policy decisions are decentralized, and HHS has limited authority in directing state programmatic choices. This tends to leave innovation to individual localities and states. Yet other allowable uses of TANF funds compete with the adoption of promising welfare-to-work approaches. Further, limited participation by TANF agencies in HHS evaluations may slow the development and adoption of new promising approaches, leaving TANF without a continuous improvement process. In announcing its intention to exercise waiver authority, HHS noted that the purpose of its proposed waivers was to test alternative and innovative strategies, policies, and procedures designed to improve employment outcomes for needy families. However, as HHS officials told us, no state has applied for a waiver since its announcement in 2012. While we are not taking a position on whether HHS has authority to issue waivers, it is clear that this strategy has not encouraged states to innovate and test new approaches. We recognize that PRWORA limits HHS’s authority over state program and funding choices and evaluations of state programs. Yet, HHS, as the federal agency that oversees TANF, is positioned to identify, suggest, and work in consultation with Congress on potential changes that would address the lack of incentives for states to adopt promising approaches. Absent federal action, adoption and evaluation of promising approaches may continue to be limited to select states and localities, leaving TANF recipients in other locations without access to these promising approaches. In the meantime, at least one promising approach—career pathways—appears to suffer from misperceptions about whether activities under the career pathways approach can be counted toward the work participation rate, or whether the career pathways approach is allowable with TANF funds. Without clarification that it is, indeed, allowable, TANF agencies may be discouraged from attempting it. To encourage broader adoption and evaluation of promising approaches and address impediments to the use of the career pathways approach among TANF agencies, we recommend that HHS should take the following two actions: In consultation with Congress, identify potential changes that would address the lack of incentives for states and localities to adopt promising approaches and then develop and submit a legislative proposal outlining those changes. Issue formal guidance to clarify how activities under the career pathways approach can be countable for the purpose of the work participation rate and that TANF funds may be used to finance the career pathways approach. We provided a draft of this report to HHS, the Department of Education, and the Department of Labor. The Departments of Education and Labor did not have comments. HHS provided written comments, reproduced in appendix V, in which the agency generally concurred with our recommendations. HHS also provided technical comments that we incorporated, as appropriate. HHS agreed with our recommendation that the agency consult with Congress on ways to address the lack of incentives for states and localities to adopt promising employment-focused approaches. HHS noted that in the Administration’s Fiscal Year 2015 Budget Request, it stated, “when Congress takes up reauthorization, the Administration will be prepared to work with lawmakers to strengthen the program’s effectiveness in accomplishing its goals. This effort should include using performance indicators to drive program improvement and ensuring that states have the flexibility to engage recipients in the most effective activities to promote success in the workforce, including families with serious barriers to employment.” The budget request also included a legislative proposal to increase incentives for states to implement or strengthen subsidized employment programs by creating a new initiative funded by diverting existing TANF Contingency Funds to this new use. We were aware of these points in HHS’s budget request and maintain that HHS should develop more concrete proposals to address the lack of incentives within the TANF program itself, and note that the agency need not wait for Congress to take up reauthorization to do so. HHS also noted that it has sponsored a large body of research that helps federal policy makers understand the wide variety of services provided by state TANF programs and provides credible information to state TANF decision- makers about possible innovative and effective approaches to serving their clients. At the same time, the agency acknowledged that gaps remain in the research on effective employment-focused approaches for low-income families and noted that additional research is needed. HHS also agreed with our recommendation that the agency issue formal guidance to clarify how the career pathways approach can be used by TANF agencies. HHS said that it will issue a formal Information Memorandum on the implementation of career pathways approaches in TANF, as part of the agency’s ongoing technical assistance efforts. It also elaborated on the various ways it has promoted career pathways and other employment-focused approaches in recent years, as we acknowledged in the report. In addition to the need for guidance, HHS said that the 12-month limit on counting vocational education training toward the work participation rate is a constraint to the implementation of career pathways models in TANF programs. However, as we note in our report, states may allow TANF recipients to combine education with other work activities that count toward the work participation rate. Better clarification of this fact through formal guidance should help to address state misperceptions that the time limit on counting vocational education training prohibits the use of career pathways approaches. As agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the Secretaries of Health and Human Services, Education, and Labor, and interested congressional committees. