SD21 - Virginia's Welfare Reform Initiative: Implementation and Participant Outcomes

Executive Summary:
In 1995 , Virginia joined a number of states that were using federal waivers to the rules of the Aid to Families With Dependent Children (AFDC) program to fundamentally change the direction of their welfare systems. The impetus for this policy change was the widespread view that the AFDC program had evolved as a demeaning barrier to self-sufficiency that robbed recipients of their incentive to work. The new course for welfare reform in Virginia was prescribed through three significant legislative provisions: (1) a universal work requirement for all able-bodied recipients; (2) restrictions on the use of long-term job training programs; and (3) strict limits on the amount of time that able-bodied recipients can receive benefits. One year later, the United States Congress passed national legislation -- the Personal Responsibility and Word Opportunity Reconciliation Act -- Which embraced many of the reforms that were already underway in Virginia and other states. Under the Act, the AFDC program was abolished and replaced with a new block grant program referred to as Temporary Assistance For needy Families (TANF).

Since the legislation authorizing the reforms was passed in Virginia in 1995, there has been a sharp and consistent drop in welfare caseloads. For example, in 1994, the State's AFDC caseload reached its highest recorded levels with a monthly average of more than 70,000 families receiving cash assistance. By August of 1998, with welfare reform in effect in each of the 122 local welfare offices across the State, the average number of families on assistance was down to less than 43,000 cases.

Because of the unprecedented decline in caseloads subsequent to welfare reform, this trend has often been treated as a litmus test of the success of the new policies. However, because public assistance recipients traditionally leave welfare for numerous reasons, important questions related to the post-program employment and income levels of TANF recipients and their living conditions can not be answered solely by a focus on caseload trends. Accordingly, and in response to emerging questions concerning the status of welfare recipients who are subject to the State's new policies, the 1997 General Assembly directed JLARC to examine the status of welfare reform in Virginia. The study mandate places a particular emphasis on the status of persons who participate in the program, those who exhaust their eligibility, as well as those who leave the welfare rolls rather than submit to the requirements of the Virginia Initiative for Employment not Welfare program (VIEW) the work component of Virginia's welfare reform effort. JLARC staff began work to address this study mandate in January 1998, and most of the data were collected in the spring and summer of 1998.

As only three years have passed since the State first implemented the eligibility and work-related policy changes of welfare reform, this review should be considered a status report on the early trends associated with the new program. The State is fully committed to the new program. Therefore, this study was no designed to test the efficacy of the new policies relative to the system which it replaced. However, some of the findings presented here may suggest a few mid-course corrections to the strategies being employed to increase the self-sufficiency of those on public assistance.

The preliminary findings from this review indicate that the general direction that the State has taken with welfare reform has been positive overall. Against the backdrop of a strong economy, local DSS staff have successfully applied the "work-first" philosophy to large segments of the welfare caseload. This approach has resulted in post-program employment rates of 50 percent for those tracked in this study, substantial declines in the rates at which recipients have remained on assistance, and a high degree of satisfaction among welfare recipients with various aspects of Virginia's new welfare reform policies.

However, other findings provide reasons for concern about the capacity of welfare reform to achieve its long-term goal of self-sufficiency for many welfare recipients. Specifically, joblessness remains a problem for a large percentage of welfare recipients who have multiple employment barriers. Despite this, the VIEW employment services they receive are not designed to address their deficiencies and are typically no different from those provided to their counterparts with few such barriers. Further more, among those recipients who find work, their earnings are considerably below the level that would disqualify them for continued assistance.