Surveying US and Canadian
Welfare Reform

3 American states—experimentation and innovation

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Many of the reforms incorporated under the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) were the result of demonstration waivers obtained by states under the predecessor to the PRWORA, namely the Aid to Families with Dependent Children (AFDC) program. The AFDC program enabled states to experiment with welfare reforms.

Prior to PRWORA, 45 states and the District of Columbia had received welfare demonstration waivers (Matthews and Becker 1997). These waivers included time limits, stricter work requirements, and teen-parent provisions aimed at strengthening school attendance and ensuring that teens lived under adult supervision as conditions of welfare receipt. Many of the successful state-based reforms were subsequently included in PRWORA, which forced all states to initiate and submit plans for welfare reform.

There have been dramatic decreases in welfare case loads since the adoption of the federal reform legislation (table 3) and, understandably, this has attracted a great deal of attention. Under AFDC and now the Temporary Assistance for Needy Families (TANF) program, the number of recipients has declined from 14,225,591 in 1994, representing 5.5% of the population, to 5,780,543 in June 2000, representing just 2.1% of the population (USHHS 2000).

Significant variations in case-load reductions exist among states. From January 1993, when states began experimenting with welfare reform, to May 2000, figures from the United States Department of Health and Human Services (HHS) show that while the nationwide reduction in welfare case loads was 53%, the reduction was only 22% in Hawaii, 26% in the District of Columbia, and 31% in California (USHHS 2000). Other states like Wisconsin had reduction rates well above the national average. It is also important to note that several states have experienced stagnation or actual increases in welfare case loads (Oliphant 2000).

Determinants of welfare case load reductions

Surrounding the issue of the reduction of welfare case loads is speculation concerning the determinants of this reduction. Some have suggested that a major reason for much of the reduction is the strong American economy. Indeed, the president's Council of Economic Advisers (CEA) estimated that between 26% and 36% of the reduction in case loads between 1993 and 1996 was due to the strong economy (Oliphant 2000). However, a mere 8% to 10% of the reduction in case loads between 1996 and 1998 were due to the economy. The CEA's analysis concluded that early reductions in case loads in the 1990s were largely due to positive economic developments while the more recent declines were rooted in institutional reform of welfare (Oliphant 2000).

Rector and Youssef provide corroborating evidence to the CEA' findings of the importance of institutional welfare reform to reductions in the welfare case load in the latter part of the 1990s. Using historical data, Rector and Youssef demonstrate that during eight previous periods of economic growth, substantial and sustained AFDC case-load reduction was largely nonexistent (Rector and Youssef 2000). In other words, there were previous periods of economic expansion that did not include large reductions in welfare case loads. They go on to explain that during past periods of economic expansion in the 1960s and the 1970s, case loads remained either relatively stagnant or in some cases actually increased (Rector and Youssef 2000). The additional historical evidence garnered from Rector and Youssef again support the hypothesis that institutional reform of welfare has in fact influenced reductions in welfare case loads.

The logical question then is why there has been such a wide variation among American states in the reduction of welfare case loads? The answer is likely to be found, at least partially, in key aspects of welfare reform that are given more emphasis in some state versus others. In molding their individual state welfare reforms from the guidelines provided by PRWORA, some states have chosen to enforce more rigorously than other states items like sanctions and work requirements. The characteristics of successful welfare reform discussed below have been implemented by those states with a serious commitment to achieving the goals embodied in PRWORA.

It is important to note that the following section is based on the type of reforms implemented rather than the state of implementation. Thus, states with wide-sweeping reform, such as Wisconsin are repeatedly discussed in each of the reform areas.

(1) Internal reform initiatives

(a) Ending the entitlement to welfare

Wisconsin

In an attempt to overhaul its welfare system, Wisconsin began with a very simple premise: each person is capable of doing something. As a result, Wisconsin has been one of the most successful states in reforming welfare in the country, reducing its case load by 54.1% between January 1987 and January 1997 while the rest of the country experienced a 9.6% case-load increase (Matthews and Becker 1997). Many of the reforms initiated by Wisconsin were so ground breaking that they were included in PRWORA as models for other states.

In January 1995, Work Not Welfare (WNW) was introduced as a pilot program in two counties. This program, recently converted into a program called Wisconsin Works or W-2, was the first in the nation to require work and place a time limit (24 months) on individuals receiving assistance.

