The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) represented a significant departure from previous welfare policies in place for more than 60 years. Previously, state and local welfare agencies focused mainly on issuing monthly welfare checks to eligible families. In contrast, the revised welfare legislation establishes broad goals for state TANF programs that go beyond income support payments, including ending the dependence of needy parents on government benefits by promoting job preparation, work, and marriage; preventing and reducing out-of-wedlock pregnancies; and encouraging the formation and maintenance of two-parent families. To receive its TANF block grant funds, each state must contribute its own funds up to a specified level. The amount of TANF funds available to states each year is capped, unlike the previous welfare program under which federal and state welfare payments increased each year as welfare rolls increased. Along with new goals and funding structure, the law established work requirements and time limits considered key to changing the nature of welfare. States are to involve increasing percentages of their adult TANF recipients in certain activities for a required number of hours each week or face financial penalties. These work requirements limited some types of education and training from counting toward the work requirement. To emphasize the temporary nature of assistance, states must restrict most families to a lifetime limit of 60 months of cash assistance. Within this federal framework, TANF provides states considerable latitude to design and implement programs to meet TANF goals while responding to states’ unique economic conditions, client needs, and policy priorities. Each state determines what aid and services to provide, sets eligibility requirements for these services, and determines what service delivery approaches to use, including reliance on contractors. Even within the federal work requirements and time limits, some provisions exist that allow states some flexibility or adjustments to stated federal requirements. More specifically: 1. States may allow and support TANF recipients in any activity of the state’s choosing, although they can only count federally-specified activities toward the federal work requirement. States have some additional flexibility because they have significant discretion in defining what activities fit within these federally-specified categories, as we found in our recent report. 2. A provision in the law, called the caseload reduction credit, lowers the work requirement standard a state must meet if its TANF cash assistance caseload declines. While the work participation rate standard rose as high as 50 percent in the law, in practice states have faced much lower standards due to this credit. 3. A state may exclude a family from work requirements and time limits by providing cash assistance with the state’s own funds rather than federal TANF funds. 4. Work requirements and time limits only apply to families receiving ongoing monthly cash assistance, allowing states to provide other services to non-welfare families, such as providing low-income working families with child care assistance. Due to the importance of state flexibility under TANF, the welfare legislation limited HHS’ authority to regulate state TANF programs. Also, HHS staff available to implement TANF was substantially reduced. However, HHS retains central oversight authority over certain aspects of state TANF programs, such as oversight of federal work requirements and time limits among other program elements. In addition, it has authority to conduct research and provide technical assistance to states, although its research role has changed significantly under TANF. Under the previous welfare program, HHS required states that applied for and received waivers to federal program rules to have an independent organization evaluate its program change, supported by HHS funding. While some of these waiver evaluations were continued under TANF, HHS no longer has authority to require evaluations of state programs, although it still has some resources available for research. In implementing TANF, states focused more than ever before on helping welfare recipients and other low-income parents find jobs. Many states implemented work-focused programs that stressed moving parents quickly into jobs; restructured benefit payments to allow more parents to combine welfare and work; expanded support services, particularly child care subsidies; and took some steps to identify and address barriers to employment. To provide services, TANF programs often turned to the workforce development and educational systems that have traditionally provided employment, training, and educational services and to other for- and non-profit providers. As a result of this decentralized service model and variation in the type and package of services that individuals are provided through TANF and other programs, the per-person cost can vary widely. Cash welfare caseloads declined dramatically in the years immediately following welfare reform and have continued to hold at about half their pre-reform levels despite the recession of 2001. Experts attribute this decline to several factors, including welfare reform, the economy, and other policy changes, including expansion of the earned income tax credit (EITC) that provides subsidies to low-income workers, as well as increased federal spending for child care subsidies for low-income parents. Changes in welfare spending over time reflect this shift away from cash assistance to other services. Of the total federal and state TANF dollars spent in fiscal year 1995, about 70 percent was for cash assistance payments, in contrast to about 38 percent in fiscal year 2004. With the funds freed up from reduced cash assistance caseloads, states have invested in work preparation and other support services for welfare recipients and other low-income families. This dramatic decline in cash assistance caseloads and other changes under welfare reform have spurred interest in how former welfare recipients are faring. Our work and other research shows that most of the parents leaving welfare have found employment and some are now better off than they were on welfare. However, many work in unstable, low-wage jobs with few benefits and advancement opportunities. In these cases, even a common occurrence such as a parent’s need to stay home with a sick child can lead to job loss and a return to welfare. While key government supports such as the EITC, Medicaid, Food Stamps, and others can help these parents support their families and lift them out of poverty, most parents are not earning enough to be self supporting. This raises important questions about whether welfare reform programs can achieve better outcomes for their participants. The welfare reform outcomes seen so far are in keeping with what is known about the effectiveness of welfare-to-work programs. A considerable body of research, much of it sponsored by HHS, suggests that welfare-to-work programs can increase employment and reduce welfare receipt. This research also shows that welfare-to-work programs that rely on a mixed approach—with a strong work focus and some education and training as needed—show the greatest earnings gains. Moreover, a mixed strategy appears more effective than approaches that focused solely on education and training or solely on job search, although an emphasis on job search only was less costly. At the same time, research shows that even the most effective welfare-to-work programs tested so far increase employment and earnings but do not typically increase household incomes. This is because the increased income from earnings is offset by the loss of cash welfare, food stamps, and other support services. Considerable questions still exist on how best to improve outcomes under welfare reform. The existing research base does not yet provide answers regarding how best to help parents successfully transition to more stable and economically-sustaining employment. Some believe that incorporating more in-depth or quality education and training into state TANF programs could yield greater results, expressing concerns that states currently do not sufficiently emphasize education and training in their TANF programs, in part due to the current structure of TANF work requirements. To address this, a Senate Finance Committee reauthorization proposal includes provisions to allow and encourage states to provide additional education and training opportunities in their TANF programs. Based on our interviews with experts and our site visits, we identified four strategies used to help TANF clients find well-paying jobs and improve their financial condition: training, post-secondary education, self- employment, and financial asset building. Within the training strategies, some programs aim to help TANF clients find jobs quickly, while others take a more long-term approach to prepare clients for highly technical fields like nursing. Training programs also target specific subgroups of clients, such as women or non-English speakers, or jobs in high demand in the local economy. Programs using post-secondary education strategies help clients get 2- or 4-year college degrees to position them to compete for higher-wage, often professional jobs. Microenterprise, or self- employment strategies, emphasize financial literacy and business plan development and sometimes provide clients capital to start a business. In contrast to the first three categories, asset building strategies focus on building clients’ financial reserves through