Fifth Annual Report to Congress (February 2003)

The High Performance Bonus (HPB) is an annual, competitively awarded grant available to States for strong performance in meeting important objectives of the Temporary Assistance for Needy Families (TANF) program. A total of $200 million was available in HPB funds to reward States for their performance for fiscal year (FY) 2000. Bonus amounts available to each State were based on a given State's relative performance during the performance year, but could not exceed five percent of the State's TANF grant. The formula for measuring State performance was developed by the Department of Health and Human Services (HHS) in consultation with the National Governors Association, the American Public Human Services Association, the National Conference of State Legislatures, and representatives of approximately 30 States and other interested parties.

Based on these consultations and the comments HHS received on draft proposals, HHS issued program guidance specifying the measures, data sources, and other provisions on which HHS would base the bonus awards for performance years 1998, 1999, and 2000.

Under this guidance, HHS based these bonus awards on the following measures:

• job entry rate;
• success in the work force (which combines job retention and earning gains measures);
• improvement from the prior fiscal year in job entry rate;
• improvement from the prior fiscal year in success in the work force.

HHS made one major change in the work measures for the awards for performance year 2000: the retention measure requires continued employment in three consecutive quarters instead of just two consecutive quarters.

The $200 million was allocated as follows: Job Entry - $80 million; Success in the Workforce - $50 million; Improvement in Job Entry Rate - $40 million; and Improvement in Success in the Workforce - $30 million. (See Table 5.1 for a detailed description of the measures.)

HHS awarded funds to the ten States with the highest scores in each measure. The focus on work measures reflected the critical importance of and strong emphasis on employment and self-sufficiency both in the law and in the States' implementation of the law.

Participation in the HPB is optional, and States may select the measures on which they wish to compete. Forty-nine States and the District of Columbia submitted data to compete for the HPB for performance year 2000, up from 48 States and the District of Columbia for the prior year and 45 States and the District of Columbia for performance year 1998.

HHS awarded the bonuses for performance year 2000 to 26 States and the District of Columbia on July 2, 2002 (see Table 5:2). Eighteen of the States received the maximum bonus amount allowed by law - five percent of their TANF block grants. Amounts that could not be awarded to States because of the five-percent cap were distributed to the other winning States.

According to reports filed by the 49 States and the District of Columbia competing for the bonus, more than 931,000 adult welfare recipients went to work in the period between Oct. 1, 1999 and Sept. 30, 2000. The job entry rate has continued to increase; the job entry rate for FY 2000 was nearly 7 percentage points (or about 20 percent) higher than the rate for FY 1998 and 3 percentage points (or about 7 percent) higher than the rate for FY 1999. Overall, 46 percent of unemployed adult welfare recipients entered the work force in FY 2000 compared to 43 percent in 1999. While the absolute number of job entries has been declining, this decline is attributable to the overall reduction in TANF cases and adults receiving assistance. Between performance years 1998 and 2000, placements and caseloads both declined 29 percent. The number of adults receiving TANF fell even more, declining an estimated 40 percent.

The calculated job retention rate (65 percent) was lower for 2000 than for the prior two performance years. However, the 2000 numbers are not comparable to the earlier figures because retention was measured over a longer follow-up period (i.e., as employment over three consecutive quarters rather than two consecutive quarters). In fact, if retention for 2000 had been measured over two quarters, as it was for 1999, the calculated job retention rate would have increased two percentage points (or about 3 percent). If retention had been measured over three quarters for both 1999 and 2000, the calculated job retention rate would have increased almost seven percentage points (or about 12 percent) between 1999 and 2000.

The national figure for earnings gain for performance year 2000 slipped two percentage points below the level for performance year 1999, but remained about one percentage point above the level for performance year 1998.

The States ranked the highest in FY 2000 in each category were Montana (job entry), Arizona (job retention and earnings), Iowa (largest improvement in job entry), and Nevada (largest improvement in job retention and earnings gain). Other jurisdictions receiving bonuses were: California, Connecticut, District of Columbia, Hawaii, Idaho, Indiana, Kentucky, Louisiana, Minnesota, Missouri, Nebraska, New Hampshire, New Mexico, North Dakota, Rhode Island, South Dakota, Texas, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming. (See Tables 5:3, through 5:7.)

Two States (Iowa and Montana) received bonuses in three categories, and nine States - Connecticut, Hawaii, Indiana, Louisiana, Nevada, North Dakota, Rhode Island, West Virginia and Wisconsin - received bonuses in two categories.

The District of Columbia and sixteen States - Arizona, California, Connecticut, Hawaii, Idaho, Indiana, Minnesota, Missouri, Montana, Nevada, North Dakota, Texas, Utah, West Virginia, Wisconsin, and Wyoming - were repeat winners from last year; five States - Iowa, Louisiana, Rhode Island, South Dakota, and Washington - won awards for performance years 1998 and 2000; and five States - Kentucky, Nebraska, New Hampshire, New Mexico, and Vermont - were new winners.