The Welfare Reform Act gives the states the opportunity and authority to streamline their operations by allowing them to experiment with ways to standardize their eligibility and benefit requirements for households participating in both TANF and the Food Stamp Program. Specifically, the act provided the states with the option of operating the Simplified Food Stamp Program. This program allows them to establish eligibility and benefit levels on the basis of household size and income, work requirements, and other criteria established under TANF, food stamps, or a combination of both programs—as long as federal costs are not increased in doing so. The TANF block grant, administered by the U.S. Department of Health and Human Services, helped the states provide assistance to about 3.9 million needy families with children in fiscal year 1997. Among other things, the grant is intended to allow children to be cared for in their own homes and to reduce welfare dependency by promoting job preparation and work. The fixed amounts of the states’ TANF grants under the Welfare Reform Act are based on the amount of the grants they received in specified fiscal years under prior law, adjusted for population increases under certain circumstances. For fiscal year 1997, the federal grants available to the states totaled $16.7 billion and ranged from $21.8 million in Wyoming to over $3.7 billion in California. With respect to state funding, the Welfare Reform Act included a “maintenance-of-effort” provision requiring the states to provide 75 to 80 percent of their historic level of funding. Because of congressional concern that welfare had become a way of life for some participants, a key purpose of the new law is to promote work over welfare and self-reliance over dependency. In support of this goal, the law provides that the states must require able-bodied participants to engage in work or work-related activities and must impose a 5-year lifetime limit on federal assistance. The states must require adults in families receiving TANF assistance to participate in work or work-related activities after receiving assistance for 24 months, or sooner, as defined by the state. If recipients fail to participate as required, the states must at least reduce the families’ assistance and may opt to terminate it entirely. To avoid financial penalties, the states must ensure that a certain specified minimum percentage of their beneficiaries are participating in work or work-related activities each year. These percentages are referred to as “minimum mandated participation rates.” To count toward these mandated rates, adults in families receiving welfare must participate for a certain minimum number of hours in work or a work-related activity as prescribed in the Welfare Reform Act—such as job readiness workshops; on-the-job training; and, under certain circumstances, education. The required number of hours of participation and the percentage of a state’s caseload that must participate to meet mandated rates increase over time are shown in table 1. Instead of prescribing in detail how the states should structure their TANF programs, the Welfare Reform Act authorizes the states to use their block grants in any manner that is reasonably calculated to accomplish the purposes of TANF. For example, the states are allowed to set forth their own criteria for defining who will be eligible and what assistance and services will be available, provided they ensure fair and equitable treatment. The states may opt to deny assistance altogether for noncitizens, drug felons, minor teen parents, or those they determine are able to work. The states may also choose when to require adults to participate in work activities, what types of activities are allowed, who should receive a participation waiver, and whether to terminate grants to entire families for noncompliance. The Food Stamp Program is the cornerstone of federal food assistance programs. It is an entitlement program that helped put food on the table for about 8.3 million households each day during 1997 at a federal cost of about $19.5 billion. It provides low-income households with paper coupons or electronic benefits that can be redeemed for food in about 200,000 authorized stores across the nation. U.S. citizens and some legal immigrants who are admitted for permanent residency may qualify for food stamps. Household eligibility and benefit amounts are based on nationwide federal criteria, including household size and income; eligibility is also based on assets, housing costs, work requirements, and other factors. The program operates in the 50 states, the District of Columbia, Guam and the U.S. Virgin Islands. FNS administers the program in cooperation with state agencies. FNS is responsible for approving state plans for operation and ensuring that the states are administering the program in accordance with regulations. The program is administered at the local level by either a state agency or a local welfare agency, depending on the state. Local office staff are responsible for determining eligibility and the level of benefits issued to participating households. The federal government pays the full cost of benefits and shares administrative costs with the states. The federal cost to administer the program was about $1.7 billion