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Testimony on Welfare Reform by Howard Rolston
Director, Office of Planning, Research and Evaluation
Administration for Children and Families
U.S. Department of Health and Human Services

Before the House Committee on Ways and Means, Subcommittee on Human Resources
March 19, 1998

Mr. Chairman, members of the Subcommittee, it is a pleasure to be here today to discuss the role of research as one critical element in the success of welfare reform. This Subcommittee played a key role in making research and evaluation activities integral to TANF. To illustrate how ACF is using the authority and funding provided by the Congress, I will describe our state evaluation activities, in terms of both what we have already begun to learn and what we can expect to learn in the future.

A central focus of ACF's welfare reform research and evaluation strategy is to develop reliable, credible information about how different strategies are working in order to inform the state policy choices that TANF flexibility provides. This information can also inform the public and the Congress about how welfare reform is progressing.

A key to developing this wealth of information is through the use of experimental evaluations of outcomes. These evaluations can shed light on whether state reforms are meeting the goals of TANF as set forth in the statute--providing assistance to needy families with children, ending dependence through increasing employment and marriage, reducing out-of-wedlock pregnancies and encouraging two-parent families.

My testimony today will focus on current evaluations of state programs, primarily of existing state waiver demonstrations, and future areas to consider for evaluations. I also will share some of our early lessons from these current evaluations. But before beginning this discussion I first would like to take a quick, broader look at other research activities funded by ACF.

The waiver evaluations are only one part of a broader welfare reform research and dissemination effort taking place in ACF. Last year, for example, we were able to fund nine projects (from over 100 applicants) that are examining a variety of key issues in welfare reform, including implementation of tribal TANF programs, identification of problems and solutions in implementing TANF in rural areas, and a study of different diversion programs that states are operating. In addition, we are making careful investments to ensure that knowledge gained through evaluation is widely disseminated in formats that program operators find accessible, including the very important Manpower Demonstration Research Corporation (MDRC) "How-to Guide" entitled Work First, How to Implement an Employment-Focused Approach to Welfare Reform.


Over the past twenty years, the application of experimental approaches to studying the effects of welfare reform has proven to be enormously important to finding out what is effective and what is not. Because of its proven track record, in almost all cases ACF and the state agreed on experiments as part of the approval of their waiver demonstrations begun prior to enactment of the Personal Responsibility and Work Opportunity Reconciliation Act. States randomly assigned families either to continue receiving welfare under the old AFDC rules, the "control group," or to another group that received welfare under the reform regime, the "experimental group."

In authorizing the Department to fund the continuation of these evaluations under TANF, Congress provided the vehicle for obtaining the earliest reliable information on the effects of different state welfare reform strategies in meeting the objectives of TANF. ACF has funded nine states to continue their evaluations with only minimal changes and an additional eight to modify their evaluations.

Since most of the nine states are continuing waiver policies into TANF with minimal change, by comparing the experimental and control groups over time in a state, we can reliably determine the causal effect of a state's reform effort on such key outcomes as welfare dependency, employment and earnings, total family income, and family structure. And by looking across states, we can begin to compare the relative effectiveness of different strategies in achieving the various goals of reform.

The ability to look across states is enhanced by the fact that the nine states embody significantly different approaches to key policy decisions. For example, they include states with a variety of time limits: states with strict and standardized time limits, states with individualized time limits, states that prescribe work after a time limit, states that eliminate the benefit of the entire family, states that only remove the benefit of the adults and states with no time limits.

The outcomes in the studies described above primarily concern adults. To better measure the effects of welfare reform on children, we created a team of twelve states to think collectively about what outcomes, both positive and negative, they thought their reforms might produce. We also included researchers to inform the team on how best to measure these outcomes.

We now have been able to fund five of these states to add a common core of child outcome measures to their evaluations-- Connecticut, Florida, Indiana, Iowa and Minnesota. Because these states represent varying approaches to welfare reform, the results will produce rigorous information on how different reform policies affect children.


The main question that the waiver evaluations answer is, "What has the totality of the change in state policy brought about?" But there is another equally important area of study to examine decisions that states need to make about the parts of their programs, if they are to invest their TANF and state funds most effectively.

