1. Welfare-to-Work Grants
This section of the bill creates a new, $3 billion fund for welfare to work grants, with $1.5 billion available in FYs 98 and 99. The funds can be used until 2001. Seventy-five percent of the money is distributed as formula grants to states, and 25 percent is distributed on a competitive basis to private industry councils (PICs) and cities or counties. The fund is to be administered by the U.S. Department of Labor (DOL). All funds, including those delivered as formula grants, will be delivered through private industry councils (PICs).
1a. Formula grants to states
To be eligible, the governor must submit to DOL and HHS an amended state plan that describes how the funds will be used; includes the formula for in-state distribution; and contains assurances that the PICs will coordinate with the agency that administers TANF. The state must be eligible for TANF for the given fiscal year, and must meet the TANF MOE requirement.
Seventy-five percent of the amount available each year is given directly to states by formula. Each state’s allocation is based on the:
States are required to match 33 percent of the federal dollars; in other words, they must spend 50 cents for every federal dollar received. State spending to receive the welfare-to-work grant cannot be counted toward the TANF contingency fund, child care block grant matching funds, or other programs.
Each state is guaranteed a minimum allotment is of .25 of the available amount for the fiscal year.
Formula for in-state distribution. The state must specify in its amendment to the TANF state plan an allocation formula. At least 85 percent of the state’s grant must be distributed to areas with a high unemployment rate, and a high concentration of poor people and individuals that have been on TANF assistance for at least 30 months. The remainder of the money must be distributed by the governor to projects that help long-term welfare recipients become employed.
Administration of grants. The PICs are responsible for administering the grants. The governor of a state may apply to the secretary of Labor for a waiver of this requirement. The secretary must find that the alternate agency would improve the effectiveness of the administration of the grant.
1b. Competitive grants
In FYs 98 and 99, the secretary of Labor must award grants to projects that will expand the base of knowledge about programs that will move job-ready individuals into employment, and may take into account the applicant’s past successes in moving individuals into work, the ability to leverage other funding sources, and other criteria. Eligible organizations are PICs, cities or counties, or private entities applying in conjunction with PICs or cities or counties. The secretary must take into account the needs of rural areas and cities with large concentrations of poverty when making grants.
1c. Use of funds
Funds distributed directly to states and competitively can be used for a number of activities, such as community service and work experience programs; job creation through wage subsidies; on-the-job training; contracts or vouchers for job readiness, placement, child care, and other services. Services must be provided to individuals who meet two of the following criteria: have not graduated from high school; require substance abuse treatment; or have a poor work history. In addition, a recipient must have been on welfare for at least 30 months or be within 12 months of reaching the state’s time limit for benefits. States are permitted to provide assistance to recipients after they have reached their time limit.
1d. High-performance bonus
The secretary of Labor, in consultation with the secretary of HHS, the National Governors’ Association, and the American Public Welfare Association, are required to develop a formula to measure the success of states of placing individuals in employment using these funds; the duration of placement, increase in earnings; and other criteria. One hundred million dollars is available for this purpose.
1e. Grants to tribes
One percent of the funds available each year must be given to tribes, which choose to administer their own TANF plans.
1f. Worker protection
Participants may fill a vacant employment provision. A work activity shall not violate an existing contract for services or a collective bargaining agreement. In addition, a person involved in a program made possible by this part may not fill a position resulting from a layoff, or fill a vacancy created when an employer fired a worker specifically to replace him or her with the welfare-to-work grant program participant. Also prohibits reduction in hours of work to employ welfare recipient. This language applies only to the new welfare-to-work block grant, not the entire TANF program.
Health and safety standards that apply to work places under federal and state laws must apply to recipients of assistance under this part. Employers must not discriminate against participants based on their gender.
States must establish grievance procedures to investigate complaints that a participating program has violated the worker protection clauses, and must provide for hearings, remedies, and appeals.
1g. Data collection for welfare-to-work program
The budget reconciliation act amends the TANF data collection and reporting requirements of Section 411 of P.L. 104-193 to require states to provide the following information about families participating in a welfare-to-work grant program.