in fiscal year 1997, and the average monthly household food stamp benefit was $169. The Welfare Reform Act requires most able-bodied adult participants receiving food stamps to work in return for their benefits. Able-bodied participants ages 18 to 50 with no dependent children may receive food stamp benefits for only 3 months in every 36-month period unless they are engaged in work or work programs. Qualifying work includes participating in a work program for a monthly average of 20 hours or more a week. Exclusions to the work requirement vary by program. For example, single parents with children under the age of 6 may be exempted from the food stamp work requirement, while TANF allows the states to exempt single parents with children under the age of 1. The Simplified Food Stamp Program allows the states to determine eligibility and benefits under one set of program criteria for families receiving assistance from both the Food Stamp Program and TANF. Under the simplified program, the states can merge their TANF and food stamp rules into a single set of eligibility and benefit requirements and control the extent to which the program’s rules are merged. Some states, for example, may elect to implement a “full” simplified program in which an extensive set of TANF requirements—such as income and asset limits—are adopted to determine eligibility. Other states may adopt a more limited, or “mini,” simplified program—incorporating only TANF’s work requirement into their simplified program. With a mini program, the states can administratively combine the value of their TANF and food stamp benefits in calculating whether participants are being provided with benefit amounts that are at least equal to the minimum wage—currently $5.15 an hour—multiplied by the number of hours they are required to work. (App. III describes in more detail how the adoption of a simplified program helps the states to comply with the requirement to provide the minimum wage.) The Welfare Reform Act requires the states to retain several features of the regular Food Stamp Program, such as issuance procedures and the use of the Thrifty Food Plan as the basis of benefits in their simplified program. The states must also obtain FNS’ approval to implement a simplified program. To establish a program, the states must demonstrate that their simplified program will not cost the federal government more than the Food Stamp Program would have cost for the affected participants in any fiscal year—that is, the program has to be cost neutral. The simplified program’s cost-neutrality requirement is more restrictive than the cost-neutrality requirement approved for some welfare reform demonstration projects, which have allowed states to calculate cost neutrality over several years. In response to our July 1998 survey, seven states—Arizona, Delaware, Georgia, Idaho, Mississippi, New Jersey, and New York—reported that they had implemented a simplified program. Each of these states implemented a mini simplified program. Six states—Arkansas, Florida, Illinois, Maine, North Carolina, and South Carolina—indicated that they were planning to implement the simplified program. Since July, one of these states—Arkansas—has implemented it—bringing the total number of states with simplified programs to eight and reducing the number of states planning to implement the program to five. Appendix IV presents the status of each state’s implementation as of July 1998. Unlike the seven states that had implemented a mini simplified program, Arkansas adopted a more extensive simplified program, using a number of TANF requirements to determine eligibility and benefits. For example, under the regular food stamp rules, the portion of the fair market value of a household vehicle that exceeds $4,650 is counted toward the household’s resource limit. However, Arkansas’ simplified program uses a state-defined TANF rule that exempts the total value of the vehicle from the resource limit. Arkansas’ primary goal in adopting the simplified program is to create a “one-stop” process for approving TANF and food stamp benefits, thereby eliminating separate participant interviews, forms, and reporting requirements for each program. The state expects that caseworkers will then be able to spend more time helping program participants find employment. (App. V describes the Arkansas program in more detail.) According to the survey responses, of the five remaining states (excluding Arkansas) planning to implement a simplified program, all but Florida plan to adopt it within the next year. Florida was uncertain about when it would adopt a simplified program. Figure 1 identifies the eight states (including Arkansas) that have implemented a simplified program and the five states that are planning to implement a program. Thirty states are not planning to implement the simplified program, and 9 states—California, Colorado, Connecticut, Massachusetts, New Hampshire, Pennsylvania, Rhode Island, Utah, and the U.S. Virgin Islands—reported that they are uncertain about whether they will implement the simplified program. Thirty five of the 45 states that had not implemented a simplified program indicated that, as currently structured, the simplified program was hardly or not at all helpful in achieving a more efficient and streamlined operation.