The 104th Congress is moving to make major changes in AFDC, the nation’s largest cash assistance program for needy families with children. Under consideration are limiting the number of years that cash assistance may be received, capping benefit increases for mothers on welfare who have additional children, denying cash assistance to unwed mothers under 18 years old, and transforming AFDC from entitlement status to a block grant administered by states. Also under consideration are the type and extent of work requirements to be established. In 1988, the Congress created the JOBS program to transform AFDC into a transitional program geared toward helping parents become employed and avoid long-term welfare dependence. Under JOBS, states are to assess the needs and skills of AFDC recipients, prepare them for employment through education and training as needed, and place them in jobs. We reported earlier that while states have made progress in implementing JOBS, only a small percentage of the almost 4.6 million adults on AFDC participated in work-preparation activities in fiscal year 1993. Moreover, little is known about the JOBS program’s progress in moving parents into employment and reducing their dependence on welfare. To help the Congress as it considers welfare reform, the Ranking Minority Member of the Senate Committee on Finance requested us to provide information on (1) examples of county or local programs that stressed job placement, subsidized employment, or work-experience positions for welfare recipients; (2) the extent to which county JOBS programs nationwide emphasized these employment-focused activities; and (3) factors that hinder program administrators’ efforts to move welfare recipients into jobs. Through AFDC, the federal government and the states provide cash assistance to needy families with children who lack support from one or both parents because of death, absence, incapacity, or unemployment. As shown in figure 1.1, since 1970, the number of female-headed families, including those headed by women who have never married, has more than doubled, as has the number of families receiving AFDC. According to a Congressional Budget Office study, the growth in female-headed families, especially those headed by females who had never been married, accounted for about one-half of the sharp increase of 1.2 million in the number of AFDC families between 1989 and 1993. Forecasting AFDC Caseloads, With an Emphasis on Economic Factors, Congressional Budget Office Staff Memorandum (Washington, D.C.: 1993), pp. 1, 3. mothers receiving AFDC who had never been married has doubled, from 21 percent in 1976 to 52 percent in 1992. About 70 percent of families receiving benefits have 1 or 2 children. While most AFDC recipients are single mothers, these women are a diverse group, making use of the program in different ways. For example, one study has estimated the total time that those receiving AFDC at a point in time can be expected to receive benefits, as shown in figure 1.2. This analysis indicates that 9 percent of these recipients are using AFDC for only a short time—2 years or less. About 76 percent, however, are receiving AFDC benefits for a total of 5 years or more, when all moves on and off welfare are considered. According to these data, under a 5-year limit on receipt of cash assistance—a measure included in the House welfare reform bill—about three-fourths of those on AFDC may be expected to hit the time limit and need to support themselves through employment or other means. This prospect poses a formidable challenge for many AFDC recipients who have limited education, job skills, and work experience. About 45 percent of all AFDC recipients, for example, have less than a high school diploma.Surveys of several thousand AFDC recipients expected to participate in JOBS in selected sites showed that at least one-third had extremely low literacy skills and between one-fourth and more than one-half lacked prior work experience. Over one-fourth thought they could not prepare for work because they or their family members had health or emotional problems.Such recipients are at risk of long-term welfare dependence. We reported previously that states have made some progress in working with some of these recipients but that many remain unserved. The JOBS program, begun in 1989, was designed to improve upon the performance of previous welfare-to-work programs and help combat long-term welfare dependence. Research studies conducted up to then showed that employment training programs for welfare recipients could have a positive but generally modest effect on increased earnings and reduced welfare costs. They also showed that programs that emphasized low-cost services, such as job search, generally did not help welfare recipients get higher paying jobs than they would have without the programs or help the more disadvantaged. It was hoped that JOBS could improve upon previous programs’ performance by reaching further into the AFDC caseload and providing more comprehensive services, including education and training, to help parents find jobs that would end their dependence on welfare. To this end, under JOBS, states are to (1) provide a broad range of education, training, and employment-related