Wyoming

Like Wisconsin, Wyoming has been aggressive in working to reduce its welfare case load. As a result, from August 1996 to June 2000, Wyoming actually experienced the largest reduction in case load of all American states. Wyoming reduced its welfare case loads by 90%, 15 percentage points more than Wisconsin (table 3). As of June 2000, Wyoming had just 0.21% of its population in receipt of TANF benefits (table 3).

On January 1, 1997, Wyoming introduced the Personal Opportunities with Employment Responsibilities (POWER) program to replace AFDC. Its goals are similar to Wisconsin's program in that it promotes and supports personal and family responsibility and works towards making recipients self-sufficient. POWER terminates assistance after 60 months and counts any and all prorated months. A prorated month is any month where benefits have been denied because of noncompliance with Pay-After-Performance or a month in which a recipient is sanctioned.

(b) Diverting potential recipients

Wisconsin

A major part of Wisconsin's W-2 (Wisconsin Works) program is focused on diversion. Wisconsin has implemented an up-front "self-sufficiency planning interview'" that is designed to deter individuals from applying for welfare. The purpose of this process is to prevent those applicants who are capable of getting by without assistance from applying for welfare by helping them to reconsider their situation in light of all other available resources.

To be eligible for lump-sum payments, for instance, Wisconsin requires that TANF applicants have an employment-related need for the cash payment that when solved will enable the applicant to either maintain or obtain employment. Unlike some other states, case-workers in Wisconsin are given full discretion to determine which applicants are appropriate for these payments. Like Wisconsin, all other states operating the lump-sum payment program impose some form of penalty for diverted families receiving the payment if they apply for TANF benefits in the future. Wisconsin is one of the few states that is aggressive about ensuring the full repayment of any "Job Access Loan" they provide.

Wisconsin's effort to divert potential recipients towards alternative resources is one of the most aggressive in the United States. Besides the initial interview, after an applicant has applied for TANF they must meet with a "resource specialist," who assists the applicant in identifying alternative resources and, if necessary, will make referrals to other public or private agencies that provide services.

Florida

The State of Florida has also aggressively pursued diversion strategies. In December of 1999, Florida implemented its Early Exit Diversion program that allows TANF recipients to accept a one-time, lump-sum payment of $1,000. Upon acceptance of the cash payment, TANF benefits are terminated and the state's 48-month lifetime limit stops. Recipients who, for some reason, need to return to welfare, must repay a pro-rated portion of the lump sum within eight months.

Earlier in 1999, Florida expanded its Healthy Families Florida program. Families at 200% of the federal poverty level who are deemed to be at risk of abuse or neglect may apply and receive one-time non-recurring payments and services that do not count towards the lifetime limit for receipt of welfare in Florida.

Although Florida's lump-sum payment program is one of the most relaxed programs in terms of determining the needs of families and monitoring the use of these payments, it has one of the most stringent repayment plans if an applicant reapplies for assistance after receiving the lump-sum payment. Florida requires that the entire loan be repaid before receiving any future assistance from the state.

When it comes to alternative resources, the state of Florida's emphasis is on reserving the time-limited TANF benefits for difficult situations. Caseworkers are expected to be knowledgeable about the resources available in the community.

(c) Sanctions and immediate work requirements

Wisconsin

Wisconsin's Governor Tommy Thompson set out to implement the welfare reforms promised during his 1987 election campaign. An early reform program was "Learnfare." The purpose of the program was to send a message to welfare bureaucrats and recipients that things had changed. "Learnfare" imposed sanctions of reduced welfare payments for parents or guardians who failed to ensure their school-age children were regularly in class. Another early program was Children First, which made child-support payments mandatory and threatened imprisonment for noncompliance.

Wisconsin's program, Work Not Welfare, now Wisconsin Works (W-2), requires immediate work from welfare beneficiaries. Upon the acceptance of an application for assistance, all applicants are required to sign a contract pledging to commence work or training for eventual employment within 30 days. After 12 months, in order to continue receiving benefits, recipients had to be working or assigned a community-service workfare position.

