Testimony

Statement by
Wade F. Horn, Ph.D.
Assistant Secretary
Administration for Children and Families
on
Hearing: Welfare Reform Reauthorization Proposals
before
The Subcommittee on Human Resources
House Ways and Means Committee

February 10, 2005

Mr. Chairman, Mr. McDermott, and members of the Committee, I am pleased to appear before you today to discuss the next phase of welfare reform. Shortly after the President outlined his reauthorization proposal "Working Toward Independence" in February of 2002, and again early in 2003, this Committee and the House passed bills that would achieve the necessary next steps outlined by the President. Most recently you affirmed your commitment to America's families by introducing H.R. 240 the very first day that this Congress convened. I would like to take this opportunity to express my heartfelt thanks to you, Mr. Chairman, for your leadership and to the Committee for your unceasing efforts to enact the next phase of welfare reform to further improve the lives of low-income Americans.

It has been three years since President Bush first proposed his strategy for reauthorizing TANF and the other critical programs included in welfare reform. During this time, the issues have been debated thoroughly but the work has not been completed and States have been left to wonder how they should proceed. We believe it is extremely important to finish this work as soon as possible and set a strong, positive course for helping America's families. Secretary Leavitt and I are convinced that working together with you, we will be successful.

Your initial work, the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, has had a profound, positive impact on our nation's vulnerable families. With our State partners, our accomplishments have far surpassed even the most optimistic goals. With heightened expectations of personal responsibility and greater opportunities, millions of families have moved from dependence on welfare to the independence of work. We have provided the necessary work supports, child care, and transportation to ensure that parents can get to work and stay there without worrying about the safety and well-being of their children. We also have collected record amounts of child support on behalf of children with a parent absent from the home.

Building on these successes, President Bush laid out a clear path for the next phase of welfare reform. The proposal is guided by four critical goals that will transform the lives of low-income families: strengthen work, promote healthy families, give States greater flexibility, and demonstrate compassion to those in need. These are the guideposts that shaped the Administration's proposal for TANF, child support, child care and abstinence education. This framework has not changed.

As we prepare jointly to move forward on making the President's welfare reform proposals a reality, I would like to use my time today to highlight the key provisions of the President's welfare reform package and update you on the important progress we have made in strengthening families since the President's proposal was unveiled. I will begin with TANF, the cornerstone of our welfare reform efforts.

Temporary Assistance for Needy Families

As the Assistant Secretary for Children and Families, I have heard one consistent theme about the Temporary Assistance for Needy Families program -- TANF is a remarkable example of a successful Federal-State partnership. This Committee and Congress granted States tremendous flexibility to reform, design, and operate their welfare programs. Initially, some questioned the wisdom of this course of action and expressed concern about a potential "race-to-the-bottom." Instead, States effectively emphasized work, while providing families with needed training, job opportunities and work supports. In looking at State reported data on TANF recipients for FY 1998 - FY 2003, States have reported an average of 843,000 new job entries each year. As a result, millions of families have been able to end their dependency on welfare and achieve self-sufficiency. The welfare caseload has declined by 61.4 percent and the total number of families receiving assistance is now lower than at any time since 1970.

Some other positive outcomes we have seen since the law's passage include:

  • Employment among never-married mothers has grown to unprecedented levels. For example, between 1996 and 2003, the employment rate for never-married mothers increased 28 percent, from 49.3 percent to 63.2 percent.
  • Contrary to critics who claimed that welfare reform would impoverish one million children, the child poverty rate declined about 14 percent, with 1.6 million fewer children in poverty. Overall child poverty rates declined from 20.5 percent in 1996 to 17.6 percent in 2003. Over this same period, the poverty rate among African American children declined from 39.9 percent to 33.6 percent - lower than at any time before welfare reform was enacted, when child poverty rates for African American children were 40 percent or higher. Similarly, the poverty rate among Hispanic children declined from 40.3 percent to 29.7 percent. Although the poverty rate has increased some since 2000 as a result of the recent recession, the surge in job creation over the past 20 months portends renewed improvement in poverty rates.
  • The birth rate for teenagers continues to decline, as does the number of births to unmarried teens.

But even with this notable progress, much remains to be done, and States still face many challenges. While the basic structure and goals of TANF remain strong, we are concerned about some unfavorable trends. Despite the success in moving families from welfare to work, a majority of adult TANF recipients are not engaged in employment-related activities. In FY 2003, States reported that only 31 percent of families with an adult recipient participated in the required 30 hours of TANF work activities. We need to reverse this trend so that all TANF recipients are given the opportunity to become self-sufficient.

