The Overlooked Facts About Welfare in California

by John C. Liu, Director of Health and Welfare Studies

May 1997

"When I ran for president four years ago, I pledged to end welfare as we know it....Today, the Congress will vote on legislation that gives us a chance to live up to that promise....For those reasons, I will sign it into law."

-President Bill Clinton
White House Briefing
July 31, 1996

 

Foreword

This report on welfare reform is the first in a series of publications that will focus on various aspects of California's current and future welfare system. With more control and discretion being given back to state and local governments, it is imperative that Californians understand the various components and policy goals of welfare reform that will be sought by the executive and legislative branches in Sacramento. Since the future ramifications of any state-based welfare reform law will have lasting repercussions on every Californian, it is crucial for the public and policymakers to base their respective opinions and decisions on the facts surrounding welfare. Opponents and proponents of welfare reform share one common reality -- the "Personal Responsibility and Work Opportunity Act" of 1996 (PRWOA) is now the law of the land and in order for California to fulfill its legal and social obligation, creative new solutions will have to be implemented at the state and local levels.1

Only then, will the fundamental goals of true welfare reform be accomplished:

(1) reducing the length and repetitive nature of welfare spells by attacking dependency, and

(2) preserving the original function of welfare as a safety net for families experiencing temporary financial hardship.

In brief, the PRWOA ends the automatic "entitlement" to cash welfare benefits by transforming the largest parts of the nation's welfare system into a two-part block grant program. The first block grant provides the states with necessary funds to help needy families support their children while requiring able-bodied recipients to work a minimum of 30 hours per week in return for continued assistance. The second block grant provides an unprecedented amount of committed federal dollars to the states for the specific purpose of subsidizing child care for recipients who work or attend school while on welfare. In creating the new Temporary Assistance for Needy Families (TANF) program, four cash welfare and related programs have been eliminated: Aid to Families With Dependent Children (AFDC), AFDC Administration, the Job Opportunities and Basic Skills Training (JOBS) Program, and the Emergency Assistance Program.

"Making work pay more than welfare" remains a priority for many Californians. In fact, a recent poll indicated that over two-thirds of Californians support Gov. Wilson's two year time limit on welfare.2 In light of California's expanding economy, with hundreds of thousands of jobs being created annually,3 the Golden State has been presented with a historic opportunity to reverse the failed welfare trends of the past 30 years by creating a new and innovative structure that emphasizes work over welfare.

Since November 1996, attempts to shape and influence public opinion over welfare reform have generated controversial debates throughout California. This report is intended to serve as a primer for the millions of Californians who wish to gain a general understanding of their state's current welfare system. With the passage of the PRWOA, it is now up to the states to implement and enforce the federal requirements contained in the new block grants.

Any honest debate over welfare reform must address the following sub-issues that are involved:4 *Do out of wedlock births contribute to the increase in dependence on welfare?

* Why are some counties more successful than others in moving recipients from welfare to work? What are the factors that contribute to that success?

* Should sponsors of legal immigrants be held accountable in fulfilling their pledge of support to the U.S. Immigration and Naturalization Service (INS) for their relatives' well being?

*What role / responsibility can the private sector, i.e. business, religious entities, and charitable foundations, fulfill without government intervention?

*Will the new increase in the state's minimum wage law affect the number of job opportunities sought by welfare recipients?

*Forty percent of the nation's children (23 million), are growing up without the presence of their biological father. That is three times more than just a generation ago.

*Why have approximately 10,000 families in California been on welfare for 17 years or more?5

This report seeks to provide some of the facts and background information that have either been overlooked or ignored by the public regarding the welfare system in California.

"The American public is tired of political promises that go unfulfilled. They realize that tough choices must be made. Their anger is not over these choices but over those elected leaders who refuse to make the choices. This is an opportunity to help restore the public's trust in their government..."

-Leon E. Panetta (D-CA)
Chairman, Committee on the Budget
U.S. House of Representatives
May 26, 1992

EXECUTIVE SUMMARY

*Home to just 12.02 percent of the nation's general population, California's AFDC population comprises 19.1 percent of the nation's AFDC caseload, spending approximately 27.9 percent of dollars spent nationwide on AFDC.

*AFDC recipients in California represent 8.48 percent of the state's total population.

*Between 1986 and 1995, California's AFDC average monthly caseload increased from 564,645 to 919,471, a 62.84 percent jump over 10 years.

*Approximately 46 percent of children on AFDC in California are born out of wedlock. Studies have shown that children without fathers are twice as likely to drop out of school and two and a half times as likely to be teen parents, live in poverty, and abuse drugs.

*The issue of welfare reform cuts across traditional political party lines. It is a bi-partisan issue and is evidenced by California's Congressional delegation voting record on H.R. 3734.

* Under current state law, California's 58 counties are required to provide "General Assistance" -- (GA) cash grants - as a safety net of last resort. The counties with the highest number of recipients are Alameda, Contra Costa, Los Angeles, Sacramento, San Diego, San Francisco, and Santa Clara. According to the California State Association of Counties, the typical GA recipient is single, male, employable, and between the ages of 30-40.