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions concerning this report, please contact me at (202) 512-7215 or brownke@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VI. Our report (1) reviews some approaches that have been identified as holding promise to engage TANF recipients in employment and increase their earnings and examines ways in which selected states and localities have used them, and (2) identifies factors that influence the use of these and other promising approaches. To first identify promising approaches, we reviewed research summaries and syntheses of rigorous research on approaches for engaging TANF recipients in employment and increasing their earnings. We primarily focused on studies that used a random assignment (experimental) research design. This type of design compares the outcomes for groups that were randomly assigned either to the treatment or to a nonparticipating control group before the intervention, in an effort to control for any systematic difference between the groups that could account for a difference in their outcomes. A difference in these groups’ outcomes is believed to represent the program’s impact. To help compile the research we reviewed, we conducted a literature search of 12 research databases, including EconLit, ProQuest Research Library, and Social Services Abstracts, using search terms such as “welfare to work.” Our intent was not to describe all possible promising approaches, but rather to identify some key approaches. We considered approaches to be “promising” if a rigorous evaluation had determined that a program using this approach contributed to increased employment, income, or earnings, or reduced welfare receipt. Not all programs using the approach had to yield positive results in order for the approach to be considered promising. We realize that there is variation in how these approaches are implemented. Although a comprehensive career pathways program has not yet been rigorously evaluated, we included this approach because it was based on a rigorous evaluation of sector-based career training and lessons from other prior rigorous evaluations. We sought input on our list of approaches from researchers with MDRC, a nonprofit, nonpartisan education and social policy research organization. We also validated our list of approaches through the process of seeking expert nominations for programs currently using these approaches. For example, based on our review of the literature, we initially identified earnings supplements—the practice of supplementing low-wage workers’ earnings with incentives to encourage employment and employment retention—as a possible promising approach. However, because we did not find any current examples of this approach being used to serve TANF cash assistance recipients, we did not include it in our final list of promising approaches. To identify state and local programs that are currently using these approaches to serve TANF cash assistance recipients, we interviewed cognizant researchers; officials from the Department of Health and Human Services (HHS), the Department of Labor, and the Department of Education; and others with TANF expertise. We selected 12 experts based on their knowledge of the research and efforts under way at the state and local level, as well as to reflect a range of perspectives on welfare-to-work issues. We identified them through our literature review and through referrals from other experts. We asked the experts and agency officials to identify state and local programs that are currently using the promising approaches we identified through our literature review to serve TANF cash assistance recipients. We asked the experts to indicate the specific reasons why they recommended these programs and whether evaluation results or outcome data were available for the programs; however, these programs have generally not been rigorously evaluated. From the programs identified by experts, we selected 10 programs to profile (located in 6 states—California, Kentucky, Minnesota, New York, Utah, and Washington—and the District of Columbia) to reflect diversity in approaches used, economic conditions, demographics, and geographic regions. We also considered how the program was connected to TANF and whether the program was in an area where TANF is state- or county- We did not report on work participation rates for the states administered.in which these programs are operated because some are state programs and others are locally administered. Work participation rates are calculated only on the state level by HHS, based on data reported by the states, and generally available after the end of the fiscal year. We conducted in-depth interviews, by phone and through four site visits, with program administrators and state and local TANF officials to learn about key program features that help increase employment and earnings. For 3 programs, we also interviewed local contractors. We obtained views from experts; federal, state, and local officials; and program administrators on factors that facilitate the use of promising approaches and that could broaden their use. We assessed information and communication HHS provides to states related to promising approaches against