In April 1996, Wisconsin brought forth two additional reforms. Work First (renamed Self-Sufficiency First) and Pay for Performance (PFP) went into effect across the state. These two programs were forerunners to Wisconsin's W-2 program, with the goal of increasing the employability of recipients and instilling the work ethic within them. Recipients had to spend 20 hours a week at a work assignment, 10 hours a week looking for employment, and five hours a week at job-search seminars. For every hour that was missed, $5.17 was deducted from the recipient's welfare benefits and, if the recipient failed to show up for any mandated activities, sanctions were taken against their food-stamp grant. Claimants failing to show up for more than 25% of their required hours were denied any cash benefits.

Wyoming

Under Personal Opportunities With Employment Responsibilities (POWER), Wyoming's work program (referred to as Pay-After-Performance), the receipt of welfare benefits contingent upon the recipient's working towards a self-sufficiency goal throughout the performance period. Upon filing an application for assistance, a recipient must begin a job search immediately. After three weeks of unsuccessful job searching, the recipient will be assessed by a case manager with a local Employment Resources Division to determine if, for example, basic education or work experience through community service is needed. Moreover, failure to cooperate for even one day within a performance period will entail an entire performance payment being withheld from the recipient.

(d) Strong employment focus

Wisconsin

In January 1997, Wisconsin implemented its Wisconsin Works (W-2) program, which placed all welfare recipients, both old and new, into this program by March 1998. As a result of TANF approval, W-2 replaced the former AFDC program by offering job placement assistance to parents with dependent children as well as similar assistance for non-custodial parents. "For those who can work, only work should pay," is one of the main principles of the program (Street 1997). Recipients will no longer receive any cash benefits; instead they will receive a cheque from a private or community-service employer. Those choosing not to work will simply not get paid. Other underlying principles claim that support for child-rearing is expected from both parents, individuals are to be held accountable for their actions, and that all have the potential through their own abilities, to contribute to their families and community.

Participants in the W-2 program report to job centers where employment planners direct them to full-time jobs. Participants in unsubsidized employment are eligible for food stamps, earned-income tax credits, and, in many instances, medical and child-care support and access to loans. An example of such a loan is the Job Access Loan program that lends money to purchase a car to recipients who need transportation. The loan is set at a maximum of $1,600, is interest free, and is repayable either in cash or performance of community service. Supportive services such as shared-ride taxi services, not including medical and childcare, are time limited.

Those unable to find private-sector work are expected to participate in subsidized trial jobs. The employer subsidy of $300 (for full-time work at pay equal to, or higher than, the minimum wage) is meant to cover costs for an employer having to invest extra time in training a worker with fewer skills. The employer is expected to make "good faith efforts" to keep the subsidized workers as permanent staff on a non-subsidized basis.

For those participants who lack the necessary skills or demeanor to become part of the work world, community service jobs are available. These participants work 30 hours a week for a flat grant of $673 for a family of any size and the grant is reduced by the minimum hourly wage for failure to meet work requirements.

Finally, for those unable to work for reasons of illness or if they are needed in the home to care for others, Wisconsin provides transitional placements. These placements provide up to 28 hours a week in work and other activities (such as counseling), including 12 hours a week of educational training while paying a flat monthly benefit of $628. Those individuals in the latter two groups are not eligible for the earned-income tax credit, overtime, or employer benefits.

Other states--success and failure

Much of the above discussion focussed on Wisconsin and Wyoming because they have been highly successful in reducing welfare case loads and they provide good examples of the application of successful reform policies.

Many other American states have also seen significant case-load reductions as a result of their efforts to reform welfare. From 1995 to 1999, Idaho experienced impressive case-load reductions. Its case load declined from a peak of 24,050 in January 1995 to 2,222 in September 1999 (USHHS 2000). The program mainly responsible for this dramatic decline was Temporary Assistance for Families in Idaho (TAFI), which commenced on July 1, 1997. One of the biggest differences between TAFI and the federal program is that Idaho places a two-year limit on aid as opposed to a five-year limit under TANF.

Another state successful in cutting case loads is Mississippi, which saw its welfare rolls decline 81% between January 1993 and September 1999 (USHHS 2000). Other highly successful states include Florida, Colorado, South Carolina, West Virginia, and Oklahoma, which all had case-load reductions equal to, or better than, 73% between January 1993 and September 1999 (USHHS 2000).