savings accounts or homeownership, relying on the assumption that personal savings play an important role in helping TANF clients pursue career goals and support their families. Many programs we visited used a combination of one or more of the four strategies. While several programs served only TANF clients, most programs served a broader population of low-income individuals in general. Table 1 shows each program by the strategy used, population targeted, and federal funding sources. Programs using training strategies to help TANF clients find jobs often vary their services to meet clients’ needs, whether by providing short- or long-term training courses, targeting specific subgroups of TANF participants, or focusing training to prepare participants for jobs in high demand in the local economy. Specifically, we observed that training strategies vary considerably in terms of: time commitment, target population, and job market relevance. At least two programs offer clients short-term (12 weeks or less) training courses designed to give them the skills to move quickly into jobs paying more than the minimum wage. For example, the Kentucky River Foothills R.O.U.T.E. (Road Ready Operators Understanding Transportation Excellence) Training Program in Richmond, Kentucky, trains low-income individuals for a Class B Commercial Drivers License. Once clients complete the 8-week truck drivers’ program, they are eligible to obtain jobs driving small trucks and buses at wages starting at $9 per hour. The Montana PEAKS program, operated by a nonprofit organization in Flathead County, Montana, is another example of a short-term, results oriented program. It serves as one of two job services providers under contract to the county TANF agency. In a minimum of 12 weeks, the Montana PEAKS program trains its clients for entry-level jobs in construction. Many Montana PEAKS graduates obtain jobs as construction site flaggers. Graduates of the program have earned wages of up to $20 per hour. While short-term training allows participants to move into higher-paying jobs more quickly, program officials found that many clients also required scheduling flexibility in order to successfully complete the training. To accommodate this need, the Kentucky truck drivers’ program conducts training for participants in 1-week modules to allow the admission of students on a rolling basis. Because modules were designed as “stand alone” components, participants can start and stop the program at any time without having to repeat the entire course. Other training programs offer longer-term training (roughly 6 months or more) to prepare clients for entry-level jobs in highly technical fields with the potential for career advancement. Jobs in this category can provide an entry point to a career ladder that could lead to jobs with even higher wages. One example of this kind of incremental advancement approach is the District 1199C Training and Upgrading Fund career ladder program in Philadelphia, which trains TANF clients, union members, and individuals from the community-at-large for careers in health care. TANF clients referred by caseworkers and other students may come to the 1199C career ladder program to participate in the organization’s 4-month long nurse’s aide training program. Graduates of this program are often placed into nurse’s aide jobs paying wages that nationally had a median beginning wage of $9.59 per hour in 2002. Another important aspect of the 1199C career ladder program is its ability to accommodate clients who do not immediately have the skills necessary to be successful in a nurse’s aide program. The program also admits participants who enroll first in an adult basic education course, then graduate to the nurse’s aide training and finally matriculate into the Licensed Practical Nurse certificate program. Participants also have the opportunity to apply for funding to complete the Registered Nursing program with a school of nursing in the Philadelphia area. According to the U.S. Bureau of Labor Statistics, average wages for registered nurses range from $17.93 to $35.94 an hour. Over the course of our site visits, we found that a number of individual employers had structured their own internal career ladder programs. In Baltimore, the Johns Hopkins Skills Enhancement Program, supported with a grant from the Department of Labor, was designed to serve TANF clients and other low-income individuals in the Baltimore area. The Skills Enhancement Program places new employees, some of which are former TANF clients referred from the Baltimore Department of Social Services, into janitorial positions while being trained by the hospital to obtain entry- level healthcare positions. According to one program official, one participant in the Skills Enhancement Program entered the program in a janitorial position earning $8.50 per hour. After completing phlebotomy training sponsored by the hospital, the participant was promoted to a clinical associate earning $12 per hour. The participant plans to enroll in another program to become a registered nurse. Career ladders were also evident in fields other than healthcare. In San Pablo, California, located not far from the technology corridor of the San Francisco Bay area, the Street Tech non-profit program provides training for clients to attain entry level jobs as computer technicians earning $15 to $20 per hour. Their Computer Apprenticeship Training/Microsoft Office User Specialist program provides participants an introduction to the field and teaches some general, basic computer skills. Graduates of this program may choose to complete 6 months of additional training at Street Tech in order to receive an A+ certification, and some have chosen to complete the organization’s Field Tech training to further enhance their skills and increase their earning potential. In recognition of their target population’s diverse needs and capabilities, programs often provide more than one type of employment-related service either directly or through some type of referral arrangement. For example, the Bethel Employment and Training Center, a faith-based non-profit in Chicago, offers its TANF and other low-income clients a diverse array of in-house and collegiate training opportunities, such as helping clients pursue interests with a variety of employers or seek self-employment. However, their offerings are not limited to training alone. The organization also has teamed up with an area bank to establish an individual development account (IDA) program that matches client contributions 2-to-1 up to $1800. Likewise, the Career Training Institute, a non-profit program that serves TANF and other low-income clients in a 3-county area in Helena, Montana, delivers a diverse roster of services. The program offers clients a multitude of training opportunities, from construction and commercial driving to clerical and accounting occupations. In addition, the Institute will also refer clients to an IDA program for women interested in starting their own businesses. An official from at least one program site suggested that offering a variety of services may provide a natural incentive for clients to stay in contact, making it easier for programs to track their progress. For example, once a client completes job training and obtains work, he or she may return later to open an IDA account or pursue other post-employment services. Some of the programs we visited help individuals with academic barriers or other skill deficiencies by providing them with adult basic education and life-skills training to prepare them for vocational coursework. For example, the San Francisco Works program, a mostly privately-funded non-profit in San Francisco, prepares TANF and other low-income clients with sixth grade skill levels to participate in training for entry level positions in biotechnology (e.g., lab technicians, media assistants, etc.). Its On Ramp to Biotech program provides clients training in language, lab science terminology, lab procedures, and documentation to prepare them to complete a 24-month biotech certification program at a community college. The Brighton Center’s Center for Employment Training program in Kentucky works with applicants to help to remove a number of barriers to employment. Through intensive case management, Center staff help clients find services to address issues such as low self-esteem and provide clients with skills and support systems to help them find and retain employment. Likewise, the Transitional Work Corporation, a TANF service provider under contact to the Philadelphia County Assistance Office, also provides advisors to prepare clients who have limited education and have been on TANF for more than 24 months. To help clients with limited work experience successfully make the transition to permanent employment, a number of programs help participants understand what would be expected of them at the job site. For example, The Cara Program requires participants to wear professional attire each day and has mounted a time clock in the building’s entryway, where participants punch in and out each day. Similarly, the program site for Street Tech in San Pablo, California resembles a corporate office, and staff conduct their relationships according to corporate norms and expectations. For instance, participants can be released from the program or “fired” for not meeting expectations for good attendance. Street Tech also places particular emphasis on the skills required for writing resumes, setting up interviews, and writing follow up thank you notes. At the Community College of Baltimore County, a TANF contractor