Executive Summary

The passage of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 replaced the previous welfare system with block grants to States through the Temporary Assistance to Needy Families (TANF) program. TANF was implemented by the Department of Health and Human Resources (DHHR) in West Virginia on January 1, 1997. The new program was intended to encourage self-sufficiency and reduce dependence on government assistance. There is a lifetime limit of five years on receiving benefits and welfare recipients are required to work after 24 months of benefits or become ineligible for further assistance. In addition to TANF, West Virginia developed a pilot program in nine counties which incorporates the requirements of TANF, but includes features which are optional for States. The pilot program, West Virginia WORKS, includes eligibility options. Implementation of the WORKS program began in nine counties and began to be phased in the remaining 46 counties on October 1, 1997. All the State will be on WORKS January 1998.

Senate Bill 430 required the Performance Evaluation and Research Division of the Legislative Auditor's Office to conduct a statistical study of the WORKS pilot counties. The main focus of the study was the rates at which welfare recipients move into three categories of work activities:

1. Unsubsidized employment -- Competitive employment in which earnings are paid completely by the employer.
2. Subsidized employment -- Employment in which wages are paid in part by the State.
3. Work experience -- Work performed for public entities or non- profit organizations in exchange for welfare benefits coordinated and documented by DHHR.

Employment Placements Increased 42% Under the WORKS Program for Eight of the Nine Pilot Counties

The impact of the WORKS program on moving people from welfare rolls to payrolls was statistically significant for some counties. Five pilot counties: Mercer, Nicholas, Pocahontas, Wayne, and Wetzel experienced increases in unsubsidized employment placements that could be attributed statistically to the WORKS program. Three Counties: Greenbrier, Monroe, and Tyler showed little or no change in placements. Wood County actually experienced a decline in the number of unsubsidized placements made after the beginning of the program. Although the decline was statistically significant it would not make sense to conclude that the WORKS program caused the drop in employment placements in Wood County. The agency indicated that Wood County experienced personnel problems that significantly hindered its performance. Therefore, the impact from WORKS is measured with Wood county statistics excluded because the decline in employment placements was not directly related to the WORKS program. Consequently, the study reports employment placements with and without Wood County. When Wood County is included, the pilot counties experienced an 11% increase in unsubsidized employment placements when comparing the first eight months of 1997 with the same period of 1996. When Wood County is excluded, the remaining eight counties had a 42% increase in employment placements. The table below shows the employment changes that can be attributed to the WORKS program.

Impact on Unsubsidized Employment
From WORKS Program


Average Difference in Job Placements Under WORKS vs.
Mercer64 more job placements
Nicholas48 more job placements
Pocahontas8 more job placements
Wayne56 more job placements
Wetzel24 more job placements
GreenbrierNo Change
MonroeNo Change
TylerNo Change
Wood136 less job placements

Note: Senate Bill 430 required a statistical study of the rates at which welfare recipients move to employment. Totals represent the statistically significant difference in the average increase of the first eight months of 1997 compared to the pre-WORKS period 1993-96. Where no change is listed, a small positive or negative change in employment occurred but the change was not statistically significant.

Large Gains Occurred in Work Experience Placements But Some May Not Count Towards the Federal Participation Rate.

Work experience placements, or the Community Work Experience Program (CWEP), increased by 70% under WORKS (96% excluding Wood County). Under CWEP, the employer does not pay the recipient; instead, recipients work for their cash assistance to gain work experience. CWEP was utilized more frequently in most pilot counties during the first eight months of 1997 than during the same period of 1996. Placements in the program had been declining in 1995 and 1996. Although large gains occurred in CWEP placements, the structure of the program was not in compliance with the minimum wage law through September of 1997. The U.S. Department of Labor has stated that programs like CWEP must meet the minimum wage requirement and other Fair Labor Standards Act requirements. The DHHR indicated that an emergency manual revision was released in October 1997, conforming CWEP with the Fair Labor Standards Act. The number of hours worked by WORKS recipients during the time of this study resulted in some recipients working for less than the minimum wage. The effect of having CWEP conform with the Fair Labor Standards Act could make it difficult for many CWEP placements to count towards the federal participation rate because the weekly number of hours worked will be insufficient. The federal participation rate requires 30% of all family recipients to work at least 20 hours a week, and 75% of two-parent recipients to work 35 hours a week. States stand to lose federal funding if participation rates are not met.

Subsidized Employment was Rarely Used

Subsidized employment was rarely used before or after WORKS was implemented. Each subsidized placement takes considerable time and effort for a caseworker since each placement must be individually negotiated with an employer. The employer must give evidence that the subsidized position will not displace current staff and the employer is required to commit to retaining the employee after the completion of the contract. The goal of subsidized employment is for placements to become permanent, unsubsidized positions.

