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Statement by
Tommy G. Thompson
Secretary, HHS
on
The Next Phase of Welfare Reform
before the
House Committee on Ways and Means, Subcommittee on Human Resources

April 11, 2002

Mr. Chairman, Mr. Cardin, and members of the subcommittee, thank you for your invitation to appear today to discuss the next phase of welfare reform. Because of the work of welfare reform's pioneers like the members of this subcommittee, America's most vulnerable families are succeeding and our mission to build on the platform of success established by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) is made easier.

PRWORA provided the groundwork in assisting millions of families in moving from dependence on welfare to the dignity of work and independence. It is supported by a strong commitment to child care and a strong child support enforcement program. I have met with many of you to discuss our accomplishments and the challenges that remain. I know in many respects we have a shared vision for building on the tremendous results we have achieved under the Temporary Assistance for Needy Families (TANF) program, the Child Care Development Fund and the Child Support Enforcement Program.

That shared vision took another momentous step closer to reality this week when Mr. Herger introduced the Personal Responsibility, Work, and Family Promotion Act of 2002. Mr. Chairman, I would like to take this opportunity to recognize the leadership you and Mr. Cardin have shown on moving quickly and decisively on welfare reform. I am heartened that legislation supported by members of this subcommittee shares many of the same broad goals of the Administration's proposal such as maintaining the basic structure of TANF, strengthening support for two parent families and work requirements, and directing to families increased amounts of the child support collected on their behalf.

As you are aware, President Bush has made a commitment to pursue four important goals in welfare reform reauthorization so that our programs can continue to transform the lives of those striving to become self-sufficient: strengthen work, promote strong families, give States more flexibility and show compassion to those in need. These goals formed the guideposts in shaping the Administration's proposals for TANF, child care and child support and are thoughtfully incorporated into this subcommittee's newly-introduced bill.

I would like to spend my time today sharing information with you on the important progress we have made in strengthening families and highlighting the specific areas the Administration and now this subcommittee have targeted for improvement. I will begin with TANF, the cornerstone of our welfare reform efforts.

Temporary Assistance for Needy Families

Since 1996, welfare dependence has plummeted and employment among single mothers has grown to unprecedented levels. But even with this notable progress, much remains to be done, and States still face many challenges. Last year, we held eight listening sessions throughout the country to discuss the TANF program and understand the new challenges ahead.

During these listening sessions we received a broad range of comments and recommendations, but several dominant themes emerged:

Not surprisingly, states want funding for TANF to be maintained.

There is broad support for keeping work and the work-first approach at the core of the program and recipient activity, but states want flexibility to engage recipients in activities that will complement work and help them achieve self-sufficiency.

Despite reservations many had five years ago, there is now virtually unanimous support for keeping time limits. Both program administrators and recipients told us how time limits were important for focusing client and agency efforts on pursuing self-sufficiency.

States told us of the difficulties of administering the various Federal welfare and workforce programs, which have conflicting rules and procedures that seriously inhibit the states' ability to effectively serve families. They are very interested in getting some ability to better coordinate these programs.

Finally, states told us they felt the purposes of TANF were generally on target, but that we should aspire to setting an even higher goal for the program that recognizes how TANF can truly improve the quality of life for American families. Some suggested establishing new goals such as improving child well-being.

These insights helped shaped the Administration's focus in approaching reauthorization and clearly have been considered in the shaping of Congressman Herger's legislation. Reauthorization of TANF must build on what we have learned and our success by:

• strengthening the Federal-State partnership by maintaining both the Federal financial commitment to the program and State flexibility in how the funds are used;
• asking 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 promote healthy marriages and reduce out-of-wedlock childbearing by targeting funds to develop innovative approaches to addressing the formation of strong and stable families;
• improving the management and, therefore, the quality of programs and services made available to families; and
• allowing States to integrate the various welfare and workforce assistance programs operating in their States to improve the effectiveness of these programs.

We are very grateful that these principles are well-reflected in Congressman Herger's bill. I would like to highlight just a few of the key provisions that will go a long way toward improving the effectiveness of the TANF program in helping our nation's families.

This far-reaching proposal blends perfectly with the Administration's priority to maximize self-sufficiency through work by requiring States to engage all TANF families with an adult in self-sufficiency plans and regularly review case progress. In addition to the requirement for universal engagement, the bill increases the direct work requirement. In order for a case to be counted as participating, the individual must be involved in a full 40 hours per week of simulated work activities. Cases counted as participating would be required to average at least 24 hours per week (of their total required 40 hours) in direct work, including employment, on the job training, and/or supervised work experience. We vigorously support this high standard so that programs and clients keep focused on self-sufficiency and making progress toward it.

We note that the bill contains tremendous flexibility for States in deciding how to apply these participation requirements. When employment is not possible, States have flexibility to meet the 24 hour work requirement through work activities designed to prepare clients for real jobs. States can exercise great creativity in establishing constructive activities to address the remaining 16 hours, including structured activities that involve parents with their children, such as counseling or joint volunteer activities. Given such flexibility, States should be able to craft activities that accommodate difficulties families may have in finding child care.

It is extremely encouraging to see that Congressman Herger's bill also incorporates our focus on promoting child well-being and healthy marriages. The bill targets $100 million for broad research, evaluation, demonstration and technical assistance, focused primarily on healthy marriages and family formation activities. Research shows that both adults and children are better off in two-parent families. It is no criticism of single parents to acknowledge the better outcomes for children of married-couple families. Rather it supports the underlying principles to redirect our policies to encourage healthy marriage especially when children are involved. Along those lines, the bill also establishes a $100 million competitive matching grant program for States and Tribes to develop innovative approaches to promoting healthy marriages and reducing out-of-wedlock births.