with the Baltimore Department of Social Services, staff prepare TANF clients for their job search by providing coaching and conducting mock interviews. While many of the programs we visited assisted individuals with limited work experience, others require that individuals have more education or better work habits. The Chicago Women in Trades program, a non-profit which prepares TANF clients and other low-income women for various apprenticeships in the construction field, such as pipefitting or bricklaying, requires its participants to have a high school diploma or GED, knowing that they would not be accepted into apprenticeship programs without this credential. While the Street Tech training program accepts individuals with limited work experience, it screens candidates to ensure that they are well-suited to handle the challenges of the various computer certification exams. Some programs target specific subsets of the welfare or low-income population, such as people who speak English as a second language (ESL) or those with learning disabilities. The Center for Employment Training (CET), a non-profit in San Jose, California, assesses all of its students to determine if they require general training in English or English language training in the context of the job function or vocation. For example, certified nursing students at the San Jose CET are taught English using medical terminology. Other programs focus on clients with learning disabilities. For example, Career Transitions, a non-profit in Belgrade, Montana, employs an instructor with a background in teaching with learning disabilities to provide microenterprise training and other short- term employment training. In addition, the ROUTE Training Program has designed its commercial truck driving program to involve both experiential and classroom learning in an effort to accommodate some participants’ learning disabilities. Program staff explained that this hands- on approach is particularly effective for students with learning disabilities and others who have not been successful in a traditional classroom environment. Several programs target women, encouraging them to pursue nontraditional employment in the trades or highway construction, although officials from some programs noted the initial reluctance of TANF job-seekers to pursue more lucrative careers in the trades outside of the often low wage service professions. Officials from the Bowling Green Housing Authority in Kentucky reported that clients who graduated from their Women in Construction program earned starting wages of $10 to $12 per hour. Flathead County, Montana, benefited from the growth of the building and construction industry. The Montana PEAKS program capitalizes on the growing building and construction industry, placing many women clients at project sites in Glacier National Park, the recipient of $100 million in recent construction contracts. To maximize wages in the trades, Chicago Women in Trades encourages its TANF clients to pursue union apprenticeship programs, which they believe provide more benefits and stability than non-union jobs. For example, staff estimated that women who completed their gateway program and, subsequently, a formal apprenticeship program were able to earn as much as $30 per hour. Many programs aim to provide clients with the training necessary to fill jobs in high demand in the local job market, such as health care, technology, and financial services. A number of programs direct clients to pursue occupations where shortages exist. For example, the District 1199C Training and Upgrading Fund program in Philadelphia, Pennsylvania, and the Johns Hopkins Skills Enhancement Program in Baltimore, Maryland, provide career paths for clients with health care professions, where there is a shortage in long-term care and other related high-demand health care occupations. In the San Francisco Bay area, two programs we visited prepare clients to fill vacancies in the biotechnology and computer technology fields. According to San Francisco Works’ executive director, San Francisco is home to approximately 100,000 biotechnology jobs and that number is expected to grow by 50 percent. Graduates of San Francisco Works’ biotechnology program fill positions that do not require a 4-year degree, such as lab technicians or media assistants. The Street Tech program also responds to the demand for technology positions in San Francisco and helps low-income individuals gain skills with the potential to move them toward higher wages. According to program administrators, students who complete the Street Tech program secure entry level jobs that range from $15 to $20 an hour and fill the demand for computer technical personnel, one of the fastest growing fields in their county. A number of programs we visited consider the amount required for individuals in their localities to be self-sufficient before placing clients into employment. The state of Pennsylvania and counties in California encourages service providers and caseworkers to use the Self-Sufficiency Standard developed by Family Economic Self-Sufficiency Project as a target when developing client employment plans. According to the Family Economic Self-Sufficiency Project, the standard calculates how much money working adults need to meet their basic needs without subsidies like welfare or food stamps. Unlike the federal poverty standard, the Self- Sufficiency Standard accounts for the costs of living and working as they vary by family size and composition and by geographic location. Both the PathWaysPA non-profit program in Philadelphia and local government officials of San Francisco County in California worked together with other local government officials and non-profit agencies in their respective regions to establish a local self-sufficiency standard for their TANF clients. Some programs we visited help motivated, qualified, low-income clients pursue education beyond high school, with the belief that higher education is key to moving individuals into higher wage jobs. For example, the goal of the LIFETIME program in Oakland, California, is to help low-income, TANF mothers earn 2- or 4-year college degrees in order to increase their earning potential. The LIFETIME program employs peer counselors who have already successfully completed a post-secondary degree under TANF to serve as models for clients in order to demonstrate that combining education and welfare is possible and permissible under current law. Staff will also help clients select a career path that matches their personal interest and aptitude. Likewise, the AchieveAbility program, a nonprofit located in Philadelphia, Pennsylvania that serves TANF and other low-income clients, operates on the premise that clients should earn at least an associate’s degree in order to earn incomes that would allow them to be self-sufficient. In exchange for continuing in housing partially funded by HUD, AchieveAbility clients must pursue education and to complete a GED and 2-year degree. Participants are also given the opportunity to participate in cultural and other educational activities. We encountered several programs using microenterprise strategies that encourage participants to run their own small businesses to either supplement or provide their sole source of income. These programs generally target low-income individuals who are highly motivated, but live in a region with few employment opportunities. Two programs in rural Montana featured self-employment training: Career Transitions and the Career Training Institute. While the Career Training Institute in Montana, provides a variety of employment training services to its clients, it actively markets microenterprise development to their TANF clients. While the Institute staff acknowledged the low success rate of these start-ups, they argue that microenterprise training does help clients build a variety of important skills. In Belgrade, Montana, the Career Transitions program provides its microenterprise clients with 50 hours of self-employment and business training. The program will often receive TANF clients who require longer term training and more intensive case management than what is considered available through the county TANF office. Individuals who successfully complete the training and produce a feasible business plan are eligible for low interest loans to implement their plan. A unique feature of the Career Transitions program was the ability for clients to sell and test market their business ideas at the organization’s weekend farmer’s market. One official from the Career Transitions program said that, for many low-income job-seekers, self-employment is the best way to become self-supporting. This is particularly true for custodial parents of young children, for whom, staff explained, self-employment provides a means to work out of the home and also fulfill care giving responsibilities. Those clients who have been successful have gone on to develop enterprises ranging in scale from part-time home-based businesses to retail operations with multiple locations. One program we visited provided microenterprise assistance to low- income women in an urban environment. The Women’s Initiative for Self Employment is a nonprofit that offers training and technical and financial assistance for prospective women small business owners in the urban San Francisco and East Bay area. While the Women’s Initiative does serve TANF clients, sometimes through referral by TANF caseworkers, and other low-income workers, some participants in the program have strong skill sets and work histories and may be only temporarily low-income. The