States also have been less effective in placing clients with multiple barriers (such as mental health issues, addiction, learning disabilities, and limited English proficiency) in work. We need to ensure that these barriers are addressed and that every family is given work opportunities leading to self-sufficiency. But our efforts cannot stop there. We also need to develop more effective models of post-employment supports that lead to career development and wage progression, programs that sustain and keep families together, and programs that enable low-income, non-custodial fathers to help their families both financially and in non-financial ways.

In addition, given what the research literature tells us about the benefits healthy marriages confer on both children and adults, we need to promote policies that support the formation and stability of healthy marriage, and provide a strong and nurturing environment for raising children.

Consequently, our efforts to reauthorize TANF build upon our past success and address current challenges by:

  • strengthening the Federal-State partnership;
  • requiring States to help every family they serve achieve the greatest degree of self-sufficiency possible through a creative mix of work and additional constructive activities;
  • helping States find effective ways to improve child well-being through programs aimed at promoting healthy marriages and encouraging responsible fatherhood;
  • improving program performance and, therefore, the quality of programs and services made available to families; and
  • permitting States to integrate the various welfare and workforce assistance programs operating in their States.

I would like to offer some detail on each of these elements.

Strengthen the Federal-State Partnership

Although national caseloads are now less than half of what they were when the TANF block grant was first established, we propose to maintain the current level of support for TANF of $16.5 billion each year for block grants to States and Tribes and an additional $319 million for annual Supplemental Grants to States that have experienced high population growth and have historically low funding levels. This will allow States to maintain investments they have made in supporting families' transition from welfare to work, strengthening families, and providing other benefits and services that support the goals of the TANF program. It also will permit them to develop innovative programs to address remaining challenges.

Other key policy changes that will increase State flexibility include: eliminating limitations on services for the unemployed by defining "assistance" so that rules tied to such spending will not apply to child care, transportation and other support services; allowing States to designate and obligate "rainy day funds"; and revising current restrictions on funds carried over from one year to the next by allowing such funds to be spent on any service or benefit that achieves a TANF purpose.

Maximize Self-Sufficiency Through Work

A key component of our reauthorization proposal is to maximize self-sufficiency through work. States will be required over time to make certain that the percentage of TANF recipients engaged in work and productive activities grows and that the primary focus is on participation in work-subsidized or unsubsidized employment, on-the-job training, and supervised work experience or community service. States also will be required to engage all TANF families with an adult in self-sufficiency activities and they must develop, and regularly monitor progress on, individual plans for each family that include appropriate activities leading to self-sufficiency .

The current caseload reduction credit, the effect of which has been the elimination of the participation rate requirement in most States, will be phased out and replaced by an employment credit. The result of these policy changes will be to reinstitute a meaningful work participation rate requirement while increasing flexibility in how States can achieve that standard.

Promote Child Well-Being, Responsible Fatherhood and Healthy Marriages

Our proposal seeks to improve child well-being through programs aimed at encouraging responsible fatherhood and healthy marriages. Indeed, we establish improving the well-being of children as the overarching purpose of TANF, recognizing that the four goals of TANF are important strategies for achieving this purpose. In support of this overarching goal, we target $100 million from the discontinued Out of Wedlock Birth Reduction Bonus for broad research, evaluation, demonstration and technical assistance, focused primarily on healthy marriage and family formation activities. These demonstration efforts will be carefully evaluated and information about successful programs will be broadly disseminated. Our proposal also redirects $100 million from the current law High Performance Bonus to establish a competitive matching grant program for States and Tribes to develop innovative approaches to promoting healthy marriages and reducing out-of-wedlock births.

Additionally, we will provide $40 million in mandatory funding for the promotion and support of responsible fatherhood and healthy marriage programs to reverse the rise in father absence and its subsequent impact on our nation's children. This funding will provide for demonstration projects to test promising approaches to promote and support involved, committed and responsible fatherhood, and to encourage and support healthy marriages between parents raising children. Funds also will be used to identify, test, and publicize community-based programs and activities that effectively encourage and support responsible fatherhood and that can be replicated in other communities, including two multi-city, multi-State projects.