Finally, I would like to mention the establishment of a new State program integration waiver authority which will permit States to further integrate a broad range of public assistance and workforce development programs in order to improve the effectiveness of these programs. I have always been a strong advocate of State flexibility, and I believe this new waiver authority could revolutionize service delivery by allowing States to design creative new strategies for assisting families.

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. For the low-income families who receive child support, it makes up a significant portion of the family budget (26 percent).

PRWORA instituted a number of important child support enforcement measures. Tools such as increased automation, the National Directory of New Hires and 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 almost 1.6 million. Of these, nearly 700,000 paternities were established through in-hospital acknowledgment programs. In FY 2001, with a caseload of 17.4 million cases, a record of nearly $19 billion in child support was collected.

Like TANF, the approach taken by both this Administration and your subcommittee is to build on our success in the child support program under PRWORA by designing legislation that will:

• direct more of the support collected to families;
• increase child support collections through enhanced enforcement tools; and,
• establish a user fee for families that have never used public assistance in cases where the State has been successful in collecting support on their behalf.

Together, we will move the child support program toward a focus on families and away from the historic purpose of recoupment of Federal and State outlays. In fact, I would be remiss if I did not acknowledge the leadership of this subcommittee in building a strong child support enforcement program and beginning the dialog on this next phase of child support reform.

Finally, I would like to turn to child care, a key support service.

Child Care

Parents need access to affordable and safe child care in order to succeed in the workplace. As a former governor, I know from direct experience that there is a fundamental link between child care and running an effective welfare to work program. The interest in maintaining a strong child care component as part of welfare reform has been reinforced by the Congress as well.

The President's budget seeks to continue funding child care at its current historically high level within the existing flexible framework of the discretionary Child Care and Development Block Grant and the mandatory Child Care funding as well as other critical funding sources such as Head Start. The President's FY 2003 budget includes $2.1 billion for the Child Care and Development Block Grant and $2.7 billion for the mandatory Child Care funding -- a total of $4.8 billion for what is referred to as the Child Care and Development Fund or CCDF. In fact, over the last decade, Federal funding specifically appropriated for child care has tripled -- from $1.6 billion in 1992 to $4.8 billion this year.

But these funds are only part of the picture. Funding for child care also is available through the Temporary Assistance for Needy Families program, the Social Services Block Grant, or SSBG, and other sources. Looking at recently available historical data on State and Federal dollars associated with CCDF, TANF and SSBG, we estimate that about $11 billion will be invested in child care through these three block grants alone.

Funding available through CCDF and TANF transfers will provide child care assistance to an estimated 2.2 million children in FY 2003. This is a significant increase over the number served just a few years ago (in 1998 about 1.5 million children received subsidized care) and does not take into account additional children that will be served by SSBG and TANF direct spending. When these funds are considered, it is estimated that approximately one-half million additional children will be served in FY 2003.

States contribute significant resources to child care as well. In fact, State spending accounts for about a quarter of total State and Federal child care expenditures under the CCDF. States spent at least an additional $774 million in State TANF funds for child care in 2000.

Combined these funds support child care services for a significant number of our nation's children. In FY2003 funds from CCDF, TANF and SSBG will provide child care subsidies for an estimated 30 percent of potentially eligible children. When focusing on children with the greatest financial need, that is those in families below poverty, the estimated coverage rate grows to 47 percent. And, if you break the numbers down by age, among poor children three to five years of age the percentage served is 72 percent. Of course, these estimates do not take into account the complexity of the child care choices made by families. Many families opt to use informal care arrangements, such as relative care. Still others may adjust their work hours to match the school day, so that child care is not necessary.

Looking beyond State and Federal spending under the block grants, other resources also support child care in the context of early childhood strategies -- including Head Start, State-funded pre-kindergarten programs, and 21st Century Community Learning Centers.

Beyond its commitment to maintaining these funding levels for child care, the Administration also is committed to preserving the key aspects of the discretionary and entitlement child care programs: support for work and job training; healthy development and school readiness for children in care; parental choice; and administrative flexibility for States and Tribes. The major restructuring of the Federally-funded child care programs under PRWORA provides a statutory foundation that remains an efficient method for distributing child care funds to States, and an effective mechanism for making these resources available to parents.

It is clear from these significant Federal and State funding commitments that we all recognize the importance of child care. Congressman Herger's bill goes even further by raising from 30% to 50% the amount of TANF funds States may transfer into their Child Care Development Fund. This proposal to provide greater State flexibility should there be increased demand for child care spending is an innovative approach to addressing any potential future child care funding needs and one we would like to discuss further.

Conclusion

Mr. Chairman, we took a major step forward on welfare reform reauthorization this week with the introduction of your subcommittee's legislation. We already have made great strides in helping our nation's families, and as President Bush stated, "The successes of the past few years should not make us complacent. They prove what is possible when we press forward with bipartisan efforts." The Administration has publicly stated its commitment to the next phase of welfare reform and you have demonstrated yours by holding hearings like today's and devoting this committee's time and energy to quickly moving on welfare reform legislation. We stand ready to work with you in moving legislation that meets our shared goal of increased successes for America's neediest families.