program’s Executive Director attributed the success of the program to the use of a model that is tailored to clients’ needs and argued that the fundamentals of their program model are equally applicable in urban and rural environments. She also reported that participants who make the transition off of welfare are more likely to approach self-employment as a full-time venture, rather than part-time. While the training, education, and microenterprise strategies primarily focus on employment, asset building strategies emphasize savings and financial education and literacy as important stepping stones to greater economic security for TANF clients. Programs we visited were using financial asset-building strategies on the premise that families must accumulate assets, through savings accounts and homeownership, and acquire financial management skills in order to move toward self- sufficiency. Among the tools used by programs are IDAs and the EITC. The 1998 Assets for Independence Act authorized federal funding for a series of state and local IDA programs. IDAs are personal savings accounts that enable low-income persons to combine their own savings with matching public or private funds to purchase homes, start or expand businesses, advance their education, or purchase other assets that will promote economic self-sufficiency. The act authorizes grants to qualified non- profit organizations (including low-income credit unions and designated community development financial institutions), as well as state, local and tribal government agencies, to conduct 5-year demonstration projects under which non-federal sources contribute at least one-half of the project funds up to $1 million. Proponents of the IDA program often educate low- income individuals about the use of the EITC, a federal tax credit for low- income families, in order to facilitate asset accumulation. In Philadelphia, the Campaign for Working Families, sponsored by several public and private funding sources to help low-income families move into the middle class, partners with several other organizations including the Women’s Opportunities Resource Center to help families build assets and establish IDAs. The Campaign for Working Families encourages clients who use the organization’s free tax preparation services to roll their EITC savings into an IDA. The IDA program, funded in part through an HHS Assets for Independence grant, requires clients to participate in financial management classes and save a minimum of $10 per week in order to receive up to $2,000 in matching funds over a 2-year period. Savings may go toward home purchase or repair, higher education, or self-employment. In Chicago, the Bethel Employment and Training Center partners with the First Bank of Oak Park to provide clients with a 2-to-1 match for up to $1,800. In order to be eligible to receive matching funds, participants must attend 10 classes on budgeting and other financial topics. Like the Philadelphia program, clients can use the IDA money for education, housing, or to start a business. One official reported that most participants in the Chicago program use the funding for education. In addition to savings, we visited programs that promote financial literacy. Through its “Building Blocks to Financial Success” course, the Women’s Opportunities Resource Center teaches money management skills including savings, debt management, financial planning, and banking. The “Building Blocks” program is available both online and in a classroom setting. All participants in the Women’s Resource Center IDA program must complete the “Building Blocks” curriculum. The programs we visited relied on a network of support to help TANF clients prepare for and attain well-paying jobs. Typically, the programs we visited were run by non-profit organizations providing services to TANF clients either under contract with a TANF agency or using a mix of public and private funding sources. Some state and local welfare agencies, through adopting specific policy provisions such as allowances for post- secondary education, also played a key role in fostering the strategies in this report. In addition to core services, local non-profits and TANF agencies either directly provided or helped link clients to services such as child care, housing, and on-the-job support. As part of the wider network, local non-profits and TANF agencies established partnerships with employers and community colleges to develop curricula and create career ladders and work opportunities for TANF clients. The vast majority of programs experts identified as using one or more of the four strategies were private, non-profit organizations, rather than the local welfare office, although in some cases employers, unions, or community colleges provided the actual services. As a result, the programs we visited were predominantly non-profits, although we also made an effort to connect with the TANF office in each locality. TANF recipients were connected to these programs through a variety of methods, including formal referrals through the TANF agency or other programs and word-of- mouth recommendations from friends and family. (See fig. 4.) Many of the programs served TANF clients along with other low-income people. Welfare recipients generally made up between 10 and 60 percent or more of the clientele of the programs we visited. The officials we met with cited some advantages to this approach. Namely, interaction between TANF and non-TANF clients provides role model opportunities, allowing clients to learn from the example set by low-income job seekers with more established work histories. Furthermore, officials posited that welfare recipients may be more attractive to employers if they are viewed simply as out-of-work job seekers rather than branded as TANF clients. Some of the programs we visited provided services to TANF clients through a contract with the state or local TANF office, while others received funding from a variety of public and private sources. Officials from two programs said this approach gave them an advantage over government agencies and other entities with a single-source funding mechanism and protected them to some degree from shifting state and federal budget priorities. In addition, administrators from two different programs said that there are psychological benefits to being distinct from the TANF program, as many needy clients who perceive a stigma around public assistance may be more likely to seek help from a group that is not explicitly linked to the welfare office. Moreover, some programs told us they chose to use other funding sources because they believed the work focus of the current welfare system was a barrier to offering strategies like education and training. Some of the experts we consulted and other researchers shared similar concerns that the system’s focus on “work first” may discourage the development of education and training approaches that delay a client’s entry into the workforce. Specifically, program officials we interviewed cited the eligibility restrictions, work and reporting requirements of some federal funding sources, including TANF and the Workforce Investment Act (WIA), as deterrents. Other officials told us that pursuing certain government grants and contracts would have forced them to set aside their mission or would have placed an undue administrative burden upon their organization. State and local TANF policies can play an important role in facilitating the use of employment support strategies. States can provide support to local programs by crafting TANF policies with a focus on specific priorities or in response to the unique needs of their TANF population, even if those priorities are not reflected in federal welfare legislation. For example, in a recent legislative session, representatives from the state of Montana, following Maine’s lead, passed legislation that will allow some of its TANF clients to count pursuing a 4-year degree toward meeting state TANF work requirements. Until 2004, Montana’s TANF program was able to do this because the state had in place—prior to welfare reform—a waiver from certain federal TANF requirements, including those that would not allow this type of educational activity to count as a permissible federal work activity unless it was combined with another activity, such as part-time work. In another effort focused on increasing education levels among TANF clients, the governor of Kentucky launched an initiative in the late 1980s to centralize oversight for the state’s community and technical colleges, believing that a more centralized approach might make it easier for low-income families to pursue higher education. This development served as the cornerstone of more recent efforts to better integrate the education and workforce systems. In our site visits in Kentucky, we saw links between community colleges and TANF agencies. In addition to core employment-related services, providing pre- and post- employment support services was a key factor in facilitating TANF recipients’ involvement in these programs. Local nonprofits and TANF agencies either directly provided or helped link clients to services such as child care, housing, on-the-job support, transportation, and other assistance. For example, in Chicago, the Project Match program allows clients to return again and again over a period of years until they are permanently employed. Also in Chicago, The Cara Program delivers on- the-job support to participants for their first 9 months of employment. Other programs we visited offer a host of other supports like housing, child care, or referrals to other programs