Over the same time period, however, states like Hawaii, Rhode Island, and the District of Columbia have been unable to achieve comparable results in reducing welfare case loads. In fact, these states score well below average, nationwide case-load reductions. From January 1993 to September 1999, Hawaii and Rhode Island reduced their welfare case load by only 22%, whereas the District of Columbia was only slightly more successful with a reduction of 26% (USHHS 2000). These states have either not fully enacted, or not demanded strict adherence to, the successful reforms described above which include: ending the entitlement to welfare, diverting potential recipients, implementing tough sanctions, requiring immediate work, and focusing on employment. That these states with some of the most liberal reform policies have not significantly reduced welfare case loads lends further support to the importance of these reforms in reducing case loads.

(2) Privatization reforms

The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 opened the door to privatization as state governments looked for innovative ways to both reduce costs and improve services to their citizens. Prior to this reform, only state employees could make benefit determinations under Aid to Families with Dependent Children (AFDC) and recently the federal government confirmed that only public employees could determine eligibility for Medicaid and food stamps. Nevertheless, PRWORA removes restrictions that in the past prevented states from contracting out welfare intake and eligibility determination duties. States now possess the flexibility to administer Temporary Assistance for Needy Families (TANF) and other related assistance programs through vouchers and awarding contracts to private for-profit and non-profit organizations.

Initially, the areas of welfare privatization focused around child-support collections and job placements. Organizations associated with these privatization efforts were non-profit organizations like the United Way, and three small for-profit companies--America Works, Curtis & Associates, and Maximus Inc. These smaller firms have been joined by larger firms such as Lockheed Martin, Electronic Data Systems (EDS), and Anderson Consulting in bidding for contracts to distribute welfare benefits. Many states are looking to these firms to apply their expertise in managing and their freedom from the rigidity of civil service contracts to innovate and improve results at a lower cost.

Wisconsin

Wisconsin has been a leader in efforts to reform welfare through privatization. Wisconsin was the first state to privatize entire areas of its welfare delivery system. Under its statewide Wisconsin Works (W-2) program, Wisconsin contracted with private firms to complete eligibility determination, case management, and delivery of other welfare-related services. As a result, roughly 70% of the W-2 case load is under the supervision of private firms, both for-profit and non-profit (Dodenhoff 1998).

In implementing its privatization reforms, Wisconsin opened up the contract process to competitive bidding. In doing so, Wisconsin ensured that publicly run centers that could meet certain specified performance standards in 1996 and wished to continue providing welfare services had the opportunity to provide W-2 services under contract without having to compete against other private, for-profit and non-profit agencies. This came to be known as the "right of first selection." Consequently, 63 counties won the right to administer W-2 while only nine private agencies received contracts. Although private firms were only awarded nine contracts, one of these contracts was for the City of Milwaukee. As a result, private firms served the majority of welfare cases in the state since Milwaukee contains a disproportionate number of the state's welfare cases.

Another innovative aspect of W-2's administrative structure is performance contracting. Contractors are paid on the principle of "capitation," which means that each W-2 agency administering welfare is paid a flat fee for administering the program in its geographic region. All costs of running the program, including cash payments to the program participants, are drawn from that flat fee. Hence, contractors can only make a profit if they spend less than they are awarded through the contracting process. According to Jason Turner, who ran Wisconsin's welfare reform program from 1993 to 1997, "Once the organization's compensation is tied to its performance, messages about desired outcomes and the actions necessary to achieve them are reinforced constantly, by every level of management, all the way down to the line worker" (Dodenhoff 1998). However, contractors also face penalties in the form of fines up to $5,000 for "failure to serve" welfare clients.

As a result of W-2 and its privatization and competition provisions, Wisconsin taxpayers saved at least $10.25 million during the first two years of the program (Dodenhoff 1998). Dodenhoff also points out that privatization protects taxpayers in other ways because, unlike public companies, for-profit firms pay taxes on any profit and are prevented from turning to the public purse in the event of cost overruns (Dodenhoff 1998).

Texas

The State of Texas was also at the forefront of the debate concerning the overhaul of welfare through privatization. In 1995, the state brought forward a now-defunct proposal to privatize and integrate eligibility determination, service referrals, enrollments, and client data for TANF welfare assistance, Medicaid, Food Stamps, and other programs through the Texas Integrated Enrollment Services (TIES) system. It was hoped that costs of managing numerous social programs for hundreds of thousands of recipients could be cut through competition.