*The new federal welfare reform law will provide California with approximately $2.2 billion between 1997 and 2002 for the express purpose of subsidizing child care for welfare recipients.

"The lessons of history, confirmed by the evidence immediately before me, show conclusively that continued dependence upon relief induces a spiritual and moral disintegration fundamentally destructive to the national fiber. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit...It is in violation of the traditions of America."

-President Franklin D. Roosevelt
Address to Congress
January 4, 1935

Introduction

As highlighted by the Presidential elections of 1992 and 1996, the welfare system in the United States remains the focal point of increasing criticism and frustration among Americans. Despite Congress' original and virtuous intent in creating a safety net program, i.e. helping widows or mothers who have been abandoned by their husbands, the welfare system has undergone dramatic changes.

These changes have prompted criticism of the welfare state from a diverse range of California's population. First, welfare recipients cite insensitive and unresponsive social workers as being out of touch with their needs. Second, taxpayers who fund the overlapping programs and the accompanying bureaucracies are increasingly expressing their concerns that a growing percentage of their tax dollars is targeted for programs that are: (1) subject to widespread fraud and abuse, (2) outdated, and (3) creating distorted incentives for able-bodied recipients to remain on welfare rather than seeking gainful employment as a means of raising their standard of living.

As required by the "Personal Responsibility and Work Opportunity Act" of 1996 (PRWOA), governors and state legislatures across the country will be required to implement state run welfare programs that "[t]ransform a broken system that traps too many people in a cycle of dependence to one that emphasizes work and independence, to give people on welfare a chance to draw a paycheck, not a welfare check."6

In light of the initiative of several governors throughout the country, Californians have much to learn about sensible ways to ease the transition from welfare to work. States such as Michigan, Wisconsin, and Oklahoma have proven track records in reducing their welfare rolls by creating the proper incentives and infrastructure that lead recipients toward long-term independence.

"Today, we have a historic opportunity to make welfare what it was meant to be: a second chance, not a way of life."

-President Bill Clinton
White House Briefing
July 31, 1996

California's History with Welfare Reform Efforts

In compliance with federal law, California Governor Pete Wilson submitted a tentative welfare reform proposal to the federal government, thereby qualifying the state of California to receive an increase of $300 million in new revenue for fiscal year 1996. While substantive welfare reform is sought by all the nation's governors, California once again finds itself in the national spotlight as a bellwether state, and deservedly so. Home to just 12 percent of the nation's general population, California's AFDC population comprises 19 percent of the nation's welfare caseload and spends approximately 27.9 percent of dollars spent nationwide on AFDC.

In his January 7, 1997 State of the State Address, Governor Wilson outlined a proposal that accepts the responsibility of fulfilling the state's obligation in reforming the welfare system while pledging his cooperation to work with all members of the state legislature. These proposals have since been forwarded to the California legislature for consideration.7 In sharp contrast, liberal legislators in the state capitol now seem intent on blocking any of the improvements called for in the PRWOA, a measure that passed the 104th Congress by an overwhelming bi-partisan majority. Similar sentiment is coming from many of California's county supervisors and welfare directors who will ultimately be charged with carrying out many of the federal requirements.

Nationwide, governors and legislatures are seeking fundamental reform of their state welfare systems now that they have finally been given the authority to do so. As mentioned earlier, some states have already moved ahead and made significant reductions in their welfare caseloads. It should be pointed out however, that one of the primary reasons for these states' successes rested on their ability to receive the required federal waivers which gave them the latitude to conduct their innovative programs.

Many of the welfare reform proposals contained in both Governor Wilson's 1997-1998 budget and the PRWOA are not new to California. In early 1995, Governor Wilson initiated the first of several attempts to secure waivers from the Clinton Administration which would have exempted California from many of the burdensome and bureaucratic federal welfare mandates.8 Several of these requests were systematically denied or ignored. Ironically, many of the reform proposals contained in California's waiver requests are now permitted by the recently enacted federal welfare law. For example, prior to the enactment of the PRWOA, California's Department of Social Services (CDSS) repeatedly sought the necessary federal waivers to establish a "maximum family grant" (MFG). In brief the waivers would have allowed California to hold constant an AFDC recipient's cash grant level, regardless of how many additional children were subsequently added to the household.

Governor Wilson's 1997 proposal suggests a departure from the policies of the past 30 years. It starts from the premise that the current welfare system "is no longer a rational system and is widely recognized as being broken. It discourages work, it creates long-term intergenerational dependency, even for able-bodied adults, it supports out-of-wedlock births..."9 The proposal's intent is to change the rules so that TANF (formerly AFDC) recipients as well as General Assistance (GA) recipients, will have the proper incentive and means to gradually work their way off welfare and into the workforce. In a majority of cases, this will call for able-bodied TANF and GA recipients to combine their earnings from employment with welfare benefits available under the new law.