to help clients engaging in training and other work preparation activities. For example, the District 1199C Training and Upgrading Fund program in Philadelphia helps participants locate assistance for child care and transportation subsidies. Some programs focus on specific populations of at-risk job seekers, such as the Bethel Employment and Training Center program in Chicago that specializes in providing employment assistance to former felons. State and local TANF offices also help facilitate the necessary support services, such as child care and transportation, that make it possible for clients to participate in these programs. Typically, the TANF agency has flexibility to fund and support services to a given TANF client regardless of whether that client is participating in a program that receives TANF funds. Some of the organizations we visited do not directly provide services, but could be characterized as service brokers, referring or linking participants with other programs in the community. For instance, Women’s Opportunity and Resource Development, Inc., in Missoula, Montana, operates as a clearinghouse for services for TANF clients. SF Works operates on a similar model. Although it provides a handful of services directly, it generally operates as an intermediary to ease the way for TANF clients to take advantage of the biotech prep coursework available to them. Another California program, LIFETIME, lends support and guidance to single mothers on welfare to help them complete post-secondary education. Again, although it does not directly provide training or other services, it assists its constituency by connecting them to the necessary support services delivered by other providers in the community. As part of the broader network, local non-profit programs and TANF offices often forged partnerships with local employers to open up job opportunities for their clients. For example, The Cara Program in Chicago has developed relationships with employers in the financial services industry, such as JP Morgan, to place clients in entry level positions with the potential for advancement, such as mailroom check processors. Program officials told us they turned applicants away based on active substance abuse problems or criminal backgrounds, out of concern about compromising their relationships with potential employers. In San Francisco, one of the nation’s highest-paying markets in the legal services industry, one group developed a program to train TANF clients to serve as paralegals. Other programs consulted with employers to develop training curricula and gather other information related to employer needs. Input from employers is an essential component to ensure effective training that addresses labor market needs. The San Jose CET worked directly with employers to develop curricula tailored to local labor market needs. Some non-profits, such as the San Francisco Works program in San Francisco, were founded by a group of enterprising businesspeople who saw an opportunity to connect job-seeking welfare recipients in the work-focused system of the 1990s with open positions created by San Francisco’s booming economy. In addition to employers, some programs also partnered with or originated within unions to assist TANF clients in finding work. For example, the Montana PEAKS program is housed in a building owned by the local steelworkers union, and the head of the program reported that she had established relationships with unions for the logging, construction and aluminum refinery industries to expand the job opportunities available to her clients. In addition to employers, program officials cited their partnerships with community colleges as important sources of additional resources and expertise. For example, the Brighton Center’s Center for Employment Training program in Lexington, Kentucky, negotiated an agreement with the Central Kentucky Technical College to allow CET students to transfer their CET credits to the college. In other cases, the community colleges directly provided training and post-secondary education services to TANF clients. For example, students in the San Francisco Works program took classes on-site with the partner community college. Through research, technical assistance, and grant-making activities, HHS plays an important role in fostering the four strategies identified in this report that are designed to help TANF participants raise their incomes. Although HHS has several efforts underway, more needs to be known about the effectiveness of strategies for building individuals’ skills and earnings capacity and how to incorporate them as options within state and local TANF programs. Within HHS, the Administration for Children and Families (ACF) has primary oversight responsibilities for TANF and for these efforts, most of which have focused on promoting financial asset building and training strategies. HHS’ Office of the Assistant Secretary for Planning and Evaluation (ASPE) also plays a key role in research efforts. HHS is engaging in several research projects focused on helping TANF clients and other low-income individuals find higher-wage employment and build their assets. One such effort, the Employment Retention and Advancement project, will identify and test program models designed to promote employment stability and increased earnings for TANF recipients and other low-income individuals. Started in 1998, this evaluation will test the effectiveness of 15 programs in eight states. The program models under review are designed to help participants retain jobs or advance in their careers, or both. Each program provides a package of services that will be compared. For example, participants in one career advancement program meet with “career and income advisors” to develop a career and income advancement plan that takes into account the client’s current job, career goals and specific barriers. Evaluations of this and the other program models will focus on the impact of receiving this package of services. TANF and other low-income individuals participating in the programs will be tracked for up to 5 years. While some preliminary results are available, final results from this 10-year evaluation are not expected until 2008. Evaluation results from this study can provide important information about the various combinations of services that might lead to positive outcomes for low-income individuals. To complement these efforts, HHS has also made contributions to the New Visions Self-Sufficiency and Lifelong Learning Project currently underway in California. A partnership between the local community college and the Department of Social Services, the project focuses on earnings gains as a primary measure of improvement in employment prospects of working parents who also receive TANF. In addition to the Employment Retention and Advancement project, in 2010, the agency expects final results from a second research effort—the Hard-to-Employ Demonstration and Evaluation Project—a 10-year study to identify effective strategies for improving employment outcomes for current or former TANF recipients and other low-income individuals who have had difficulty finding and holding down jobs. While both the Hard-to- Employ Demonstration and Evaluation Project and the Employment Retention and Advancement project are designed and managed by HHS, Labor also provides some funding. HHS also recently supported research comparing the job requirements of high demand positions in the long-term care industry to the skill profiles of TANF clients. This study explored the possibility of training TANF clients to fill these needs and identified challenges programs face in designing and implementing a long-term care training program for TANF clients. On the demand side, HHS is also about to undertake a nationally representative survey of employers in an attempt to understand more about the factors that ensure a TANF job-seeker success in the workplace. In addition, the agency is reviewing current research to better understand the role that asset building plays in addressing poverty. More specifically, they are looking at the factors influencing low-income families’ asset accumulation, as well as possible effects. The agency also plans to examine how means- tested program rules may affect low-income families’ ability to build assets. Finally, in recognition of employment barriers facing TANF job seekers in rural areas, HHS has also launched a demonstration project to evaluate the effectiveness of welfare-to-work strategies being used in rural areas, with final results due in 2007. These research efforts are a part of HHS’ broader research and evaluation efforts that include analysis of healthy marriage and responsible fatherhood initiatives, evaluations of other related welfare-to-work grants programs as well as research designed to address the needs of special populations such as low-income individuals with additional barriers. The agency also has taken steps to share research findings with local TANF programs, welfare researchers, and policymakers. Since 1998, HHS’ Administration for Children and Families 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. In addition, ACF and ASPE make research results available through presentations at other conferences related to welfare and low-income issues, their agency websites, and online announcements sent to subscribers. For example, officials noted that ASPE and ACF work together to send “TANFnet” announcements to state program administrators; currently TANFnet goes to 300 state administrators. Another source of research on these types of strategies could be the programs