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.
From WORKS Program
|Average Difference in Job Placements
Under WORKS vs.|
|Mercer||64 more job placements|
|Nicholas||48 more job placements|
|Pocahontas||8 more job placements|
|Wayne||56 more job placements|
|Wetzel||24 more job placements|
|Wood||136 less job placements|
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.
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.
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.
First Eight Months of 1997 Compared to First Eight Months of 1996
|Source:Office of Audit, Research and Analysis, Department of Health and Human Resources, C-219 data.|