The Current Welfare System in California

As drafted by Congress, the original welfare program established under the Social Security Act of 1935 was called "Aid to Dependent Children" (ADC). The program was designed to enable the states to aid needy children whose mothers were either: (1) widows, or (2) had been abandoned by their husbands. In 1962, the ADC program was expanded to provide similar benefits to children living in foster care. A year later, the title of the program was changed to "Aid to Families with Dependent Children" (AFDC) with the intention of keeping families together by providing assistance to households with unemployed fathers. Since 1965, the welfare system in the United States has expanded and evolved into a bureaucratic machine at all levels of government (federal, state, and local).

A comparison of the current welfare programs with those of the 1930s will show a significant contrast and departure from Congress' original intent of keeping the family together.

For the past 10 years, the welfare system in California has involved all three levels of government: federal, state, and county, with the AFDC and food stamp programs funded jointly by California and the federal government. The general assistance program (GA) is funded entirely by the 58 counties.10 More often than not, a significant majority of these programs overlaps either in purpose and/or in scope. Prior to the federal welfare reform law, the entitlement system was overwhelmingly federal in nature based upon the number of programs and dollars spent. Until August 22, 1996, the largest operating welfare program in California was the federal entitlement, Aid to Families with Dependent Children (AFDC), now transformed into the federal cash welfare block grant called Temporary Assistance for Needy Families (TANF ).

Under the old AFDC guidelines, California was able to define which segment of its population was "needy," set its own benefit levels, establish (within federal limitations) income and resource limits, and administer the program as prescribed by federal law.11 Although California was allowed to define which segment of its population was "needy," stringent federal guidelines prohibited the state from implementing changes to the AFDC program that have proven to benefit the poor. For example, California's own "welfare to work" program, Greater Avenues for Independence (GAIN) had to operate within the context of a federal welfare system that 1) did not require work as a condition of aid; 2) had no time limits on aid, and 3) did not provide adequate financial incentives for recipients to increase their earnings.

Profile of AFDC recipients -

Prior to the enactment of the PRWOA, eligibility for AFDC in California was divided into three general categories: 1) AFDC-Family Group (AFDC-FG), 2) AFDC-Unemployed Parents (AFDC-U), and 3) AFDC-Foster Care (FC). The most recent data available from the California Department of Social Services (CDSS) show that as of June 1996, California provided AFDC-FG/U benefits to approximately 2.8 million recipients. Of this amount, 1.9 million recipients, or 75 percent, fell in the AFDC-FG category while 659,988 recipients were classified as AFDC-U.12

AFDC-FG eligibility was based on the continued absence of a child's father. According to the most recent AFDC characteristics survey, primary reasons for the continued absence of a father included abandonment, divorce, separation, never being married to the mother and, in a limited number of cases, death or imprisonment.13 AFDC-U eligibility was based on the unemployment status of the primary wage earner in a two-parent family.

California's AFDC population reflects a diverse group of recipients who have come to rely on welfare for a wide range of reasons. While barriers to self-sufficiency vary from household to household, the following AFDC profiles are typical among the AFDC-FG and AFDC-U recipient pools.

An AFDC-Unemployed case typically consists of a mother, father, and two children. Eligibility is based on the unemployment of the primary wage earner.14

Additionally, AFDC benefits increase according to family size. In January 1996, California's maximum AFDC benefits by family size allowed the following adjustments:

One-person family: $299/month
Two-Person family: $490/month
Three-person family: $607/month
Four-person family: $723/month<
BR> Five -person family: $824/month
Six-person family: $926/month

Trends in welfare spending -

While the federal welfare program dates back to 1935, much of the debate in Sacramento will center around the social policies and costs associated with President Lyndon Johnson's "War on Poverty" programs established in 1965. To be sure, the costs borne by California's taxpayers over the past 30 years to help fund the entire welfare system have been enormous. According to experts in welfare policy, between 1965 and 1994, U.S. taxpayers have spent approximately $5.4 trillion on government welfare programs.15 (This $5.4 trillion price tag was measured in constant 1993 dollars and has been adjusted for inflation.) To put this dollar amount in perspective, $5.4 trillion could fund 81 times over the entire projected California state budget expenditures for fiscal year 1997-1998 of $66.6 billion.

With respect to California's share in funding AFDC benefits (excluding administrative costs), the state spent $53.6 billion between 1986 - 1996, with $43.5 billion designated to AFDC-FG recipients, and $10.1 billion going towards AFDC-U recipients. A year by year breakdown is as follows:16

As the table indicates, California's level of AFDC-FG/U spending in 1996 represents an increase of 36 percent over the 1986 spending level.

The Unseen Administrative Costs of Welfare Bureaucracy -

If welfare reform legislation is employed as a means of executing sound social policy objectives, it is imperative that the federal, state, and local bureaucracies which have perpetuated the cycles of dependency be streamlined. The costs of administering the federal welfare programs alone in California are staggering and have literally increased in exponential rates over the past decade. Prior to the enactment of the PRWOA, state and local governments had been required to comply with countless rules, regulations, standards, and guidelines with respect to the four major federal welfare programs. A review of the welfare administration costs over the past decade highlight the importance of seeking a streamlined and more efficient bureaucracy. The following table highlights the amount of spending on administrative expenditures compared with the actual amount of cash being provided to welfare and social services recipients.