using them, although this was not the case among those we visited. Few of the programs reported plans for rigorous research and evaluation. A number of the officials we met with cited a lack of dedicated funding as the reason for not doing more in the way of evaluation and outcome measurement. Some individual programs had undertaken efforts to measure participant outcomes and two mentioned plans for a rigorous experimental design evaluation that could result in an assessment of its effectiveness. Often, when a program did collect data on participant outcomes, the indicators of interest were directly related to employment— program wide job placement rate, individual wage gain, length of tenure in a given job or access to benefits. However, some programs were interested in a broader spectrum of progress indicators. For example, the Project Match program in Chicago oversees a central database that tracks a variety of individual performance indicators for a number of area programs. These may include progress on work preparation activities, family or personal activities (e.g., going to medical appointments), and housing and financial activities (e.g., eliminating a debt). This forthcoming research will expand existing knowledge about welfare- to-work strategies in important ways, but more remains to be known about designing and implementing programs that can increase low-income parents’ earnings capacity and move them into higher-wage jobs. For example, research could help identify (1) more information on specific education and training strategies that work and what the key program elements are that lead to success and that can be replicated; (2) ways to incorporate education and training strategies into the lives of low-income individuals, whether as part of a welfare-to work program or in combination with part- or full-time work; (3) which strategies work best for those with varying skill levels, including how best to target educational and training skills to specific job needs, particularly for those who may not succeed in a classroom setting; and (4) which service delivery approaches are the most effective and cost-efficient, including understanding more about the most appropriate provider or access point, such as the welfare, educational, or employment and training systems or some combination of these. A new initiative HHS has recently launched, called the Innovative Employment Strategies Project, could help to identify additional research opportunities within existing resource constraints. This project is designed to document promising practices to help TANF and other at-risk families achieve self-sufficiency through employment and to make recommendations for further research. HHS has a strong tradition of leading and supporting rigorous welfare research and is well-positioned to continue to promote and support additional research, although it faces considerable challenges in doing so. In 2003, we recognized ACF as an agency with an evaluation culture based on its efforts to plan, execute and use information from evaluations and highlighted it as a model for other agencies. As part of this culture, it has played a role in working with methodological experts and partnering with state and local welfare agencies to promote and support the importance of evaluation to state and local welfare agencies. At the same time, HHS faces considerable challenges to support research in the new and evolving welfare environment. These include: limited authority to oversee states and reduced resources under TANF; fewer incentives for states to evaluate their programs than existed under the previous welfare program with its waiver, evaluation, and funding provisions; the increasingly decentralized welfare environment with a multitude of players involved in delivering services and operating programs; and the broadened population of interest under welfare reform, including current and former welfare recipients and other low-income parents. Still, HHS has a track record of successfully working with research experts and state and local governments, as well as its federal partners Labor and Education, to make important contributions. In addition, it has already broadened its research agenda to conduct and promote research beyond TANF recipients. The types of strategies we identified form a critical area to explore as welfare reform evolves. HHS also supports strategies designed to help TANF clients raise their incomes through targeted grants. In addition to the TANF grant—one of the most significant and likely sources of funding for welfare programs— the agency also offers two smaller grant programs that directly support the employment and asset-building strategies discussed in this report. The Job Opportunities for Low-Income Individuals (JOLI) and Assets for Independence (AFI) programs, both administered by ACF’s Office of Community Services, are designed to help TANF clients move into higher- wage employment or build financial assets through use of strategies such as training, asset building and microenterprise development. The JOLI grants, created in 1988, provide funding to organizations interested in creating job opportunities for TANF recipients and other low- income individuals with the goal of economic self-sufficiency. Nonprofit organizations receiving JOLI grants are required to use specific types of strategies such as training women and minorities for nontraditional jobs and supporting the development of microenterprises. In addition, HHS requires these organizations to establish a cooperative relationship with the state TANF agency, in an effort to ensure that TANF clients benefit from services funded by JOLI grants. In fiscal year 2004, about $5 million in grant funding was awarded. The agency is currently developing evaluation tools to assess the effectiveness of programs funded by JOLI grants. HHS’ AFI grants support asset accumulation among TANF recipients and other low-income families by funding financial education and economic support services. In addition to providing services such as financial education and assistance accessing tax credits, organizations receiving AFI grants help low-income individuals and families open special purpose savings accounts called IDAs that are matched with grant funds. Participants can use the money they save for postsecondary education to purchase a first home or start a small business. According to HHS, there are currently more than 315 AFI projects active across the country, and more than 21,000 families have opened IDAs through the AFI project . The average AFI grant award is $350,000 across a 5-year grant period. In 2007 ACF will publish a final evaluation of the effectiveness of the AFI grant projects. HHS supports the use of strategies identified in this report by providing technical support to TANF programs through the Welfare Peer Technical Assistance Network. The Network is comprised of states, counties, localities, and community based organizations and provides opportunities for members to learn from each other via round tables, site visits, teleconferences and a Web Site. Upon request, the Network provides opportunities for members to share experiences and solve common problems. For example, in 2005, the Network sponsored a 3-day event focused on innovative strategies to increase self-sufficiency outcomes in rural areas and in 2004 and 2005 co-sponsored with the Internal Revenue Service (IRS) two roundtable discussions about the use of the EITC. In 2002, the Network joined forces with Labor to focus on promoting IDAs. HHS also supports these strategies by disseminating information to state and local TANF programs through ACF’s 10 regional offices. Most often, regional offices sponsor regional conferences or workgroups to share effective strategies for meeting the needs of TANF recipients. For example, one regional office publicized a state post-secondary educational program that regional officials believed to be a promising practice. Information about this program was shared within the region and nationally. A second regional office organized a meeting in 2002 for several states to gather and discuss the administration of IDA programs. In 2004, this same regional office hosted a teleconference to discuss strategies and ways to develop successful work experiences for TANF clients in rural settings. Regional offices sometimes collaborate with other federal agencies in these efforts. For example, one ACF regional office worked with Labor to sponsor a conference designed to provide technical assistance to a state level TANF office on how to help move TANF recipients into health care jobs. Another regional office collaborated with the IRS to disseminate information about the EITC to states with the goal of helping TANF programs develop organized efforts to increase the number of low-income families who claim the credit. Some regional offices, in collaboration with federal agencies such as Labor and the Department of Transportation (DOT), have organized multi-state meetings on the specific challenges facing rural areas, as well as promising strategies. Regional offices have also shared information with TANF program administrators through the use of newsletters, electronic listservs and site visits. While HHS has provided some technical assistance to facilitate use of these strategies, the overall emphasis of welfare reform on work rather than education and training is sometimes perceived by programs as a barrier to implementing these strategies for TANF recipients. As we noted previously, some programs we visited believed they would have to change their program design