Improve Program Performance

Under TANF, States have become great innovators. But, the shift in focus to a work and family support program has presented management challenges. Therefore, our fourth reauthorization component highlights improving program performance and accountability. For example, we replace the current High Performance Bonus with a $100 million Bonus to Reward Employment Achievement. Targeted on meeting the employment goals of TANF, it will reward States for successful job placements, sustained work and wage growth.

Program Integration

For any organization to succeed, it must never stop asking how it can do things better. Using the flexibility under programs such as TANF and the One-Stop Career Center system, States have made great strides towards transforming and integrating their public assistance programs into innovative and comprehensive workforce assistance programs. But, with greater flexibility even more can be accomplished. The final key element of our TANF proposal, therefore, seeks to enable far broader State welfare and workforce program integration through the establishment of new State program integration demonstrations to show the mutual benefit that could result from broad flexibility in program integration. The proposed demonstrations could modify all aspects of selected Federal programs, including funding and program eligibility and reporting rules, enabling States to design fully integrated welfare and workforce investment systems that could revolutionize service delivery.

I would like to turn now to another program that offers a vital connection to a family's ability to achieve self-sufficiency: child support enforcement.

Child Support Enforcement

Child support is a critical component of Federal and State efforts to promote family self-sufficiency and to provide for the well-being of children. Like TANF, the child support program has been very successful. On a national basis, the program's effectiveness in collecting support has greatly improved. Total collections have increased 47.6 percent in just five years, and the number of cases for which child support was collected has increased by 78.7 percent. In FY 2003, we collected more than $21 billion of support for children-an all-time high and a 5 percent increase over FY 2002, even while the caseload decreased.

The child support enforcement program uses a number of tools to ensure that children receive the support they deserve - many of which were implemented as a result of the original welfare reform legislation. Tools such as the National Directory of New Hires and the Federal Case Registry, the passport denial program, the financial institution data match, and license revocation have made a tremendous difference in improving State performance and strengthening child support collection efforts. Equally important, PRWORA streamlined paternity establishment, particularly voluntary paternity establishment, to encourage fathers to take the first step toward providing their children with financial and emotional support. The impact of these changes has been dramatic. The number of paternities established or acknowledged has reached over 1.5 million. Of these, over 860,000 paternities were established through in-hospital acknowledgement programs.

The child support enforcement proposals being considered as part of welfare reform reauthorization build on our success by focusing on increasing child support collections and directing more of the support collected to families. This focus on families represents a major shift away from the historic purpose of the child support enforcement program which was heretofore aimed at recouping Federal and State welfare outlays.

Directing More Support to Families

Under current law, States and the Federal government can keep some of the child support collected on behalf of current or former TANF recipients to defray costs of welfare. We are proposing a change to give States an incentive to send more child support directly to the family. Families and children will benefit financially and, equally important, the children will see that their parents support and care for them.

Currently, almost half the States pass through a portion of child support collections to TANF families. Under our proposal, the Federal government will share in the cost of amounts passed through to families and disregarded for purposes of determining TANF eligibility of up to the greater of $100 per month or $50 over current State efforts. Federal contributions to the pass-through of collections to TANF families will provide a strong incentive to States to begin to pass-through additional support to these families, or increase the amount of the current pass-through. Moreover, these increased pass through amounts will be disregarded in determining TANF eligibility, thus providing greater financial resources to help children in need. This proposal will increase collections going to families by $169 million over five years.

States also will be given the option to adopt simplified distribution rules under which families that have transitioned from welfare will receive all of their child support collections. This proposal will increase collections going to families by $984 million over five years and eliminate the need for States to use complex distribution rules.

Increasing the Amount of Child Support Collected

The second prong of our strategy for child support enforcement is to increase the amount of support collected by adding to our existing cadre of enforcement tools. For example, we will expand our successful program for denying passports to parents so that it covers parents owing $2,500 or more in past-due support. The passport denial program, run jointly by HHS and the Department of State, currently works to deny passports to delinquent parents owing more than $5,000 in past due support. In FY 2004 alone, individuals with child support arrearages paid $12.5 million in lump sum child support payments in order to renew or obtain their passports. Under the current threshold of $5,000, there are approximately 3.5 million cases certified at the Department of State for passport denial. Lowering the threshold to $2,500 will likely add an additional 500,000 cases.

Also, to ensure that child support orders are fair to both custodial parents and children as well as noncustodial parents, we will require States to review and adjust as appropriate, child support orders in TANF cases every three years. These reviews will ensure that orders reflect any changes in the needs of the child and/or the ability of the non-custodial parent to pay.