federal internal control standards. We obtained budget, performance, and other program data for the programs we selected, as well as HHS administrative data on states’ engagement of TANF recipients in prescribed work activities. We assessed the reliability of these data by reviewing related documentation and interviewing knowledgeable officials and determined they were sufficiently reliable for providing contextual information on these programs and describing work participation trends, respectively. We also reviewed relevant GAO, HHS Office of Inspector General, and HHS reports, as well as relevant federal laws, regulations, and guidance. We conducted this performance audit from January 2014 to November 2014 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. In meeting the 30-hour average weekly requirement, individuals must spend at least 20 of the hours in certain activities (referred to as core activities). Any additional hours needed to meet the requirement can come from non-core or core activities. Employment Retention and Advancement Project (ERA): This study ran from 1998 to 2011. Under the study, Health and Human Services issued planning grants to 13 states to develop new programs. The goal was to test strategies for helping employed individuals keep their jobs and advance in the workforce. Only 3 of the programs were found to increase employment retention and advancement: the Texas sites (Corpus Christi and Fort Worth), Chicago, and Riverside PASS ERA programs. An ERA report was published in April 2010, “The Employment Retention and Advancement Project: How Effective Are Different Approaches Aiming to Increase Employment Retention and Advancement? Final Impacts for Twelve Models,” which can be viewed at: http://www.acf.hhs.gov/programs/opre/resource/the-employment- retention-and-advancement-project-how-effective-are. Among the participating sites, 8 were led by TANF agencies at either the state or local level. The Texas ERA program offered monthly stipends of $200 to former TANF recipients working at least 30 hours per week. The Chicago program was a work-focused advancement program, offering targeted job search assistance and help indentifying and accessing career ladders. These services were provided to participants by staff in a private, for- profit firm, and TANF recipients were required to have regular contact with program staff to continue to receive TANF benefits. In contrast, the Riverside PASS ERA program provided voluntary, individualized retention and advancement services provided primarily by three community-based organizations and community colleges. Each of these programs targeted a specific population’s service needs. Enhanced Services for Hard-to-Employ Demonstrations and Evaluations: This demonstration tested several strategies for helping hard-to-employ parents find and sustain employment. One of the four sites in the study included TANF participants: the Transitional Work Corporation in Philadelphia conducted a subsidized employment demonstration exclusively for TANF clients. Other sites included programs in Kansas, Missouri, New York, Pennsylvania, and Rhode Island. This 10-year evaluation was completed in 2012. Findings from this study were used to influence the design of two new federal subsidized employment initiatives. Final evaluation reports can be viewed at: http://www.mdrc.org/publication/what-strategies-work-hard-employ. Temporary Assistance for Needy Families/ Supplemental Security Income Disability Transition Project (TSDTP): This study is an effort to identify the extent of overlap between TANF and SSI programs and populations and develop pilot programs aimed to improve a variety of outcomes for individuals with disabilities and work-limiting barriers to employment. The study is a collaboration between ACF and the Social Security Administration through a contract with MDRC. This study is complete. Reports were published throughout 2013 and 2014. TSDTP included Ramsey County, Minnesota—a program highlighted in this GAO report—which participated in a pilot-phase experiment to increase employment among TANF participants with work limitations and disabilities. Los Angeles County, California and Muskegon County, Michigan were also involved in the study, implementing pilot tests of approaches to serving individuals with disabilities either through the provision of services to TANF participants with work-limiting barriers, streamlining the Supplemental Security Income application process, or improving coordination between the two systems. Behavioral Innovations to Increase Self-Sufficiency (BIAS) study: Launched in 2010, BIAS is the first major opportunity to apply a behavioral economics lens to programs that serve poor families in the United States. The goal of the study is to learn how tools from behavioral science can improve the well-being of low-income children, adults and families. The study is being conducted by OPRE and MDRC in partnership with behavioral experts. One site within the study is the Los Angeles county TANF agency. Results are planned for rolling release in 2014 and 2015. Two reports on BIAS were issued in April and August of 2014. Health Professions Opportunities Grant (HPOG): HPOG was established by the Patient Protection and Affordable Care Act with the goal of providing training programs in high-demand healthcare professions to TANF recipients and other low-income individuals. In 2010, the Administration for Children and Families (ACF) awarded five-year grants to 32 grantees in 23 states. The program includes post-secondary educational institutions, workforce