Section 5001(e) also amends the following state reports required by P.L. 104-193, Section 411:
Section 5001(e) also amends the HHS secretary’s regulatory authority, requiring her to consult with the secretary of Labor in defining data elements with respect to Section 5001 welfare-to-work grant programs.
1h. Evaluations
The secretary of Labor, in conjunction with the secretaries of HHS and HUD, must develop a plan to evaluate welfare-to-work programs. The evaluations should measure placements in unsubsidized employment, private and public sectors, earnings of individuals who gain employment, and expenditures per placement.
1i. Penalties
If a state receives a welfare-to-work grant, and does not meet its TANF MOE, the state’s TANF grant in the following year will be reduced by the amount of the welfare to work grant. For example, if a state did not meet its TANF MOE in FY 98, and received a welfare-to-work grant, its FY 99 TANF grant would be reduced by the amount of the state’s welfare-to-work grant in FY 98. These penalties are in addition to any that can be imposed under Section 409 (a)(7).
2. Application of Fair Labor Standards Act
No language is included in the act to clarify the application of the Fair Labor Standards Act (FLSA) to the TANF work requirements. DOL issued a guidance earlier this year that welfare clients engaged in community service or work experience programs are subject to the FLSA, which requires the minimum wage to be paid for hours of work performed. DOL stated that states may combine the amount of TANF and food stamp benefits received by a client in calculating the minimum wage. Depending on the nature of the work slot, the client may be covered by a wide range of federal laws, including family and medical leave, FUTA, FICA, etc. No clarification of the application of these other laws has been issued by the administration to date.
3. Transfer of Title XX Funds
Permits states to transfer only up to 10 percent of their TANF funds to the Social Services Block Grant (Title XX).
4. Changes to the Vocational Education Cap
No more than 30 percent of the individuals in single-parent and two-parent families, respectively, who are required to be working, may be engaged in vocational education activities. For example, in FY 97, 25 percent of the state’s TANF caseload must be engaged in a work activity. Under this change, only 30 percent of those engaged in work (or 7.5 percent) may be engaged in vocational education activities. Teens who are required to attend school or participate in education related to work are excluded from the cap for FYs 98 and 99, but included in the 30 percent cap in FY 2000 and in every subsequent fiscal year.
5. New Penalty for Failure to Reduce Benefits for Refusal to Work
The secretary of HHS must reduce a state’s TANF grant by 1-5 percent if the state does not reduce the benefits for every hour TANF recipients refuse to work. The amount of the penalty must be based on the severity of the state’s violation.
6. Mandatory Penalty for Failure to Meet Work Participation Rates
The secretary must impose a 5 percent penalty for state’s failure to meet the all families or the two-parent family work participation rates. Under prior law, the HHS secretary had the option to penalize states up to 5 percent.
7. Changes in Work Definitions
Mandatory work requirements, Section 5504, includes a number of changes to the work requirements: a two-parent family with a disabled parent shall be considered a single- parent family; states are given the option to exclude participants in a Tribal work program from the states’ calculation of work participation rates; the 35-hour requirement for two-parent families may be split between the two parents; the definition of work participation for two-parent families is changed from “making progress” toward work to “participating” job search is extended from 6 weeks to 12 weeks when the state is considered “needy” as defined under the contingency-fund provisions (the definition, “unemployment being 50 percent greater than the U.S.” is removed); married teens as well as single teens may meet their participation rate by attending school; teen parents can meet their participation rates by attending school for an average of 20 hours per week per month instead of the graduated increase in hours of work as applied to adults; and care-taker relatives with a child under six can meet the work requirements by working 20 hours a week (same requirement the natural parent must meet).
8. GAO Study on Domestic Violence
The Senate version of the Budget Reconciliation bill included an amendment that would clarify that when an individual is provided a “good cause” waiver under the optional certification for domestic violence screening, the individual “shall not be included for the purposes of determining the participation rate. . .for the purposes of applying the” 20 percent hardship exemption cap. The amendment also states that these people will not be included in determining penalties for failure to meet the participation rates, failure to establish paternity and the five-year limit. However, this provision was not included in the final version. It was replaced with a requirement that the GAO conduct a study of the effect of family violence on the use of welfare programs.