Welfare Administration - Includes expenditures incurred in the administration of the public assistance cash grant programs for:

*Aid to Families with Dependent Children - Family Group
*Aid to Families with Dependent Children - Unemployed Parent
*Aid to Families with Dependent Children - Foster Care
*Refugee Programs - Cash Assistance Program and Demonstration Project Adoptions

Aid Programs Cash Grants - Includes expenditures incurred in providing cash grants aid to public assistance recipients for:

*Aid to Families with Dependent Children - Family Group
*Aid to Families with Dependent Children - Unemployed Parent
*Aid to Families with Dependent Children - Foster Care
*Refugee Programs - Cash Assistance Program and Demonstration Project Adoptions
*Gain

As this table demonstrates, the amount of spending on administrative costs has been increasing at an enormous rate. In light of the block grant structure which allocates a defined contribution to each state for each fiscal year, it is imperative that California take advantage of the flexibility it has been given to design a program that directs more dollars into the hands of recipients instead of an overbloated and inefficient bureaucracy.

General Assistance / Relief (GA/GR)

In addition to the state and federal welfare programs, California's 58 counties are statutorily mandated to provide a "safety net of last resort" -- General Assistance. Part 5, Sec. 17000 of the California Welfare and Institutions Code states that "Every county and every city and county shall relieve and support all incompetent, poor, indigent persons, and those incapacitated by age, disease, or accident, lawfully resident therein, when such persons are not supported and relieved by their relatives or friends, by their own means, or by state hospitals or other state or private institutions."

While the types of GA services and benefits vary among the counties, the recipients' profiles are similar throughout the state. In general, most of California's GA recipients are single, male, ages 30-40, and employable adults ineligible for AFDC, SSI/SSP, and Food Stamps.17 The most recent survey conducted by the California Department of Social Services shows that during the month of June 1996, 155,346 GA recipients received cash grants totaling $33.56 million.18 While this amount reflects a slight downward trend in expenditures from the previous year, the total cost to counties remains a heavy burden, especially as county supervisors prepare to make the adjustments called for in the federal welfare reform law. The following table highlights the significant increases in GA spending over the last 10 years: 19

As the table indicates, GA spending has increased by 46 percent over the past decade. It is no surprise that some counties are continuing to look for creative solutions and alternatives to the current funding requirements and regulations. For example, California state Senator Cathie Wright (R-Simi Valley) authored legislation (S.B. 1584) in 1996 to create a pilot program that sought to streamline bureaucratic and cumbersome regulations by combining "[m]oney and staffing for welfare and return to work programs that have operated separately in the past."2

0 Standardized GA Benefits -

While it is imperative that the widest range of options be explored with respect to reforming the GA program, lawmakers should be cautious of any proposal that seeks to turn control of the GA program entirely over to the state. The appeal of a "one size fits all" approach is superficial, as it does not address the core issues of how and why dependents have come to rely on the GA program as an integral source of their income. As in any government run program (federal or state) where rules and regulations are created by one centralized bureaucracy, a myriad of unintended consequences will inevitably occur.

Currently, the size of GA cash grants, work requirements, and level of other related services designed for the indigent vary from county to county. Proponents of a state run and controlled program argue that a standardized GA package would eliminate financial incentives for recipients to move from one county with fewer welfare benefits to other counties that may offer higher levels of assistance in cash, housing, etc. If legislators and county supervisors adopt this line of reasoning, it is natural to ask the question, "Why won't recipients move to regions of the state that are experiencing significant job growth and opportunities if they're willing to move for higher welfare benefits?"

Furthermore, such a proposal would effectively eliminate any incentive for county supervisors and welfare directors to swiftly implement innovative ideas that move GA recipients from welfare to work. Uniform benefits will put an end to experimentation with varying levels of services, time limits and work requirements. This, in turn, will prevent the development of cost saving or quality enhancing changes in the state's welfare program.

Another significant drawback under a state controlled GA program is the financing structure of such a scheme. Requiring all GA recipients to accept standardized benefits combined with weak work requirements will make it difficult for state legislators and the governor to contain the growth of welfare spending. By folding the GA program into the state's general budget, other important obligations, i.e. education, park services, transportation, law enforcement, highway funds, etc. face the possibility of reductions in the funding of their programs absent an increase in state taxes. As in other government run programs, designing a uniform welfare package within a limited budget is not an easy task. The ultimate design will depend on the ability to balance the objective of providing reasonable general assistance to welfare recipients with the reality of limited funding. Even the division of fiscal responsibility between the state and counties, i.e. 80-20 split, is not enough of an incentive for the counties to depart from the status quo and encourage the majority of GA recipients who are employable to enter the workforce.

Introducing a standardized GA benefits package, set by the legislature, will undoubtedly result in continued political pressure to expand upon the original version. It is all but inevitable that over time, welfare advocacy groups will lobby the legislature to add services and benefits to the standardized package. Such a move will raise the cost of the GA program to California's taxpayers.

Finally, while county supervisors do have a legitimate concern with respect to the current unfunded state mandate, simply handing over control and responsibility of the GA program to the state will not solve the inherent flaws of the current program over the long run. If members of the state legislature insist on perpetuating this costly and unfunded mandate, it is imperative that they consider the option of turning complete control and discretion of the GA program over to the counties.