investment boards, state and local government agencies, and community-based organizations. Two of the 27 non-tribal HPOG grantees are Departments of Human or Social Services agencies and also administer the TANF program. One of the five tribal sites also administers the Tribal TANF program. However, a number of HPOG grantees also serve as the employment services providers for TANF agencies. ACF’s Office of Planning, Research, and Evaluation (OPRE) is evaluating HPOG demonstration projects. An interim analysis of the impacts of HPOG is expected in June 2016. Innovative Strategies for Increasing Self-Sufficient Project: The Innovative Strategies for Increasing Self-Sufficiency evaluation began in 2007 as a multi-site, random-assignment evaluation of promising strategies for increasing employment and self-sufficiency among low- income families. It is under the direction of ACF. This study focuses on the career pathways approach as the main intervention. One of the nine ISIS sites—Seattle/King County Workforce Development Corporation—is a contracted employment services provider for a local TANF agency and serves both TANF and non-TANF clients. Other sites in the study include: Des Moines Area Community College, I-BEST in Washington State, Instituto del Progreso Latino, Madison Area Technical College, Pima Community College, San Diego Workforce Partnership, and Valley Initiative for Development and Advancement. Job Search Assistance (JSA) Strategies: This study was launched by OPRE in fall 2013 and features a multi-site, random-assignment evaluation to measure the relative impact of specific job search services offered by TANF programs on short-term labor market outcomes such as earnings and time to employment. The JSA evaluation aims (1) to provide information about the relative impacts of various JSA services and the manner in which agencies provide them, and (2) to provide actionable and policy-relevant feedback to the TANF field, including federal TANF policymakers, state and local TANF administrators, and frontline caseworkers. Site recruitment is ongoing, and initial findings could be reported as early as the end of 2016. Subsidized and Transitional Employment Demonstration (STED): The STED study was launched by ACF in 2010 with the goal of demonstrating and evaluating the next generation of subsidized employment models for critical low-income populations. The project is led by MDRC, under contract with ACF, and examines strategies for providing counter-cyclical employment and for successfully transitioning individuals from short-term subsidized employment to unsubsidized employment. STED is being conducted in coordination with the Department of Labor’s Enhanced Transitional Jobs Demonstration Project. Random assignment began at the first sites in early 2012 and continued through late 2013. Of the seven STED sites, three are TANF agency-operated including Los Angeles, San Francisco, and Minnesota. The evaluation is scheduled to run through 2017. Bloom, Dan. Transitional Jobs: Background, Program Models, and Evaluation Evidence. Prepared by MDRC for the Department of Health and Human Services. Washington, D.C.: 2010. ———, Cynthia Miller, and Gilda Azurdia. Results from the Personal Roads to Individual Development and Employment (PRIDE) Program in New York City. MDRC. July 2007. ———, Pamela J. Loprest, and Sheila R. Zedlewski. TANF Recipients with Barriers to Employment. Washington. D.C.: Urban Institute, August 2011. Derr, Michelle and LaDonna Pavetti. Assisting TANF Recipients Living with Disabilities to Obtain and Maintain Employment: Creating Work Opportunities. Prepared by Mathematica Policy Research, Inc. for the U.S. Department of Health and Human Services. Washington, D.C.: February 2008. Greenberg, David H., Victoria Deitch, and Gayle Hamilton. “A Synthesis of Random Assignment Benefit-Cost Studies of Welfare-to-Work Programs.”Journal of Benefit-Cost Analysis, vol. 1, issue 1, article 3 (2010). Gueron, Judith M. and Gayle Hamilton. The Role of Education and Training in Welfare Reform. The Brookings Institution, Policy Brief no. 20 (April 2002). Hamilton, Gayle. Improving Employment and Earnings for TANF Recipients. Prepared by the Urban Institute for the Department of Health and Human Services. Washington, D.C.: March 2012. ———. Moving People from Welfare to Work: Lessons from the National Evaluation of Welfare-to-Work Strategies. Prepared by MDRC for the Department of Health and Human Services and Department of Education. Washington, D.C.: 2002. Hendra, Richard, Keri-Nicole Dillman, Gayle Hamilton, Erika Lundquist, Karin Martinson, and Melissa Wavelet. The Employment Advancement Project: How Effective Are Different Approaches Aiming to Increase Employment Retention and Advancement? Final Impacts for Twelve Models. Prepared by MDRC for the Department of Health and Human Services. Washington, D.C.: April 2010. Kirby, Gretchen, Heather Hill, LaDonna Pavetti, Jon Jacobson, Michelle Derr, and Pamela Winston. Transitional Jobs: Stepping Stones to Unsubsidized Employment. Washington, D.C.: Mathematica Policy Research, Inc., April 2002. Maguire, Sheila, Joshua Freely, Carol Clymer, Maureen Conway, and Deena Schwartz. Tuning In to Local Labor Markets: Findings from the Sectoral Employment Impact Study. Philadelphia, PA: Public/Private Ventures, 2010. Roder, Anne, and Mark Elliott. Stimulating Opportunity: An Evaluation of ARRA-Funded Subsidized Employment Programs. Economic Mobility Corporation, New York, NY: September 2013. Werner, Alan, Catherine Dun Rappaport, Jennifer Bagnell Stuart, and Jennifer Lewis. Literature Review: Career Pathways Programs, OPRE Report #2013-24, Office of Planning, Research and Evaluation, Administration for Children and Families, U.S. Department of Health and Human Services (Washington, D.C.: June 24, 2013). In addition to the contact named above, Gale Harris (Assistant Director), Kristen Jones (Analyst-in-Charge), Holly Hobbs, and Michael Pahr made significant contributions to all aspects of this report. Also contributing to this report were James Bennett, Sue Bernstein, Ed Bodine, Alexander Galuten, Ashley McCall, Sheila McCoy, Almeta Spencer, and Walter Vance.

