Welfare Reform: One Year Later

By Pantazis, Cynthia | Public Management, November 1997 | Go to article overview

Welfare Reform: One Year Later


Pantazis, Cynthia, Public Management


In 1995, the United States General Accounting Office (GAO) concluded that the nation "needs to create an effective and efficient employment and training system that provides easy access to services; encourages the efficient use of resources; offers a wide variety of services; and holds program administrators accountable for results while allowing states and local agencies the flexibility to determine how best to meet the needs of their communities."

While localities and states have actively responded to economic changes by linking education and training programs to economic development efforts, frequently the goal of these efforts has been to respond to worker displacement and unemployment, rather than to address the broader problem of ongoing skills development for all segments of the population.

Further, enactment of the welfare reform law - the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 - has raised concerns that the requirement to make a quick reduction in caseloads will continue to promote a concentration of federal dollars on employment and training programs that serve primarily the unemployed and the disadvantaged. This argument emerges in the context of national efforts to set workforce development policies that address the needs of the unemployed and the currently employed.

While the new welfare law does place pressure on states and local governments to reform their poverty programs, these circumstances may in fact create an opportunity not only to improve services for the poor but to promote efforts to link economic and workforce development programs that are capable of assisting individuals and business. The key question is whether the current fiscal environment will accommodate all the reform that is needed.

This article explores how localities and states are breaking down the bureaucratic distinctions between traditional welfare and employment programs. In this context, local governments and states are undertaking innovative approaches to develop comprehensive employment systems that coordinate and secure results from education, training, welfare, and job creation programs. This is an evolving process that relies on the participation of and partnerships among governments, communities, economic development professionals, educational institutions, and private businesses. These relationships are crucial to implementing unified, locally driven approaches that enable people to work.

Balancing Flexibility and Mandates

Enactment of the welfare reform law ended six decades of federal control over the welfare entitlement, giving governors control over programs serving 12.8 million people currently on welfare and almost all of the 25.6 million people now receiving food stamps. The law requires major programmatic restructuring, even as projected funding is reduced by $56 billion over six years. Central to the law are the five-year lifetime limit on receipt of benefits and the requirement that recipients actively prepare for and seek work following two years of welfare benefits.

Within the broad federal parameters of time limits, work requirements, and fixed funding, states have an unprecedented flexibility in determining recipients' eligibility criteria, designing diversion strategies and payment standards, offering financial incentives for employment, and denying assistance to certain groups of people.

A Second Wave of Devolution

To maximize the flexibility outlined in the law, several states are considering proposals to devolve responsibilities further to localities and to allow county commissioners and other local officials to make fundamental decisions on who should receive welfare, how soon these people will have to go to work, and under what conditions this should happen. Among the states considering a second wave of devolution are California, New York, Colorado, Ohio, Indiana, and North Carolina. If adopted, these proposals would afford cities and counties an unprecedented level of authority to make social policy.

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