and mission in order to get TANF funding or did not want to meet what they believed to be onerous program requirements while other providers made adjustments to meet their own mission goals and TANF work requirements. Some of the education focused providers were supported by state TANF programs that were specifically designed to include such options. It is not clear whether all program administrators, programs, and policymakers understand ways they can include education and training components as a part of their TANF programs. HHS headquarters and regional offices that work with program officials to share concrete information on what others have done to incorporate such strategies can help administrators understand the full range of program strategies that they may use at their option. While some program design decisions are made at the state level, often it is up to local TANF administrators to choose program strategies. As a result, it is important for HHS to provide assistance to both state and local administrators. Moreover, because many of the strategies we identified may involve efforts under the purview of Labor and Education, some of the cross- agency efforts identified by some of the regional offices may be particularly useful in providing technical assistance. While some regional offices noted such cross-agency efforts, others did not. Beyond HHS, a number of other federal agencies also provided research, technical assistance and targeted grants in support of grants designed to help TANF clients and other low-income individuals achieve higher-wage employment and build financial assets, sometimes in conjunction with HHS. For instance, HHS is a contributing partner to Labor’s National Work Advancement and Support Center Demonstration. In addition, Labor’s High Growth Job Training Initiative, while not specifically targeted to low- income individuals, seeks to train participants with training for high growth jobs such as those in the health care industry. As mentioned earlier, HHS is in the process of evaluating this practice as a possible approach for pairing TANF clients with opportunities in the burgeoning long-term care industry. In addition, from 1994 through 2003, Labor’s Women in Apprenticeship and Nontraditional Occupations program has funded community based organizations to provide technical assistance to employer and labor union efforts to place and retain women in apprenticeship and nontraditional occupations. Several other agencies have promoted the use of these strategies. For example, the Department of Education—in addition to collaborating with HHS and Labor on welfare-to-work research efforts—has sponsored its own research on community colleges’ role in welfare-to-work training. The agency has also provided technical assistance to state TANF administrators about post-secondary education as it pertains TANF. Additionally, the IRS has supported asset-building strategies by partnering with HHS in the Delta Initiative–-an effort whereby both agencies are working to increase the number of TANF and other low-income families in the seven state Mississippi Delta region who apply for the EITC. The Department of Transportation also has several efforts designed to help low-income individuals, as well as efforts to train and support women and minorities for entry into highway construction and maintenance jobs. In addition, DOT permits states to reserve some On-the-Job Training program positions for TANF clients. In addition to DOT’s efforts, HUD has launched the Jobs-Plus demonstration to increase labor force attachment among public housing residents (many of whom are also TANF clients) by issuing grants to local housing authorities to provide residents with employment- related services and incentives to improve their employment prospects. Our review focuses on promising strategies for increasing welfare clients’ incomes and the role that HHS can play in supporting these strategies. The sweeping welfare reforms of the last decade shifted the focus of the federal welfare program from issuing benefit checks to a broader mission of moving families into economic independence. Under the TANF block grant, states are funding a variety of programs designed to help clients make a successful transition into the workforce. This has carved out an important role for the broader workforce development and educational network—local non-profit programs, employers, community colleges, and other organizations. As a result, welfare recipients now prepare for work in a more decentralized environment where service providers may rely on a combination of public and private funding sources beyond TANF funding streams. The Departments of Education and Labor and other federal agencies have also expanded their roles in providing work-related services for TANF clients and other low-income people. While all of the strategies and programs we visited may show promise and help some welfare recipients find better jobs, research does not yet exist to isolate which strategies work best, for whom, and under which conditions, not to mention how to deliver services in the most cost- effective manner. However, the significant federal dollars spent on TANF warrants continued federal research efforts and attention from HHS, as well as Education, Labor, and other relevant agencies. Many of the strategies covered in this report represent new, or at least untested, approaches in the realm of welfare-to-work services. They deserve an opportunity for the kind of validation that only rigorous research can provide. Finally, in a time of scarce budgetary resources, it is appropriate that HHS and state TANF programs make full use of the vast array of strategies and programs available at the local level to help welfare recipients achieve the goal of self-sufficiency. According to experts, many state and local organizations have developed new and promising approaches with the potential to improve clients’ economic stability and career prospects. These practices hold value for the individuals and agencies directly involved and can provide important lessons for others. As the federal agency charged with helping low-income parents avoid dependence on welfare, HHS has several mechanisms to share research and information on effective and promising practices with programs providing services to TANF clients, such as its regional offices or partnerships with other agencies. However, some innovative programs serving welfare clients operate at the local level—not linked to HHS—and others may not receive direct funding from TANF and therefore may not be known to local, state, or federal officials. Because of these factors, HHS officials may find it increasingly challenging to gather and disseminate information on promising practices or to provide technical assistance for local programs wishing to implement these promising strategies. It is more difficult, but important, to reach all of the parties now involved in delivering welfare-to- work services in this more decentralized environment. To help ensure that the federal government considers research on these promising strategies and better informs welfare agencies and programs about how they might incorporate such strategies for TANF recipients, we recommend that the Secretary of HHS: 1. Review its current research agenda and identify opportunities to conduct and promote additional research on increasing earnings capacity among low-income parents. 2. Review existing research dissemination and technical assistance efforts across its relevant units to better ensure a comprehensive process for distributing information and implementation assistance to the wide range of program administrators and programs involved in welfare reform. 3. Seek out additional opportunities to work with the Secretaries of Labor and Education to jointly conduct and promote research and distribute information and implementation assistance related to enhancing skills and earnings capacity among low-income parents. We provided a draft of this report to HHS for its comments; these appear in appendix III. In its comments, HHS said that the recommendations were not necessary or warranted given that it is already carrying out a strong portfolio of research, evaluation, technical assistance and dissemination. It also stated that our conclusions and recommendations about promising strategies do not reflect existing research evidence. We disagree. While acknowledging HHS’ past and ongoing efforts, already discussed in the report, we continue to think additional efforts are warranted. In addition, our conclusions and recommendations are firmly based in existing research. More specifically, as the report introduction and background discuss and as HHS notes, welfare reform is built upon a considerable research base. This research shows that welfare-to-work interventions can increase employment and reduce welfare use and that a mixed approach—with a strong work focus and some education and training as needed—shows the greatest earnings gains. This research also shows that the most successful approaches tested generally do not lead to stable, higher-paying employment. As a result, many former welfare recipients rely on other forms of government aid to help make ends meet and some return to the welfare rolls. We have added to our discussion of this research in the background section. A key unanswered question—and the focus of this report—is about identifying and testing additional ways to help low- income parents support their families through employment rather than reliance on government supports. We acknowledge that HHS has several important