One significant advantage in turning control of the GA program over to the local level is the ability of Californians to hold their county supervisors and welfare directors accountable. Priorities will have to be clearly spelled out to the taxpayers -- who the intended beneficiaries will be, and at what cost. Under this scenario, county supervisors and welfare directors who wish to provide more generous benefits to able bodied recipients, should be willing to seek the approval from those who must fund these proposed expansions.

While the GA program is often overlooked by both taxpayers and policymakers, Californians should be aware that fewer of California's indigent are being served through the GA program. Ironically, its annual expenditures are increasing. Records provided by the California State Office of the Controller document that the amount of dollars spent on GA has nearly doubled from $252.9 million in fiscal year 1984 to $460 million in fiscal year 1994. However, the number of GA recipients has not increased proportionately.

Supplemental Security Income

The Supplemental Security Income (SSI) program was created by Congress in 1972 under Title XVI of the Social Security Act. Implemented in 1974, its purpose was to "[a]ssure a minimum cash income to all aged, blind, or disabled persons with limited resources (the countable resource limit is $2,000 for an individual and $3,000 for a couple).21 Certain assets are excluded in determining a recipient's resources, i.e. home, automobile, household goods and personal effects, and life insurance policies. Under current law, the maximum federal SSI payment is $470 per month for an individual and $705 per month for a couple. Recipients who reside in another person's household are eligible to receive up to two-thirds of the federal guarantee. California provides an additional payment to supplement the federal SSI benefit ($156 - individuals, $396 - couples). This is referred to as the State Supplementary Payment (SSP) Program. SSI recipients in California are automatically eligible for Medicaid benefits as well. SSI recipients living alone or in a household where all members receive SSI benefits are also eligible for Food Stamps.

SSI and Disabled Children -

A sub-group of the SSI population that has been at the center of much controversy is "disabled" children. As one of the fastest growing recipient groups of the SSI population, the Clinton Administration and the Congress identified a need to review the eligibility requirements for this particular group. Prior to the enactment of the PRWOA, disabled low income children under 18 were eligible for SSI federal cash payments of up to $470/month under one of two requirements. First, if a child's medical condition was included in a catalog of specific impairments, he/she would be deemed eligible. Alternatively, a child could qualify for SSI payments even if his/her medical condition was not listed in the catalog of specific impairments by meeting the "Individualized functional assessment" (IFA) test. If the physician determined that the unlisted medical condition was the primary cause of the child's inability to engage in normal behavior for his/her age, SSI cash grants were approved by the federal government. As the Congressional Record indicates, it was the vague and overbroad definition of the IFA test that received widespread Congressional review and scrutiny between 1993-1996, that led to the subsequent repeal of the childhood IFA test and imposition of a more reasonable eligibility criteria for children seeking SSI disability benefits.

Under the prior definition, assessments of "disability" were criticized as overly subjective, contributing to uncontrolled growth in the number of disabled children receiving SSI benefits between the program's inception and 1995. While in 1974 there were only 68,000 disabled children receiving SSI, the number had increased to 965,200 in 1995, an increase of 1,300 percent. Between 1989 and 1995, the period during which IFA's came into use, caseloads tripled from about 300,000 to more than 900,000. According to a General Accounting Office (GAO) report, fraud and abuse are minor factors for this increased figure, as they account for only 1/10 of 1 percent.22 Instead, the explosion in the growth rate of SSI "disabled" children receiving cash benefits has been attributed to the government's past definition of "disabled." A recent GAO report concluded that there were fundamental flaws in the Individualized Functional Assessment (IFA) process, which purported to detect whether a child behaves in an age-inappropriate manner and therefore qualifies for SSI. The report stated, "[E]ach step of the process relies heavily on adjudicators' judgments, rather than objective criteria from the Social Security Administration, to assess the age appropriateness of children's behavior. As a result, the subjectivity of the process calls into question the Social Security Administration's ability to assure reasonable consistency in administering the program."23

The most significant change affecting SSI children (in addition to eliminating the flawed ifa process) is the substitution of the former law's "comparable severity" test with the following new definition of childhood disability:

"An individual under the age of 18 is considered disabled under SSI if the child has a medically determinable physical or mental impairment, which results in marked and severe functional limitations, and which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months."

This new statutory definition of childhood disability continues to preserve the SSI safety net for truly impaired children who have qualified in the past for benefits under the IFA test, while removing from consideration children with mild impairments or those who display "maladaptive behavior."

