Direct Services
A final area in which grantmakers have engaged the welfare reform issue
is direct services. These activities include job placement and job linkage
assistance, as well as training programs that prepare welfare recipients
for the workforce.
Direct services are perhaps the most fundamental issue of welfare reform. Millions of people now on welfare must become economically self-sufficient in the near future. Their ability to make progress towards this goal is inherently a question of individual development. Direct social services provide alternatives to income assistance, now critical given the time limitations and sanctions that are part of welfare reform. Unfortunately, TANF's policy framework does not provide many incentives for officials to invest in the personal development of welfare recipients. States have instead focused on cheaper ways to reduce welfare caseloads. In many regions of the country, a strong economy has made progress toward this goal possible with no additional investment in services. (See Chapter 2, Workforce Development, for more information.)
Caseload
Reduction vs. Job-Readiness Training
This preference for caseload reduction rather than job-readiness reflects
two considerations. First, states want to capture the cost savings realized
through a decline in beneficiaries. Second, states want to avoid penalties
imposed if caseload reductions fail to keep pace with federal mandates.
Politicians have also seized upon caseload reductions as a simple way to
measure and describe the success of welfare reform to the public.
Thus far, caseload reductions have not proven especially difficult. The welfare rolls have dropped by more than 25 percent during the past five years, beginning before enactment of federal legislation. Most of this decline can be attributed to economic expansion. Based on recent findings, it appears that sanctions have also played a role in ejecting families from the program.28 Whatever the underlying causes, caseload reduction in itself does not improve the employability of individual welfare recipients. The clock is still ticking for those who are not yet job-ready - many of whom may eventually face destitution after their time limits expire.
Grantmakers can help avert this impending crisis. By experimenting with promising programs in job placement and job creation, foundations can not only create new models for employment readiness but also effect the overall supply of entry-level jobs. Community foundations in particular can play a key role in shaping local and regional responses to welfare reform. For instance, the Pittsburgh Foundation's Gaps Initiative funded a comprehensive response to assist local welfare recipients making the transition to TANF program requirements.
One model for direct services is the federal Welfare-to-Work grants program, administered by the Department of Labor. Congress created this $3 billion initiative in 1997 as part of the balanced budget agreement. The program supports local initiatives to promote job placement, job readiness, and job creation for welfare recipients.
Most of the grant money - roughly 75 percent - is allocated by formula to state governments, which must in turn coordinate the program with PICs. The remaining 25 percent is distributed by the Department of Labor to local governments, PICs, and nonprofits as a competitive program. The federal government has released approximately half of the total funds in 1998; the second half will be spent in fiscal year 1999. A smaller pool of bonus grants will be awarded to states in fiscal year 2000.
Both competitive and formula grants under the program must be spent within three years of receipt, and all program spending is scheduled to be completed by September 30, 2001. Most significant, the program requires a one-third grantee match. This matching requirement cannot be met through in-kind support or money from other federal grants.
The Department of Labor completed two competitive rounds of funding in 1998 - 126 grants totaling $472 million - and expects to award another $239 million in fiscal year 1999. Programs funded in 1998 will provide transportation, counseling, child care, and health care services to welfare recipients transitioning to work. In addition to these direct services, some funds administered by state and local governments will create community service positions.
Grantmaking
and Welfare Reform
Welfare reform is an uncertain enterprise, both for its proponents and
for those who wish to change the system through public policy, research
or direct services. This uncertainty reflects the newness of the program
and the untested nature of its policy goals. Unlike employment and training
programs discussed above, whose goals today remain essentially consistent
with the Manpower Development and Training Act of 1962, TANF has a very
short history. None of the prior attempts to reform welfare under AFDC
attempted so radical or fundamental a break with the earlier system.
Because the ground rules for welfare have changed so dramatically, outcomes are difficult to predict. Grantmakers should develop flexible strategies that can adapt to changing circumstances. For example, some of the warnings issued just one year ago now seem off the mark. It was widely predicted that states would have difficulty meeting the federal work requirements imposed by TANF, particularly requiring that the percentage of caseload participating in work activities jump from 25 percent in 1997 increase to 30 percent in 1998. Despite these earlier forecasts, most states are meeting targets with ease - with the help of strong local economies.
On the other hand, no one could have predicted the severity with which sanctions would be used to push families off the rolls. Federal statistics indicate that 38 percent of recent caseload decline is attributable to the use of sanctions by states to eject welfare recipients from the program.29 Had the impact of sanctions been properly anticipated, advocates for welfare recipients would surely have made due process rights a top priority during the 1996-1997 legislative season. Similar surprises in the implementation of TANF are bound to occur; funders should develop strategies that can adapt to them.