In addition to proposals to enhance State efforts to secure child support collections we are seeking to improve children's access to health insurance. For example, we will require States to look to either parent when considering the health care coverage needs of a child rather than focusing solely on non-custodial parents as under current law. Research shows that more health insurance is provided by custodial parents and stepparents than is provided by non-custodial parents. Under this proposal, States could improve their efforts to place responsibility on parents, rather than the government, for meeting their children's health care needs.

User Fee

In addition to our proposals for increasing support and directing more of the support collected to families, State agencies will be required to collect a $25 user fee for families that have never received welfare when child support enforcement efforts on their behalf are successful. Because the fee is collected only when the State is successful in collecting support and represents a fraction of the cost of the services families receive, we are confident it will not pose a barrier to families seeking child support enforcement services.

Access and Visitation Program

Finally, in keeping with the President's commitment to strengthen families, funding for access and visitation grant programs will double over time, from $10 million to $20 million annually and for the first time will be available to Indian Tribes that operate Title IV-D child support programs. Studies have shown that when non-custodial parent/child relationships are improved, non-custodial parents are more likely to meet their financial responsibility to their children.

I would like to turn now to child care, a key support service for low-income families.

Child Care

Access to child care assistance can make a critical difference in helping low-income families retain employment. Therefore, the Administration remains committed to preserving the key aspects of the child care program: parental choice, administrative flexibility for States and Tribes, inclusion of faith-based and community-based organizations, and development of literacy, numeracy, and other early learning skills for children in care; while maintaining the underlying structure and financing of these essential child care programs.

Our proposal supports maintaining the historically high level of funding for child care, including $2.1 billion for the Child Care and Development Block Grant and $2.7 billion for Child Care Entitlement -- a total of $4.8 billion for what is referred to as the Child Care and Development Fund or CCDF. In addition, States continue to have the flexibility to use TANF funds for child care both by transferring up to 30 percent of TANF funds to CCDF, and by spending additional TANF money directly for child care. When TANF funds are considered, as well as Head Start and other State and Federal funding sources, over $18 billion currently is available for child care and related services for children.

Funding available through child care programs and TANF transfers alone will provide child care assistance to an estimated 2.2 million children this year. This is a significant increase over the number served just a few years ago; in 1998 about 1.8 million children received subsidized care.

These substantial child care resources support our expectation that all families will be fully engaged in work and other meaningful activities by ensuring that safe, affordable child care is available when necessary.

Abstinence Education

In 2000, there were almost 19 million new cases of sexually transmitted diseases in the U.S., and historically, about one-quarter of these cases have been teenagers. We know that for many of the diseases there is no cure. We also know, without a doubt, that those teens who choose to abstain from sex will not contract such diseases and will not become pregnant. The goal of abstinence education is to encourage our nation's youth to make the healthiest decisions for themselves.

Therefore, the final piece of our welfare reform strategy supports reauthorization of the State Abstinence Education Program. Recently, the State Abstinence Education Program contained in PRWORA and the discretionary Community-Based Abstinence program were transferred to the Administration for Children and Families. This move provided important linkages to community-based and faith-based positive youth development programs which connect youth to caring adults, thereby empowering them in their schools and communities. Such programs can be effective in protecting young people not only against early sexual behavior but also from illegal drugs, alcohol, tobacco, and violence.

One of the great success stories in recent years is the progress in lowering the out of wedlock birth rate, especially among teen mothers. The State Abstinence Education Program and Community-Based Abstinence Education grants have helped people to develop the self-discipline to say "no" to sex. They help people develop inner strength, help them take charge of their lives, and redirect their energies into healthy and productive choices. While the evidence is still being collected, we are seeing the benefits of a strong abstinence message, and it is clear that the State program needs to be reauthorized.

Conclusion

Mr. Chairman, the proposal I bring before you today contains many different elements. What binds these fundamental elements together is the desire to improve the lives of the families who otherwise would become dependent on welfare. In his second inaugural address, the President stated that in America's ideal of freedom, citizens find the dignity and security of economic independence. He expressed the vision of an ownership society, making every citizen an agent of his or her own destiny. These ideals certainly fit the President's concept of welfare reform as well as those embodied in H.R. 240. The Secretary and I stand ready to work with you on the next steps to making economic independence within the reach of America's neediest families. I would be happy to answer any questions you have.

Last Revised: February 10, 2005