CARCIERI WELFARE REFORM PLAN TO BE HEARD BY HOUSE & SENATE FINANCE COMMITTEES

03-28-2006

Governor’s Plan Designed to Improve Effectiveness & Reduce Costs

Governor Donald L. Carcieri’s proposals to reform the state welfare program by making it more effective for beneficiaries and less costly to taxpayers are scheduled to be considered this afternoon by both the House and Senate Finance Committees. The Governor’s welfare reform plan was included as part of the FY 2007 budget proposal that he submitted to the General Assembly last month. The House Finance Committee is scheduled to begin its hearing at 2:00 p.m., while the Senate is scheduled to start at 3:00 p.m.

Since the national welfare program was reformed by Congress in 1996, Rhode Island has lagged other states in reducing its welfare caseloads, and in helping beneficiaries move from welfare to work. At the same time, Rhode Island’s welfare program is one of the most generous in the nation, and in the region.

Governor Carcieri believes that, after ten years, we need to re-examine the choices made in 1996 and reform the state’s welfare program to refocus it on helping people transition from welfare to work, and to bring the benefit structure into line with our neighboring states.

“Rhode Island has one of the most generous welfare programs of any state in the nation,” Governor Carcieri said. “Unfortunately, despite our generosity, we haven’t had the same success in moving people out of welfare and into work. While Rhode Island spends more than almost any other state on public assistance programs, we rank near the bottom in terms of reducing the number of people on welfare.”

“When the welfare system was reformed ten years ago, Rhode Island decided to take a different approach than many other states,” Carcieri said. “Instead of working to get people out of welfare and into jobs, the state focused on providing people with the education and training that many believed they needed to sustain jobs in the long-term. For instance, while many states asked their welfare participants to seek work immediately, Rhode Island allowed beneficiaries to spend more time gaining the skills many believed they needed to succeed in the workplace.”

“Unfortunately, Rhode Island’s decision to focus on education and training over work has ensured that we have not been as successful as many other states in reducing our welfare caseloads,” Carcieri said. “Education and training are only useful if they help people get off of welfare.”

“While reducing the number of people on the welfare rolls is important, I am even more concerned about our lack of success in getting people into jobs,” the Governor said. “In fact, according to the federal government, Rhode Island ranks 41st in terms of getting welfare recipients back to work.”

“After ten years, it is time to re-examine the decisions that were made in 1996,” the Governor said. “In particular, we must begin to reform Rhode Island’s welfare programs so that they are more effective in moving people out of welfare and into work. Let me be clear: The goal of our welfare to work program should be helping people move off of welfare and into work.”

“Rhode Islanders cannot continue to pay more money for programs that are less successful than similar programs in other states,” Carcieri said. “We also cannot afford to offer such extraordinarily generous benefits that we risk attracting welfare recipients to move to Rhode Island from states with less liberal programs.”

“We owe it to welfare recipients and to the taxpayers who fund these programs to make the reforms necessary to ensure that they are successful,” Governor Carcieri concluded. “My welfare reform plan will bring our programs into line with our neighboring states, while reducing costs for Rhode Island taxpayers and, most importantly, increasing our ability to help welfare recipients get jobs.”

Welfare Reform in America & Rhode Island

In 1996, Congress enacted a major welfare reform initiative, creating the current federal Temporary Assistance for Needy Families (TANF) program, and establishing a federal lifetime limit of 60 months for receiving cash assistance. The purpose of federal welfare reform was to help families get off of welfare and into work.

While establishing general guidelines, the federal TANF program gives individual states wide discretion to design their own welfare programs. Rhode Island responded in 1996 by approving its own version of welfare reform, creating the state’s Family Independence Program (FIP).

Unlike many other states, Rhode Island designed its welfare system to focus on providing families with the tools they would need to enter and succeed in the workplace. As a result, for the past ten years, Rhode Island’s welfare system has often emphasized education and training over immediate job placement. Unfortunately, Rhode Island’s focus on education over work has caused the state to lag behind other states in reducing its welfare caseloads, and in helping beneficiaries move from welfare to work.