A particularly important example that illustrates this kind of evaluation is the increasing efforts by states to improve job retention and advancement. Over the last several years, it has become clear that many welfare recipients do work, but their work is sporadic with substantial periods of unemployment and dependency interspersed with work. In addition, many of these families continue to have low incomes. We have learned a lot over the last twenty years about ways that are most effective to move recipients into work, and most states have moved to "work first" approaches, in part based on that knowledge. Now we need to turn our attention to learning about how to keep individuals employed more persistently, and how to raise working families, income.

As part of the creativity that is coming from a flexible, work-focused system, many states are now experimenting with what are frequently called "post-employment services" in order to increase employment persistence. For example, some states are working with employers to provide mentors to individuals with little work experience; others are providing opportunities for skills enhancement for former recipients who show their commitment to work; and others are addressing access to health insurance. Rigorous evaluation can tell us which of the approaches, or the details of them, are actually effective in increasing employment and earnings.

This example suggests how, if we continue to work with states to ensure that the evaluations we fund answer their most pressing program design questions, we have a tremendous opportunity to learn which strategies really achieve the goals of welfare reform. And this kind of learning can play a critical role in the success of state welfare reform efforts.


In turning to what we have learned so far from these waiver demonstrations, I want to stress that it is too early to draw inferences with a high degree of confidence. Our ability to learn from the evaluations will certainly grow over time. Nonetheless, based on the information we have now, the following lessons are suggested.

  1. Most state evaluations indicate significant impacts on the proportion of recipients and former recipients who are employed. These impacts range from modest to quite large, depending on the reform intervention and the population subject to it. Among the states at the higher end of the range, the proportion of participants working in the last quarter of follow-up was 8 to 15 percentage points higher for the welfare reform group than the AFDC control group.

  2. States are dramatically increasing the mandatory aspect of work programs. As with time limits, states have implemented a variety of policies for sanctioning individuals who fail to comply with program requirements, including eliminating a portion of the grant, eliminating the entire grant, and progressive reductions for repeated instances of failure to comply. These sanctions, including whole family sanctions, are much more commonly applied than anyone would have predicted. For example, in Delaware nearly half of the participants were sanctioned for failure to cooperate, and in Florida the sanction rate was 31 percent for the welfare reform group compared to 7 percent for the control group.

  3. Although states are getting out the message that welfare reform is occurring, and despite state efforts to simplify and explain their programs, many recipients do not have a clear understanding of the new rules. For example, they may know that there's a time limit, but do not have a good idea of how months are counted toward it. Thus, in one state almost 90 percent of participants knew they were under a time limit, but only about half understood the circumstances under which a month counted. This is not a new phenomenon since recipients seldom understood AFDC rules either.

  4. To date, the studies confirm earlier research on the effectiveness of more generous earnings disregards. Earnings disregards appear to be more effective than other policies being evaluated in raising family income for single parent families. This was most dramatically illustrated in Minnesota where work incentives were a very central feature of the state's reforms.

In theory, more generous disregards should increase the employment of single parents, and it appears likely that this is happening in current state reform efforts. At the same time, they probably also increase the length of time, and amount of welfare received over time, although the welfare received is now essentially a smaller earnings supplement. For example, again in Minnesota, under its demonstration, which had no time limit, both duration and amount of welfare were significantly increased. But even in states with time limits and tough work requirements, welfare duration prior to the exhaustion of the time limit was not reduced.

Previous research suggested that the effects of more generous disregards on earnings are mixed, stimulating participants who would not have worked, or worked only a little, to earn more, but also stimulating those who would have worked more substantially to earn less than they would have. The results in Minnesota seem to confirm this with average earnings increasing substantially for long-term urban recipients, but declining substantially for two-parent families (especially women).

The effects on family income of the common package of welfare reform, which combines more stringent work requirements, more generous disregards and time limits, are not clear. At this point, most programs appear not to have increased or decreased average family income by much, although undoubtedly, these averages mask the fact that some families have experienced positive effects and some have experienced negative effects. More generous programs combining high benefits with generous disregards and no time limits appear to do much more to increase family income, but probably also increase governmental costs at least in the short run. Thus, over an 18-month follow-up period Minnesota reduced poverty by nearly 15 percentage points for long-term urban recipients, but increased welfare costs by about 8 percent.


These early lessons, I believe, illustrate how the results of our evaluations hold the promise to be highly informative to policy makers at all levels of government. our perseverance in carefully evaluating the results of these shifts in states, programs can make a major difference in the extent to which the goals of welfare reform are realized.

I would be happy to answer your questions.

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