Questions and concerns surrounding the regulations governing childhood eligibility for SSI disability payments are not new. Prior to the enactment of the federal welfare reform law on August 22, 1996, (P.L. 104-193), the Clinton Administration had already called into question the validity and efficacy of the Individualized Functional Assessment process. The Clinton Administration came to the same conclusion as the 104th Congress that objective criteria were not applied under the IFA test and, as such, sent legislation to the Congress containing provisions that would have eliminated the IFA test. On June 11, 1996, Rep. Sam Gibbons (D-FL) introduced H.R. 3612, the "Work First and Personal Responsibility Act of 1996," at the request of the Clinton Administration. If passed, H.R. 3612 would have stricken and eliminated the IFA test.24

As a matter of record, another significant piece of legislation addressing the IFA test was introduced earlier during the 104th Congress by Congressman Nathan Deal (D-GA). On March 23, 1995, every U.S. Representative in the Democratic Party voted in favor of H.R. 1267, the "Individual Responsibility Act of 1995" which included similar language striking the IFA test.25

SSI and legal noncitizens -

As mentioned in an earlier section, another sub-group of the SSI population that has received widespread attention by the media are legal noncitizens. Under the PRWOA, new restrictions are placed on the eligibility of welfare benefits for legal immigrants with the following exceptions:

1) Time limited exception for humanitarian reasons. Entrants may not be denied SSI, food stamp benefits, medicaid, or social services for the first five years after being admitted to the United States as a refugee or granted political asylum;

2) Exception based on service in the United States Armed Forces. Honorably discharged veterans, active duty personnel, their spouses, and unmarried dependent children are exempted from any changes;

3) Exception based on having worked in the United States. Individuals and families that include an individual who was worked for at least 40 qualifying quarters under Title II of the Social Security Act of 1935 continue to qualify for all benefits without change.

4) Naturalization.

Even though U.S. immigration law states that becoming a public charge is grounds for deportation, reliance on welfare as a primary means of support has increased rapidly over the past decade. In a report issued by the U.S. General Accounting Office (GAO), the federal government spent $8 billion on welfare benefits for non-citizens in 1995, with all indications pointing to increased growth and demand for such benefits absent reform. Furthermore, the GAO has documented that the number of legal non-citizens receiving Supplemental Security Income benefits (SSI) increased from approximately 240,000 in 1986, to 800,000 in 1996.26 Another GAO study found that approximately 50 percent of the SSI benefits being provided to the elderly were received by noncitizens.27 Estimates have been made that absent the reforms implemented by the PRWOA, the number of noncitizens receiving SSI benefits would have reached 2 million beneficiaries. Whether noncitizens receive aid from the federal, state, or county governments, the costs associated with providing welfare benefits will remain the responsibility of California's taxpayers. According to data provided by the Committee on Ways and Means in the U.S. House of Representatives, the federal government spent $5.1 billion on SSI benefits for noncitizens, and $9.3 billion for Medicaid benefits.28 (SSI beneficiaries residing in California for at least one year are automatically eligible to receive Medicaid benefits.)

However, it is equally imperative, if not more so, for Californians to be aware of the following facts and policy considerations that have contributed towards this dilemma which is currently confronting the state's elected officials.

Since 1882, the Immigration and Nationality Act has prohibited individuals seeking residency in the United States from entering if they appear likely to become wards of the government. While this ground for exclusion is obviously waived for refugees and political asylees, aliens seeking to become permanent legal residents must show proof of employment, financial resources, or in the alternative, provide "affidavits of support" signed by United States residents. If an alien is admitted via sponsorship, under prior law for a limited period (3 or 5 years depending on the program) the income and resources of the individual who signed the affidavit (the "sponsor") are calculated into the alien's income and resources determining whether or not welfare assistance is warranted. While approximately 50 percent of legal noncitizens have gained permanent resident status through the "affidavits of support" route, former pledges of support have not been held to be legally binding by the courts. As a result, taxpayers have been prevented from collecting payments from sponsors for welfare benefits provided to sponsored noncitizens. The PRWOA addresses the lack of enforceability surrounding "affidavits of support" by establishing legal ground for the federal government to obtain reimbursement for welfare benefits from an alien's sponsors. In addition, deeming is made permanent until the sponsored noncitizen is naturalized. Despite these new enforcement mechanisms, it is likely that enforcement actions will be lengthy and cumbersome. With 38 percent of all noncitizens residing in California,29 it is imperative that state and federal lawmakers arrive at a fiscally responsible and compassionate solution that will not abandon the elderly, physically and mentally disabled noncitizens residing in California.

A significant fact that has serious policy implications is the explosive growth in the number of noncitizens receiving SSI benefits in California. In recent months, the public has been made aware of elderly immigrants who rely on SSI because their sponsors are no longer capable of caring for them. However, a frequently overlooked fact is that many recent immigrants, in collusion with their sponsors and unscrupulous translators, have taken advantage of the loopholes in U.S. immigration laws and the government's inability to enforce the "affidavits of support."30 This is supported in a statement made by Ms. Doris Meissner, the current Immigration and Naturalization Service (INS) Commissioner appointed by President Clinton, and by the authors of two recent studies examining the number of noncitizens receiving SSI benefits. Commissioner Meissner states, "Sponsorship is an expression of intent, and it is one where the government assumes as a goodfaith matter that if a family attests to its willingness to sponsor...then it will be carried out. This area of elderly immigrants is one where it is not working so well."31

