*This is an archive page. The links are no longer being updated.
1994.01.12 :  Colorado Welfare Reform Proposal

Contact:  David Siegel
Wednesday, Jan. 12, 1994                     (202) 401-9215

HHS Secretary Donna E. Shalala today approved a welfare
demonstration for the state of Colorado that seeks to increase
personal responsibility and employment opportunities for
recipients of Aid to Families with Dependent Children (AFDC).

"Colorado has developed a number of innovative changes to the AFDC
program.  The state is anxious to do more in the way of promoting
self-sufficiency for welfare families, and I believe this
demonstration will do precisely that," Shalala said.

The demonstration, called the "Personal Responsibility and
Employment Program," contains a number of major revisions to the
state's AFDC program.  For instance:

Parents who are able to work or able to participate in a training
program must do so after receiving AFDC benefits for two years. 
Individuals who refuse to perform the assignments will face a loss
of AFDC benefits.

Food Stamps will be "cashed out"; meaning that the value of the
coupons will simply be added to the monthly AFDC payment.

To encourage work and the accumulation of assets, three specific
policies will be implemented.  First, the income disregard formula
will exempt the first $120 of monthly income, plus 58 percent of
the remainder, when AFDC payments are calculated for working
families.

Second, AFDC families who are employed will be allowed to possess
up to $5,000 in assets; an amount five times the current $1,000
limit.  Non-working AFDC families will be permitted to accumulate
$2,000 in assets.

Third, AFDC families will be permitted to own a car regardless of
its value or their equity in it. current law limits a family's
equity in one car to $1,500.

Finally, the demonstration provides for financial bonuses when
children stay in school and graduate from a secondary (high
school) or GED program, and permits financial penalties when
parents fail to have their children immunized.

In addition, the Colorado plan eases and simplifies transitional
coverage rules under Medicaid, so that more welfare recipients
retain health care coverage as they move to employment.

The demonstration is expected to begin later this year in five
counties.  A rigorous evaluation, utilizing random assignment to
control and experimental groups, will be included.

HHS Assistant Secretary for Children and Families Mary Jo Bane
said the demonstration "is another example of this
administration's commitment to state innovation and flexibility in
welfare policy.  We look forward to working with state officials
as this demonstration proceeds in the future."

                               ###