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"The welfare reform law made work the centerpiece of a new welfare program, and I'm pleased to report that states are well underway to helping parents turn welfare checks into pay checks," Secretary Shalala said. "However, our work is not finished yet. We need to ensure that supports -- particularly child care -- are in place for families to achieve self-sufficiency."

In 1998, all states and the District of Columbia met the overall work participation rate while 28 of the 41 states subject to the two-parent rate met it. Not all states were subject to the participation rates for 1997 and those that were only had to report for the last quarter of the fiscal year. Thus, 1998 is the first full year that all states were subject to the work participation rates. Nationally, 35 percent of all welfare recipients were meeting the work requirements.

The percentage of employed recipients reached an all-time high at 23 percent, compared to less than 7 percent in 1992 and 13 percent in 1997. Similarly, the proportion of recipients who were working, including employment, work experience and community service, reached 27 percent, a nearly fourfold increase over the 7 percent recorded in 1992.

Under the Temporary Assistance for Needy Families (TANF) program established by the new welfare law, states are required to meet minimum participation rates of parents on welfare either working or engaged in work activities. The rates for all families started at 25 percent in 1997 and increase 5 percent each year to 50 percent in 2002. For two-parent families, the rates started at 75 percent and increase in 1999 to 90 percent. In 1998, states were required to meet 30 percent for all families and 75 percent for two-parent families with single parents working a minimum of 20 hours per week and two parents at 35 hours per week. States can receive a credit for reductions in their welfare caseloads for parents moving off welfare compared to 1995. The credit adjusts the target in both rates for each state. Also, several states had adjustments to their rates because they continued waivers approved under the Clinton administration.

"Across the country, states are building new and innovative partnerships with businesses and community programs to help parents get jobs or the skills they need for employment," said Olivia A. Golden, HHS assistant secretary for children and families. "Along with this promising report of higher employment rates, we've learned from new working parents and employers that for families to succeed in the work place and at home, they need quality and reliable child care."

Under the welfare law, states that fail to meet the minimum participation rates are subject to a penalty of 5 percent of their annual federal block grant or 7 percent if they received a penalty in 1997. For failure to meet the two-parent participation rate, the penalty amount will be based on the percentage of two-parent families in the state's caseload. However, states can submit corrective compliance plans or appeal the penalty for a reasonable cause exception.

Not all states and territories have two-parent programs funded through TANF. The 14 states that failed to meet the two-parent participation rates are Alaska, Arkansas, Delaware, District of Columbia, Minnesota, Nebraska, New Mexico, North Carolina, Pennsylvania, Rhode Island, Texas, Virginia, Washington and West Virginia. In 1998, the territories were subject to penalties for the first time. Guam, Puerto Rico and the Virgin Islands did not meet the participation rate requirements. They can also submit corrective plans or appeal the penalty.

The participation rate tables are available on the World Wide Web at: www.acf.dhhs.gov/news/98table.htm.

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