research efforts under way to shed light on these issues. Our recommendation asks HHS to review its research agenda and seek out additional opportunities, given the importance of improving outcomes for low-income parents. We maintain that while not yet proven effective, the practices we identified hold promise and warrant additional attention in HHS’ portfolio. We acknowledge that some strategies, such as microenterprises, will probably always be of limited scale. We also clearly understand that, as HHS said, Congress created work requirements that emphasized some core activities and deemphasized others, such as post-secondary education. At the same time, Congress gave states flexibility to include other approaches deemed to address state and local needs and some administrators we spoke with believe post-secondary education can play a role in moving families permanently off welfare. We also identified promising short-term, work-focused training strategies that would fit within existing TANF work requirements. HHS stated that we recommend that it do more to encourage states to shift their focus toward activities not emphasized by Congress. What we found, and what we do recommend, is that the wide range of program administrators involved in helping low-income parents avoid welfare dependence would benefit from an even greater effort by HHS to provide information and practical technical assistance about promising practices. We think further collaboration among HHS, Labor, and Education in providing technical assistance warrants attention. As we already discuss in the report, HHS has several relevant and very important research efforts under way that will provide valuable information to policymakers. We understand that choices about where to focus limited research resources must be made and that its ongoing efforts are just one part of a larger portfolio of research related to TANF goals, including research on promoting safe and healthy marriages and fatherhood initiatives. We added language to the report to acknowledge these resource constraints. However, within these constraints, we still think it important that HHS explore opportunities to conduct and promote research on ways to increase low-income parents’ incomes through employment. We also think it particularly important that it expand its collaborations with Labor and Education in addressing these issues. Much remains to be explored about whether and how best to incorporate education and training into the lives of low-income parents to improve employment outcomes. Potential benefits include improved household incomes, reductions in government benefit programs, and increased contributions to the nation’s workforce. We note that HHS cited the President’s proposal for TANF reauthorization as an opportunity that would give HHS additional funds to explore promising practices. In some cases, HHS’ comments included information on research, dissemination, or technical assistance activities that it had not shared with us earlier; these have been added to the report. We also made revisions in some of our summary statements and other areas to better ensure HHS’ existing efforts were acknowledged and to add clarification. HHS also provided technical comments that we incorporated as appropriate. As agreed with your offices, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days after its issue date. At that time, we will send copies of this report to the Secretary of the Department of Health and Human Services, appropriate congressional committees, the Secretaries of Labor and Education, and other interested parties. In addition, the report will be available at no charge on GAO’s Web site at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (415) 904-2272 or bellisd@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix IV. Officials with expertise in welfare-to-work strategies were interviewed from the following organizations. Following is contact information for programs mentioned in this report. Gale Harris, Assistant Director, and Tiffany Boiman, Analyst in Charge, managed this assignment and made significant contributions to all aspects of this report. Michelle Bracy, Rachael Chamberlin, Lise Levie, Jean McSween, Angela Miles, Susan Pachikara, Nyree Ryder, and Daniel Schwimer also made significant contributions to this report. TANF: State Approaches to Screening for Domestic Violence Could Benefit from HHS Guidance. GAO-05-701. Washington, D.C.: August 16, 2005. Welfare Reform: Rural TANF Programs Have Developed Many Strategies to Address Rural Challenges. GAO-04-921. Washington, D.C.: September 10, 2004. Supports for Low-Income Families: States Serve a Broad Range of Families through a Complex and Changing System. GAO-04-256. Washington, D.C.: January 26, 2004. Program Evaluation: An Evaluation Culture and Collaborative Partnerships Help Build Agency Capacity. GAO-03-454. Washington, D.C.: May 2, 2003. Welfare Reform: With TANF Flexibility, States Vary in How They Implement Work Requirements and Time Limits. GAO-02-770. Washington, D.C.: July 5, 2002. Welfare Reform: States Are Using TANF Flexibility to Adapt Work Requirements and Time Limits to Meet State and Local Needs. GAO-02- 501T. Washington, D.C.: March 7, 2002. Welfare Reform: More Coordinated Federal Effort Could Help States and Localities Move TANF Recipients with Impairments toward Employment. GAO-02-37. Washington, D.C.: October 31, 2001. Welfare Reform: Moving Hard-to-Employ Recipients into the Workforce. GAO-01-368. Washington, D.C.: March 15, 2001. Welfare Reform: Work-Site-Based Activities Can Play an Important Role in TANF Programs. GAO/HEHS-00-122. Washington, D.C.: July 28, 2000. Welfare Reform: Assessing the Effectiveness of Various Welfare-to-Work Approaches. HEHS-99-179. Washington, D.C.: September 9, 1999. Welfare Reform: Information on Former Recipients’ Status. HEHS-99-48. Washington, D.C.: April 28, 1999. Welfare Reform: States’ Experiences in Providing Employment Assistance to TANF Clients. HEHS-99-22. Washington, D.C.: February 26, 1999.

Summary: Following major welfare reform in 1996, the number of families receiving cash assistance was cut in half to 2 million. While many former recipients now rely more on their earnings, they often work at low-wage jobs with limited benefits and advancement opportunities. To better understand how to help these individuals and their families attain economic self-sufficiency, GAO is reporting on (1) strategies designed to increase income for TANF recipients through employment; (2) the key factors related to implementing and operating such strategies; and (3) actions the Department of Health and Human Services (HHS) has taken to facilitate the use of these strategies. GAO consulted experts to gather information about promising strategies and visited 26 programs. Based on interviews with experts and site visits, we identified four strategies that aimed to increase incomes for recipients of Temporary Assistance for Needy Families (TANF)--training, post-secondary education, self-employment, and financial asset building. Training strategies often targeted services to particular groups or job market needs. Other programs used post-secondary education to position clients for higher-wage jobs. Some programs we visited gave participants the tools to run their own businesses as a way out of poverty. Finally, asset building strategies aim to help clients save and invest money to pursue career goals and support their families. The 26 programs we visited used one or more of these strategies. A broad network of local non-profits, state and local TANF offices, employers, and community colleges is key to operating these strategies. Some of the programs we visited were non-profits under contract with the TANF office. Others relied on a mix of public and private funds, some because of concerns that TANF's emphasis on work was a barrier to providing education and training options. State and local TANF offices, for their part, sometimes set policies and provide additional funding to encourage the strategies discussed in this report. Local non-profits and TANF agencies either directly provided or helped link clients to supplemental services such as child care, housing, on-the-job support, and transportation. As part of the broader network, local non-profits and TANF offices often forged links with employers and community colleges to leverage additional resources for their clients, including training curricula, career ladders, and work opportunities. HHS is supporting these strategies through research, targeted grants, and technical assistance. Efforts by other federal agencies, such as the Departments of Education and Labor, also support some of the strategies discussed in this report. HHS has several research projects focused on helping low-income individuals find higher-wage employment and build their assets. While these efforts are important, more needs to be known about the effectiveness of specific strategies, such as those identified in this report, in increasing TANF recipients' earnings capacity. In addition to the TANF block grant, HHS has two small grant programs that support employment and asset-building strategies. While HHS has provided some technical assistance to facilitate the use of these strategies, it is not clear whether service providers understand ways they can incorporate education and training in a work-focused welfare system. Furthermore, HHS faces some challenges disseminating information on new research or promising strategies to all of the organizations providing services to TANF clients in the more decentralized welfare environment.