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1994.12.29 :  GOP Plan for Poor Children

Contact:  HHS Press Office    (202) 690-6343
December 29, 1994

      GOP PLAN LEAVES POOR CHILDREN AND STATES WITHOUT SUPPORT;
  SHALALA CONTRASTS MOVIE FANTASY WITH REAL IMPACTS ON CHILDREN


     The welfare reform plan proposed by Republican members of
the House of Representatives would deny federal welfare benefits
to millions of children without providing states nearly enough
money to provide for the children in residential or foster care
settings, HHS Secretary Donna E. Shalala charged today.

     In denying welfare benefits, the Republican proposal
suggests orphanages or other residential care for children whose
families could no longer support them.  But according to an HHS
analysis, the proposal would provide only a small fraction of the
costs of carrying out such a plan.

     The HHS analysis finds that the proposal would result in
some 5 million children being dropped from the rolls of the Aid
to Families with Dependent Children program.  But funds to be
provided to states in place of AFDC would only provide enough
money for fewer than 9,000 placements in residential care, or
about 61,000 placements in foster care.

     "The Republican plan is a cruel hoax whose human
consequences would fall on children, and whose financial
consequences would fall on state taxpayers and private
charities," Secretary Shalala said.

     "The solution to the welfare crisis is not to send children
to orphanages, it's to send their parents to work," Shalala said. 
She said the Republican plan would prohibit federal assistance to
millions of children, whether or not their mothers are willing to
work.  

     "And while the plan casually suggests orphanages as one
solution, the level of federal funding provided would only be
sufficient to provide residential care to less than one percent
of the affected children," she said.  "For the children
themselves, and for state treasuries as well, the cost of this
plan in human and financial terms would be unprecedented."

     States would be left with two stark choices, Shalala said: 
use state revenues to provide some sort of residential or other
care, or hope that private charities or other family members
could take up the slack.

     The HHS analysis found that, if the proposal were fully in
place and implemented today, some 5 million children would be
denied benefits.  The benefits would be denied as a result of the
proposal's requirement that states exclude coverage for children
born to mothers under 18, as well as requirements for a five-year
time limit on benefits, for paternity establishment, and for
limits on benefits for children born to a family already
receiving welfare.

     At the same time, federal funds returned to the states under
the Republican plan would total $293 million.  But this amount
would be sufficient to pay for only 8,029 spaces in residential
care, or 61,055 provisions for foster care.  

     The amount of funding returned to states is determined by a
formula in the proposal, which involves the number of children
denied benefits because of the age of the mother, as well as
other age- and year-related factors.  The HHS analysis shows that
some 650,000 children receiving AFDC in 1993 were born to
unmarried mothers under 18 years old.  

     In addition, the proposal would permit states to deny
benefits to children born to mothers aged 18-20, and would permit
a 2-year time limit on benefits.  If all states adopted these
options, the total number of children to lose benefits would be
about 6.9 million.  The amount of funding which states would
receive in this circumstance would total about $1.1 billion,
enough to fund only 29,616 spaces in residential care, or 225,200
provisions for foster care.    

     Residential care costs an average $100 per day, or $36,500
per year; and foster care costs are about $400 per month, or
$4,800 per year, according to the Child Welfare League of
America.

     Secretary Shalala said the "fantasy of the movie Boys Town
must be contrasted with the reality of orphanages and state
budgets.

     "The real issue here is not whether orphanages or group
homes can be loving and compassionate facilities.  The issue is
what actually happens to millions of real-life children who would
be cut from welfare rolls, with no Father Flanagan in sight and
no money to pay for the real costs of child rearing."

     As an example, Shalala cited the state of Nebraska, where
the real Boys Town is located.  In that state, some 19,000
children would be denied AFDC payments under the Republican plan. 
Yet the federal assistance to provide other forms of care for
these children would be enough to provide only 16 spaces in
residential settings, or 122 placements in foster care.
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