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The Limits of Time Limits On Welfare

by Linda Ostreicher, Jan 01, 2002
 
 

About 30,000 New York City families reached their lifetime limit--five years--for receiving Federal welfare benefits in December. The purpose of such time limits, according to their proponents, is to motivate welfare recipients to find other sources of income before they reach their limit. In New York State, however, this theory does not apply.

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The state Constitution requires the government to provide for the "aid, care and support of the needy." This means that when federal welfare benefits run out, the state Safety Net Assistance program kicks in with benefits equal to those under the federal program. Theoretically, the change should be minimal for welfare recipients: they will get the same amount of assistance, in a slightly different form.

So who should care about Federal welfare time limits in New York? In fact, it is the government--both at the state and city levels--which should feel motivated by time limits to reduce the need for public assistance. During the years that people are eligible for Federal welfare benefits, the U.S. government foots half the bill, so the state and city each pay only 25 percent of the cost. Once that eligibility ends, the cost to the state and city doubles as they take on the whole responsibility for Safety Net Assistance benefits.

Officials of both the city and state governments of New York have known for over five years that time limits would cut off federal funds for long-term welfare recipients. If this had motivated them to reduce this population's need for support, they would have made major efforts to reach this "hard-to-help" group with services aimed at their particular needs.

Studies of families receiving long-term public assistance show that they differ from the general population of families on public assistance. According to the Manpower Demonstration Research Corporation, heads of these households have more children and less education and work experience than heads of households receiving only short-term benefits. Many long-term recipients have multiple barriers to work, rather than a single clear-cut problem that would qualify them for Social Security disability assistance. They are the people least likely to be helped by welfare reform as New Yorkers have known it since Rudy Giuliani launched his version of it in 1995.

New York City's welfare reform program has focused on two goals. 1. It has prevented people from getting or staying on the welfare rolls by ingenious, often illegitimate, means. 2. It has helped the most skilled, educated, and experienced beneficiaries to get employment of any kind, no matter how dead-end, low-paid and temporary those jobs may be.

In the short term, these tactics have succeeded in cutting the welfare caseload in half over the five year-period starting in October 1996. Their long-term effects may end up costing the city and state more than they have saved.

A number of states had earlier time limits on federal welfare than New York. When we look at families that reached those limits already, we get some idea of what to expect in New York City. The evidence does not suggest that families can pull themselves together and out of poverty just because their welfare checks stop arriving. As of April 2001, nearly one in three adults heading New York City households on welfare was already employed, but earned wages so low that the household still qualified for public assistance.

Six months after time limits ended cash assistance for recipients in Cuyahoga County, Ohio, only 32 percent of them had worked continuously for at least 20 hours a week since their assistance ended. The Center on Urban Poverty and Social Change reports that three out of four of these families had incomes below the poverty line, even when food stamps are included. When the Manpower Demonstration Research Corporation followed up on a series of welfare-to-work projects, they found that only eight percent of subjects were continuously employed in the four years after they left welfare.

Federal welfare reform legislation has built-in incentives for states to invest in helping public assistance recipients to become qualified and able to work. Each year since 1996, each state has received the same amount of money that the U.S. government gave it for welfare benefits in 1995, even though the number of people receiving cash benefits is now much lower. The extra money was meant to be used to pay for child care, transportation, Medicaid coverage, education, job training, and other items needed by welfare recipients to find and keep jobs.

New York spent a lot of that money on good programs. However, some funding went through a budget gimmick called "supplantation," in which federal dollars paid for services that the state would have paid for otherwise, freeing up state dollars for general purposes, including a massive round of tax cuts.

The United States General Accounting Office examined spending under welfare reform by ten states, and concluded that eight of them invested more state funds into services for low-income families in the year 2000 than they did in 1995. New York was one of the two exceptions in which state spending declined.

Five years into welfare reform, New York State has accumulated over a billion dollars in unspent federal welfare funds. This surplus would be helpful when welfare rolls begin to increase again in response to economic changes, if it were not likely that Congress will treat the unspent dollars as an excuse to reduce future federal funding for public assistance.

Immediate use could be made of the unspent federal funds to improve and expand services that invest in beneficiaries' future ability to support themselves. These include high-quality child care, and education, job training, and vocational counseling for teenagers and adults. Job creation would also be useful during this time of economic contraction, through wage subsidies or community service programs. Even if the new jobs were not permanent, employees could develop a work history and gain experience, better positioning themselves for jobs that may emerge when the economy recovers.

There is no shortage of successful welfare-to-work strategies for New York to adopt. On paper, many of them already are in place. However, the size and quality of these programs depends on state and city commitment to do more than push people off the welfare rolls without regard to their future well-being.

New York City has a history of illegally discouraging applicants for public assistance. In the months preceding December 2001, recipients about to reach their five-year federal benefit limit were invited by the city to report to welfare offices to discuss "how you plan to manage your household expenses once your limits for Cash Assistance expire." According to a report by the Social Welfare Committee of the Association for the Bar of the City of New York, the notices bearing this invitation did not say that state benefits were available for those whose federal benefits ran out.

Although child care is essential to low-income mothers seeking work, there are still 30,000 children on the waiting list for subsidized child care slots in New York City. Just before leaving office, the city's first term-limited Mayor and City Council eliminated $71 million from the municipal budget, preventing the creation of 10,000 new day care slots.

It is no wonder that advocates for the poor are leery of how smoothly New York will make the transition to Safety Net Assistance. It will be much more difficult for families to navigate their way back into eligibility once the welfare machinery accidentally drops them into hunger and homelessness.

Linda Ostreicher, a former budget analyst for the New York City Council, is a freelance writer and consultant to nonprofits. She is currently on the staff of Bronx Independent Living Services.


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