activities; (2) increase the number of AFDC recipients participating in these activities; (3) target resources to the hard-to-serve; and (4) provide support services, including child care, transportation, work-related, and other support services, such as mental health counseling, if deemed necessary. To encourage states to work towards the federal goal of reducing welfare dependency, the Congress created minimum participation and targeting requirements that states must meet to receive their full share of federal funding. The minimum participation requirements rose from 7 percent of nonexempt AFDC recipients in fiscal year 1991 to 20 percent in fiscal year 1995. Under the targeting requirements, states must spend 55 percent of their JOBS funds on designated target groups. The Congress also expected that performance standards based on outcomes, such as increased employment and earnings and reduced welfare dependency, would be established after the initial implementation of the program. Outcome-related performance standards have not yet been established. (For more information on the current status of these performance standards, see p. 42.) While most states have met the minimum participation requirements, the number of AFDC recipients participating in JOBS remains limited. About one-half of the adults receiving AFDC have been exempted from JOBS, most often because they are caring for a young child. Of those considered nonexempt, states decide how many to serve in JOBS based on the availability of state resources. As shown in figure 1.3, the number participating in JOBS each month, while increasing, has remained limited for fiscal years 1991 through 1993. In 1993, about 11 percent of the 4.6 million adults receiving AFDC were active in JOBS activities each month. Although some individual programs have succeeded in serving most of their nonexempt AFDC recipients, JOBS programs overall served only about one-fourth of the nonexempt population. Federal law requires JOBS programs to make an assessment of employability based on a participant’s educational, child care, and other support services needs; skills and work experiences; and family circumstances. The types of assessments used can range from 5-page surveys filled out by participants to comprehensive career-oriented assessments. If participants are considered job-ready when they enter the program, they may be required to look for work immediately without further employment preparation. Programs have varying criteria on when a participant is considered job-ready. While some local programs encourage all of their participants to look for work before being placed in education, training, or work-related activities, most require some minimum level of education, skills, or work experience before participants are expected to look for work. Within the federal JOBS guidelines, states and localities assess the needs of their JOBS participants, determine the type and intensity of services provided, and set the criteria by which participants are deemed job-ready. They also have discretion to establish the wage level and benefits associated with the employment goal established in the employability development plan. Some programs set wage goals as high as $8 per hour, while others believe that a job at any wage level is an appropriate goal. To help AFDC recipients move towards self-sufficiency, states rely on two federal funding sources. First, about $1 billion of federal JOBS funds has been made available annually in recent years for allocation to the states. States must then commit their own funds to JOBS to match these federal funds. In fiscal year 1993, states used about 70 percent of the federal JOBS funds available to them. Second, the federal government has provided an uncapped source of funds to share with states the costs of providing child care assistance to AFDC recipients in education or training programs or who are employed. In fiscal year 1993, the federal government provided about $1.2 billion of the almost $2 billion spent by states on JOBS and AFDC child care. HHS oversees the JOBS program at the federal level and state AFDC agencies supervise it. At the local level, JOBS is administered either by the state AFDC office or by county officials. Before using JOBS funds to purchase services for participants, programs must make full use of the services and resources available in their communities without charge to AFDC recipients. Programs may also contract with other organizations for services. As a result, programs rely heavily on a variety of community resources, such as Job Training Partnership Act (JTPA) agencies, adult basic education programs, high schools, the state employment service, Head Start, and community colleges. To identify welfare-to-work programs that strongly emphasize employment or work for their welfare recipients, through job-placement activities, subsidized employment, or work-experience positions, we reviewed welfare-to-work evaluations and HHS program data and contacted HHS officials and welfare experts. We then visited selected programs in Riverside County and San Jose, California; Athens, Ohio; and New York, New York. Also, in Charleston, West Virginia, we spoke with six JOBS officials representing 11 West Virginia counties.