Rhode Island Welfare Program More Generous than Other States

By many measures, Rhode Island’s version of the federal TANF welfare program – the Family Independence Program (FIP) – has been more generous than welfare programs in most other states. For instance:

• In FY 2004, Rhode Island had the 3rd highest spending on public assistance programs.
• Rhode Island families receive TANF payments longer than families in any other state in the nation. The national average was 21.9 months; Rhode Island families stayed on for 38.5 months. Connecticut residents spent, on average, 18.8 months on assistance; in Massachusetts, it was 10.4 months (although additional state-funded assistance may be available in other jurisdictions after TANF benefits have been expended).
• Rhode Island also had one of the highest percentages of its population on welfare in 2004, at 3 percent. Connecticut had 1.2 percent, Massachusetts 1.7 percent.
• Rhode Island ranks last in the number of families receiving payments for less than one year and first in the number of families receiving payments for more than 5 years.
• Rhode Island continues paying the highest percentage of families in the nation – twenty one percent – after the expiration of the federal 60 month limit.
• Rhode Island was one of the few states that does not count time spent on TANF in other states toward Rhode Island eligibility.

Unfortunately, the success of Rhode Island’s welfare system has not matched its generosity. Rhode Island ranks lower than many other states in terms of helping families get off of welfare and into jobs. For instance:

• Nationally, 34 percent of people receiving TANF payments work; in Rhode Island only 20 percent work (excludes “child-only cases”).
• Between 1996 and 2006, Rhode Island reduced TANF enrollment by 42.5 percent, the 10th lowest drop in the country. Nationally, TANF enrollment dropped 60.9 percent, while Massachusetts reduced enrollment by 52.9 percent and Connecticut by 73.1 percent.
• Nationally, Rhode Island ranked 43rd at reducing enrollment; Massachusetts and Connecticut ranked 30th and 6th respectively.
• In 2003, the U.S. Department of Health and Human Services ranked Rhode Island 41st in the nation at getting TANF recipients back to work.
• Rhode Island does not require TANF recipients to work or search for work immediately after receiving assistance. Thirty-five states require recipients to seek employment immediately.

In his budget proposal for the coming fiscal year, the Governor has included a major welfare reform initiative designed to improve its effectiveness for program participants, while reducing the cost of these programs to state taxpayers. Many of the provisions of the Governor’s plan are scheduled to be implemented on July 1, 2007. The Governor’s welfare reform plan would:

• Require recipients to sign an employment plan, and sanction them if, after three months, they choose not to participate in that plan, saving $2.9 million. Currently, families can continue to receive benefits for up to 18 months without complying with their agreed-upon work plan.
• “Anyone receiving state welfare benefits should be working to get a job or to receive the education they need to seek employment,” Governor Carcieri said. “Currently, families can continue to receive payments from the state for eighteen months, even if they are making no effort to hold up their end of the bargain. That is too long. Under my welfare reform plan, families that are not participating in their agreed-upon work plan will only be able to continue receiving payments for three months.”
• Reduce maximum length of eligibility from 60 months to 30 months for individuals enrolled after July 1, 2007, making Rhode Island’s limits closer to those in Massachusetts (eligibility of 24 out of 60 months) and Connecticut (with a 21 month eligibility).
  
  “Right now, Rhode Island’s welfare benefit structure is out of line with our neighboring states,” Governor Carcieri said. “We need to reduce eligibility limits so that we Rhode Island isn’t seen as more generous than Massachusetts and Connecticut. We should not continue to provide an incentive for welfare recipients to move to Rhode Island.”
• Count time spent on welfare in other states in calculating length of eligibility in Rhode Island. Currently, Rhode Island officials do not deduct time spent on welfare in another state from an individual’s 60 month total length of eligibility.
  
  “Federal welfare laws are designed to limit welfare participants to five years,” Governor Carcieri said. “Right now, someone who has used up their eligibility in another state can move to Rhode Island and be eligible for another 60 months of benefits. We need to close the loophole that can enable people to collect welfare benefits longer than the federal law allows.”
• Implement a graduated reduction in benefits after 24 months.
• Strengthen work requirements for two-parent families, saving $1.3 million.
• Tighten child care program by mandating a $10,000 resource test, increasing co-shares for families at or above 150 percent of the federal poverty level (saving $1.4 million), and delaying a rate increase for child care providers for one year (saving $1.4 million).