Summary: The TANF block grant requires states to engage a certain percentage of work-eligible cash assistance recipients in specified work-related activities, such as job search assistance and training. Yet, data suggest that more TANF recipients could receive assistance that would help them gain employment and reduce their dependence. GAO was asked to provide examples of what some states are doing to achieve these goals and how to expand these efforts. This report (1) reviews some approaches that have been identified as holding promise for engaging TANF recipients in employment and increasing their earnings and examines ways in which selected states and localities have used them, and (2) identifies factors that influence their use. To first identify promising approaches, GAO reviewed summaries and syntheses of rigorous research on approaches that increase employment and earnings, and profiled 10 state and local programs that were nominated by experts familiar with welfare research and state and local efforts, and that were selected to represent a range of approaches. GAO also reviewed relevant federal laws, regulations, and agency guidance, and interviewed agency officials and experts with a range of views. The 10 state and local programs GAO examined used various promising approaches to help Temporary Assistance for Needy Families (TANF) cash assistance recipients gain employment by meeting a range of participant needs. These approaches included the use of subsidized employment, employment alongside treatment for a health condition, and training for high-demand jobs. For example, for individuals in need of additional work experience, San Francisco's TANF program has provided subsidies to employers to place participants in temporary, wage-paying jobs. To help individuals with mental and physical disabilities and substance abuse problems, nonprofit contractors for New York City's TANF program have provided individualized assessment and treatment, often combined with employment. To prepare individuals with various skill levels for high-demand jobs, Minnesota and Washington have used a career pathways approach of combining occupation-specific training with basic skills education and support services. However, experts told us that some states have a misperception that this approach is not allowable under TANF rules, even though the Departments of Labor, Education, and Health and Human Services (HHS) support its use. HHS told us that states could still meet program requirements while using this approach, but the agency has not issued formal guidance clarifying this. Internal control standards for the federal government state that information should be communicated to managers in a form that enables them to carry out their responsibilities. As a result of these misperceptions, the career pathways approach may be underused by TANF agencies and TANF recipients could miss out on the potential benefits of this approach. Expertise and dedicated funds facilitated use of these promising approaches, but the federal TANF program, itself, lacks incentives for their wider adoption. Of the 10 programs GAO examined, 9 drew on the expertise of partner organizations—including community college systems, workforce agencies, and nonprofits. The programs also benefitted from decisions by state and local policymakers to dedicate funds—including TANF funds—for the selected programs, according to officials. However, incentives for large numbers of state and local TANF agencies to adopt and test promising approaches are lacking under the structure of the TANF program for several reasons. First, many program design and funding choices are left to the states, and GAO's prior work has shown that state use of TANF funds for more costly welfare-to-work approaches can compete with other allowable uses of TANF funds. Second, TANF's main performance measure does not necessarily encourage agencies to use certain approaches that incorporate longer-term education and training or treatment services, although states are not prohibited from doing so. Third, little incentive exists for TANF agencies to evaluate their programs. HHS's authority over many aspects of TANF is limited and it has not proposed legislative changes to address these areas. Yet, because HHS oversees TANF, it is positioned to identify, suggest, and work in consultation with Congress on potential changes that would better address the lack of incentives for the use of promising approaches by states and to better meet the TANF goal of increasing employment. Without federal action, adoption and evaluation of promising approaches may continue to be limited to select states and localities, leaving TANF recipients in other locations without access to these promising approaches. GAO recommends that HHS should issue guidance to clarify how the career pathways approach can be used by TANF agencies and identify potential changes to address the lack of incentives in the TANF program. HHS agreed with GAO's recommendations.