According to the California Legislative Analyst's Office (LAO), a non-partisan office which provides fiscal and policy information and advice to the California legislature, there will be 207,000 noncitizens in the state denied most federal benefits effective September 1997.32 While such a large number merits serious analysis and discussion, lawmakers should determine and distinguish SSI recipients who have no other means of financial support, and those that have family members and relatives with more than sufficient resources to support the sponsored individual. New information provided by the Public Policy Institute of California, a non-partisan think tank in San Francisco reveals that most immigrants on SSI in California will not be adversely affected. In fact, "The difference between immigrants and other (SSI recipients) is especially striking in SSI, where median family income of recent immigrant recipients was over $40,000, and 25 percent had incomes over $64,000."33

Health Benefits - Medicaid

Under current law, TANF (formerly AFDC) and SSI recipients remain categorically eligible for Medicaid. The value of this health benefits package for a family of three in 1996 was worth approximately $3,000 per year. In addition to TANF recipients, California is required under federal law to provide Medicaid benefits to certain low income pregnant women and children who have no ties to the welfare system.

In general, welfare recipients qualifying for Medicaid assistance receive the following health benefits: Inpatient hospital, mental health, outpatient and clinical services, home health and nursing services, physician and other qualified health providers, prescription drugs, laboratory and X-ray services, and early and periodic screening, diagnostic, and treatment (EPSDT) programs for eligibles under age 21.

TYPES OF WELFARE PROGRAMS:

In addition to the aforementioned welfare benefits, recipients are eligible to receive a myriad of services and benefits from other state and federal programs. In general, there are over 75 federal welfare programs that have received significant funding over the past three decades.34 Listed below are some of the major programs with which Californians may not be familiar.

CASH AID: (8)
Aid to Families with Dependent Children
Supplemental Security Income
General Assistance: Cash
Earned Income Tax Credit
Foster Care: Title IVE
Assistance to Refugees and Cuban/Haitian entrants
Emergency Assistance to Needy Families with Children
Adoption Assistance

MEDICAL AID: (7)
Medicaid
General Assistance: Medical Care
Maternal and Child Health Services Block Grant
Community Health Centers
Medical Assistance to Refugees and Cuban/Haitian Entrants
Migrant Health Centers
Medicare for Persons Below the Federal Poverty Threshold

FOOD AID: (11)
Food stamps
School Lunch Program
Special Supplemental Food Program for Women, Infants, and Children
The Emergency Food Assistance Program
Nutrition Program for the Elderly
School Breakfast Program
Child and Adult Care Food Program
Summer Food Service Program for Children
Needy Families Food Distribution Program
Commodity Supplemental Food Program for Mothers, Children, and Elderly Persons
Special Milk Program

HOUSING AID: (9)
Section 8 Lower Income Housing Assistance
Low-Rent Public Housing
Section 502 Rural Housing Loans for Low Income Families
Section 236 Interest Reduction Payments
Section 515 Rural Rental Housing Loans R> Section 521 Rural Rental Assistance Payments
Section 235 Homeownership Assistance for Low Income Families
Section 101 Rent Supplements
Public Housing Expenditures by State Governments

ENERGY AID: (2)
Low-Income Home Energy Assistance Program
Weatherization Assistance

JOBS AND TRAINING AID: (5)
Training for Disadvantaged Adults and Youth (JTPA II-A)
Summer Youth Employment Program (JTPA II-B)
Job Corps (JTPA-IV)
Senior Community Service Employment Program
Job Opportunity and Basic Skills Training

SOCIAL SERVICES: (9)
Social Services Block Grant
Community Services Block Grant
Legal Services Corporation
Emergency Food and Shelter Program
Title X Family Planning
Volunteers in Service to America
Day Care Assistance for Families "At Risk" of Welfare Dependence
Child Care and Development Block Grant
Child Care for Recipients (and Ex-Recipients) of AFDC

DEVELOPMENT AID: (3)
Community Development Block Grant
Urban Development Action Block Grant
Legalization Impact Aid

State programs and support services are also provided through the California Department of Social Services. Services that most recipients are eligible for include Medi-Cal, Food Stamps, Child Care, and Employment Services. Other services that recipients may have access to include housing subsidies, substance abuse treatment, earned income credit, mental health treatment, rehabilitation services, in home supportive services, and other programs serving persons who are disabled.35 Projected federal/state spending under prior and current laws - In order to understand the fiscal impact of the Personal Responsibility and Work Opportunity Act of 1996, a comparison of projected spending under the prior law and PRWOA is provided. As the following table indicates, the federal welfare reform law of 1996 reduces spending by just 3.5 percent between 1996-2002.

PROJECTED GENERAL FUND SPENDING FOR CALIFORNIA'S MAJOR PROGRAMS

The following figure reflects projected spending by major program areas as identified by the California LAO for fiscal years 1995 - 1998. These programs are Medicaid (Medi-Cal), AFDC, and SSI/SSP.