Federal participation requirements make many employers hesitant to hire a welfare recipient under the subsidized arrangement. Since a recipient must work at least twenty to thirty-five hours per week, an employer who wants someone to work only twenty hours per week may not want to commit to additional hours of work. Furthermore, unsubsidized placements are preferable from DHHR's standpoint. Since Jobs Training Partnership Act (JTPA) funding for subsidized employment is now gone, TANF funds must be used. Therefore, for budgetary reasons, an unsubsidized placement is more cost-effective and it is the ultimate goal of WORKS. Employer incentives are available for unsubsidized placements as well as subsidized placements. Even if an unsubsidized placement is made, an employer is still eligible for the Work Opportunity Tax Credit which amounts to as much as $2,100 per year. Overall, the additional costs of subsidized employment make this a less desirable alternative for caseworkers.

Welfare Cases Dropped by Nearly 50%

The number of welfare cases has decreased dramatically since the beginning of WORKS. The overall number of cases has decreased by approximately 46%, from 4,918 to 2,616. The decrease has been caused by a number of factors; the major factors include the following:

Employment Placements were an estimated 25% of the total case reduction.
Recipients chose not to participate in 25% of the case closures. Recipients either requested to be taken off the welfare rolls, they did not appear in the office to complete paperwork, or they would not comply with the new requirements. Discussions with WORKS staff indicated that recipients chose to have their case closed for a variety of reasons, some of which included: 1) wanting to save as much of their five-year benefit limit for a more serious need; 2) they were working secretly while collecting welfare; or 3) they did not want to report an absent parent for child support.
New eligibility requirements made many recipients ineligible. The inclusion of Supplemental Security Income (SSI) and step-parent's income were major changes in eligibility determination. The exact number of case closures resulting from new eligibility requirements is not known because of limitations in the data. Closures due to the inclusion of SSI income are estimated to be between 10% and 20% based on DHHR hand-counts for five of the first eight months of 1997.

The majority of case closures were cases that did not have a work requirement under the old welfare system. This is indicated in the graph below. These types of cases dropped by 70% and represented 60% of the total number of cases closed. The bulk of these cases were closed because of SSI income, recipients requesting to have their case closed, or lack of compliance. As stated previously, the reasons varied, but in essence, many cases have been closed because of ineligibility, some did not want to comply, or some could do without welfare at the time. With these types of cases eliminated from the rolls, the Department of Health and Human Resources is left with cases that will prove more difficult to reduce through encouraging self-sufficiency.

The Composition of the Reduced Caseload has Changed in Terms of Work Requirement

As the number of cases has fallen, the composition of the caseload has changed. The most important change has been the increase in the proportion of cases that require work activities. Prior to WORKS only 46% of the cases had a work requirement, under WORKS the percentage is 70 %. Single mothers required to work were only one-third of the total caseload under the former welfare system. Under WORKS, the percentage is over half. One contributing factor is that under the old welfare system, a single mother was exempt from work requirements if she was caring for a child three years of age or younger. Under WORKS, the work exemption applies when the child is one year old or younger. With the greater emphasis on getting individuals to work, the agency will have to allocate its resources more in the area of day care or transportation. The charts on the following page illustrate the large increase in the percentage of cases that require work and those cases involving single mothers who are required to work.

Expenditures on Cash Assistance Could Drop 33% to 55%

Reductions in welfare cases will reduce expenditures on cash assistance and public assistance food stamp allotments. This analysis shows that the percentage change in cash assistance payments is close to the percentage change in cases. For example, if cases drop by 10% then cash assistance payments will drop by 11%. Therefore, if the pattern of case reductions that has occurred for the pilot counties (30% to 50% declines) occurs for the remaining 46 counties which will be phased into WORKS, expenditures on cash assistance could drop by 33% to 55% in fiscal year 1998 depending on the rate in which cases are converted to WORKS, and on economic conditions.

The total amount expended on AFDC and AFDC-U (for the unemployed) in FY-1996 was $99,870,761. The Federal/State match was approximately 75% federal and 25% State. Expenditures on public assistance food stamps was $112,878,724 in FY- 1996. However, the food stamp program is 100% federally funded with respect to the coupon allotments. Therefore, there is no fiscal impact to the State when case reductions reduce food stamp allotments. Expenditures for 1997 could not be used because they exclude RAPIDS data for AFDC expenditures. Without knowing the amount of cash assistance expenditures for 1997, the State's cost savings cannot be estimated properly. However, if AFDC expenditures are close to $100 million as they were in 1996, the cost savings could be $33 million to $55 million, with the State's share being $8.3 million to $13.8 million.

Although it is expected that the State will experience cost savings from case reductions, there are additional costs the State will incur that must be considered. For example, as WORKS is implemented Statewide, additional workers will be needed. The agency indicated that 18 new people were hired to implement WORKS in the pilot counties. Nine were strictly for WORKS and nine were hired to replace people who transferred from within the agency. The total cost was $422,499. As WORKS is implemented Statewide, additional workers will be needed. If the same ratio of workers and expenditures holds for the remaining 46 counties, then 92 new staff will be needed at a cost of $2.2 million. Also, it is expected that to promote self-sufficiency to the more difficult cases that remain, day-care expenditures and transportation subsidies will increase.

Total AFDC Expenditure & Public Assistance Food Stamps Expenditure
First Eight Months of 1997 Compared to First Eight Months of 1996


PA-Food Stamps
PA-Food Stamps


Source:Office of Audit, Research and Analysis, Department of Health and Human Resources, C-219 data.