Welfare reform touches upon nearly every aspect of low-income advocacy. It will affect grantmaking in diverse ways, even for those funders who choose not to work on the issue directly. Some foundations that support housing development through CDCs will find local projects increasingly at risk, as welfare tenants whose rents have been subsidized by federal income support can no longer pay them. Likewise, grantmakers who have traditionally supported social service programs can expect a continual increase in the demands for homeless shelters, child welfare organizations, crisis counseling, and similar activities. These collateral effects of welfare reform will escalate with any downturn in the economy, and can be expected to worsen as time limits take effect.
Lessons from the Strategy
Both neighborhood-based and statewide organizations have recognized that decisions affecting welfare policy are now being made at the state level. Welfare reform has mobilized community organizing groups and policy advocates to intensify their efforts on behalf of low-income people. This renewed energy has prompted some grantmakers to invest in grassroots and statewide campaigns.Direct organizing of welfare recipients - as a targeted constituency - has not been a priority for many community groups since the welfare rights movement of the 1960s and 1970s. The profound impact of TANF on neighborhoods, as well as a desire to remain relevant during this pivotal debate, has led organizing groups like ACORN, the Industrial Areas Foundation, and others to reemphasize welfare organizing drives. These campaigns offer grantmakers a new area to explore in community- building strategies.
Some grantmakers have promoted collaborations among grassroots organizations in order to impact state implementation of TANF, either through grant pools or special RFPs. These statewide efforts have often combined organizing with public policy as an explicit grant goal.
- While congress has overturned decades of social welfare policy through new legislation, this sweeping change has not been accompanied by a federal commitment to monitor the effects of welfare reform. Grantmakers have helped fill this information gap through research and monitoring.
- Direct services in support of welfare recipients are perhaps more important than ever. Investments in job placement and training, job creation, and support services will enable welfare recipients to find employment before their time limits run out.
Monitoring efforts like the Urban Institute's Assessing the New Federalism initiative and similar work by the Institute for Women's Social Policy, Center on Budget and Policy Priorities, Center on Law and Social Policy, and other organizations will provide invaluable information on the consequences of welfare reform. It is unlikely that efforts by the U.S. General Accounting Office, the U.S. Department of Health and Human Services or U.S. Department of Labor will be nearly as comprehensive.
This information, and the secondary research it engenders, will lay the groundwork for informed policy choices in the future. When TANF is reauthorized in 2001, a better understanding of the implications of welfare reform and the range of alternative choices available to policymakers will be essential.
Private philanthropy has been the primary resource for research and documentation efforts. Grantmakers might want to consider other promising areas of research that expand on the data already under collection. Such research provides practical guidance to community groups, and offers another opportunity to leverage public policy changes.
The past several years have marked a much greater emphasis on jobs strategies within the philanthropic community, partly in response to welfare reform. The shortcomings of the earlier JTPA system, examined earlier in the toolbox, combined with time-limited welfare assistance under TANF, create a new sense of urgency to develop successful programs. Grantmakers can build on the federal changes in workforce development funding to experiment with promising training strategies, as well as to promote job creation through economic development and wage-based community service models.
Concluding
Thoughts
Welfare reform is perhaps the most important and far-reaching revamping
of federal policy and program of the past decade. It affects every aspect
of jobs-related funding foundations undertake. Foundation funding can play
pivotal roles in making welfare reform work for low-income people and communities.
Philanthropic investment is important because:
- It can help support the extensive research and monitoring necessary to understand the real impacts of reform at the national, state and local levels. This kind of information is essential to making sure future changes in the program benefit the poor.
- It can support the direct services (child care, transportation, case management) necessary to insure that welfare-to-work benefits even the hardest to place. It can also support the programs necessary for those who will never be able to work.
- It can support on-going, mutually beneficial relationships between policy advocates and community-based organizations.
- It can support organizing among welfare recipients to give them a powerful voice in the shaping and implementation of programs.
- It can support public policy advocacy at the federal, state and local levels.
Resources
Bernstein, Jared. The Challenge of Moving from Welfare to Work. Washington, DC: Economic Policy Institute. 1997.See Resource section for more information.
28 Vivian Toy, "Tough Workfare Rules Used as Way to Cut Welfare Rolls," The New York Times, April 15, 1998.29 Barbara Vobejda and Judith Havemann, "Sanctions Fuel Drop in Welfare Rolls," The Washington Post, March 23, 1998.
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