Providing Child Care for Welfare Recipients -

Another significant change in federal spending is in the area of child care. Title VI of the Personal Responsibility and Work Opportunity Act addresses the issue of overlapping and redundant federal programs by consolidating four major child care programs targeted towards low-income households into a single block grant to the states.36 By eliminating conflicting eligibility provisions, time standards, and work requirements, the consolidated child care program requires federal funds to follow the parent under any one of the following scenarios: parent is receiving public cash assistance while participating in a work-related activity or education program, has recently left public assistance, or is working but earns very low income and would be at risk of becoming dependent on welfare in the absence of subsidized child care. It is expected that the consolidated and expanded CCDBG program will accomplish five important goals:

* allow states maximum flexibility in developing their programs;

*promote parental choice;

*encourage states to provide consumer education information to parents;

*help states provide child care to parents trying to become independent of public assistance;

*help states implement health, safety, licensing, and registration standards established in state regulations;

*permit states to transfer up to 30% of the TANF block grant to child care block grant (and otherwise use TANF for child care).

The Congressional Research Service, a non-partisan research organization that provides Congress with analytical research data, estimates that California will receive approximately $2.2 billion between 1997-2002 under the new CCDBG. Its breakdown is as follows:

The new welfare reform law provides states with both entitlement and discretionary funding for child care services under the expanded CCDBG. Between 1997-2002, approximately $20 billion will be provided to the states for child care. Of this amount, $14 billion is provided as entitlement funds while $6 billion is discretionary and subject to annual Congressional appropriations procedures. Specifically, a breakdown of the CCDBG is as follows:36

1. Discretionary Funds - CCDBG discretionary funding is authorized at $1 billion per year from fiscal years 1996 - 2002. Up to 2 percent of appropriated funds, but no less than 1 percent, is reserved for Indian tribes.

2. Entitlement Funds - For fiscal year 1997, $1.97 billion in entitlement funds is allotted. This annual entitlement automatically increases each year through 2002 where $2.7 billion will be allotted for such funds.

"When our Founders boldly declared America's independence to the world and our purposes to the Almighty, they knew that America to endure would have to change, not change for change sake, but change to preserve America's ideals: life, liberty, the pursuit of happiness."

-President Bill Clinton
Inaugural Address
January 20, 1993

CONCLUSION: A time to change - The Era of Excuses Is Over

California's welfare system has reached a critical crossroads. The enactment of the "Personal Responsibility and Work Opportunity Act" of 1996 has given California's executive and legislative branches of government a historic opportunity to truly reform its welfare system. The various reform agendas that have been proposed by Governor Wilson in conjunction with the California Department of Social Services, the Legislative Analyst's Office, and state legislators are ambitious, but achievable this year. Californians have understandably become concerned about the condition of their state's welfare system.

Despite the billions of dollars that have been spent on welfare programs, California's elderly, poor, and disabled populations are trapped in an inefficient system.

While very few observers of the welfare state are quick to defend the status quo, lawmakers seeking to reform the system must be sure that any policy objectives which may become law do not result in unintended consequences that may exacerbate the deficiencies in the current system.

Pressure to provide a humane safety net for California's needy remains a priority. However, California's taxpayers have also expressed their concern that the price tag for welfare's altruistic goals has grown exorbitantly high and out of control with very little or no accountability. For several decades, observers of the welfare state have criticized state and local government's inability to swiftly move able-bodied welfare recipients to work. In turn, the state and county officials have rightfully passed the blame towards the federal government (Congress, Executive Branch, and numerous federal agencies) which created these programs and their accompanying rules and regulations in the first place. The "Personal Responsibility and Work Opportunity Act" of 1996 ends the shifting of responsibility once and for all.

County supervisors and local officials should not only make the "tough choices" that will have to be made, they must clearly explain what their priorities are to their constituents. Therefore, if welfare directors and county supervisors believe that it is a priority to continue funding their respective GA populations at current or expanded benefit levels, they should be willing to ask taxpayers if it is also their priority.38

It is incumbent upon every Californian to be a part in creating a new foundation which accomplishes the main objectives of welfare as stated earlier: (1) reducing the length and repetitive nature of welfare spells by attacking dependency, and (2) preserving the original function of welfare as a safety net for families experiencing financial hardship. As lawmakers prepare to debate the issue of welfare reform, Californians should demand clear answers from their elected officials regarding the following questions:

1) Are the following principles of meaningful reform going to be included in California's new welfare laws?

* self-sufficiency
* family unification
* personal responsibility
* fewer bureaucracies
* accountability
* taking care of the truly needy

2) Or will the new law ignore the structural and inherent flaws of the current system and merely seek to expand control over the welfare system via a larger centralized bureaucracy?

A majority of the American people, especially Californians, supported the federal welfare reform law and the principle of holding their respective state and local officials accountable for their actions. With this mandate in mind, state legislators should boldly prescribe a new set of principles that clearly identifies a vision addressing the needs and concerns of welfare recipients and taxpayers alike.

After all, the men, women, and children of California deserve no less.

Endnotes

The Pacific Research Institute, founded in 1979, is California's preeminent public policy think tank promoting individual freedom and personal responsibility, the cornerstones of a fair and free opportunity society. With its reliable and timely research, PRI puts ideas into action, influencing policy makers in the nation's most populous state and in its capitol. PRI has published the work of more than 200 scholars, including three Nobel Laureates. PRI, a 501(c)(3) non-profit, is funded entirely by voluntary donations.