Also, reformers in Texas believed that "one-stop" access for benefits and assistance would improve service quality for recipients while reducing administrative costs. "One-stop" access makes it simpler for both the administrators and welfare recipients because recipients receive various benefits under one roof. TIES effectively amounted to a 5-year contract to run Texas's $550-million-per-year welfare system. The bidders for the proposal at the time included Lockheed Martin Corporation, International Business Machines (IBM), EDS Corporation, and Andersen Consulting.

However, a review by the federal departments of Health and Human Services, Agriculture, and Labor determined in May 1997 that Texas's Request for Offers (RFO) under its TIES program violated PRWORA. The Clinton administration determined that Texas was eligible to proceed with certain privatization reforms contained within TIES but the task of determining eligibility for Medicaid and Food Stamps had to remain with state employees. The rationale revolved around regulations in PRWORA that specifically prevented non-public employees from taking actions involving value judgements or discretion.

For now, Texas has chosen to abandon the TIES RFO and begin again. The new approach is much more incremental, consisting of several distinct stages that include integration, re-engineering, automation, and perhaps in the future, privatization. The state has initiated this process by contracting with EDS to complete the first two stages of welfare reform outlined above. The last stage, which involves the privatization of the current public workforce, is currently not under consideration but Texas has not ruled out the possibility should Congress overturn the Clinton administration's ruling.

New York City

New York State is unique in that it devolves considerable financial and administrative responsibility for welfare programs to the counties and to the City of New York. The jurisdictions are given substantial administrative flexibility in running welfare programs and also have an important voice in state legislation. For example, a proposal to convert Home Relief payments to a block grant to counties was defeated because of county opposition in 1996 (Holahan et al. 1997).

America Works, a for-profit company founded in 1984, contracts with the State of New York to place New York City welfare recipients in jobs. The goal of America Works is to assist the long-term unemployed to make the transition out of welfare dependency and into stable employment. America Works operates on the basis of a pay-for-performance standard that removes any responsibilities on the part of the state for assisting welfare recipients to find private-sector employment. In terms of private-sector employers, America Works provides professional placement and support services to those companies that offer unemployed people entry-level positions.

In order to achieve its goal, America Works has developed a program entitled "supported work," which seeks to remove barriers that prevent otherwise employable individuals from finding and keeping jobs. This approach, aimed at the individuals who are hardest to employ, consists of four principal stages: orientation, training, trial work period, and recruitment. To begin, participants are prepared for the discipline necessary for working life such as the necessity of arriving on time with a positive attitude during the week-long orientation. The training portion consists of roughly five weeks covering a range of work-related skills, such as clerical procedures and proper behaviour during interviews, and lessons on appropriate dress. Next, the trial work period places the participant in the work environment, initially employed through America Works and supported by an America Works representative who visits the employment site regularly to assist the participant and employer. Lastly, at the end of the four-month trial period, the employer recruits the participant directly on a full-time basis and the America Works representative remains involved, periodically intervening if any problems arise.

America Works receives no payment until the participant is placed in a job. At this point, it receives an initial payment of 18% of the total value of the $5,490 received for a fully assisted recipient (Yates 1997). America Works then receives 70% if the employer hires the recipient as a permanent employee after four months, and then receives the remaining 12% if the individual remains employed for the next three months (Yates 1997). If the participant drops out at any point during the seven-month duration of the program, America Works refunds to the state the intermediate payment.

Data compiled by New York State revealed that of those recipients that America Works had placed in jobs three years before, 88% were still off the welfare rolls (New York State Department of Labor 1997). This result was confirmed by the Social Market Foundation, which noted in its study of America Works that it had been "successful in helping the long-term unemployed to find jobs and at saving public money" (Harding 1998). Another study reported by the National Center for Policy Analysis, shows that America Works is capable of training workers for substantially less than the estimated $23,923 price tag for a comparable New York City public program (NCPA 2000b).

Conclusion

The early research into the entry of private firms into welfare systems across the United States has been promising. The Council of State Governments and the Reason Foundation independently surveyed state social-services agencies and concluded that after privatization of social services cost reductions were achieved (Gooden 1998). Besides the obvious benefits to state budgets, the reforms initiated by the states described above have helped to make privatization more palatable, have reshaped welfare administrations, and have increased employment across the United States.

Hence, both as a result of waivers obtained prior to the federal welfare law and opportunities now available as a result of PRWORA, states across the United States have increasingly looked to privatization as a tool to reduce costs while improving the welfare system and the lives of countless Americans.

(3) Faith-based reforms

In his influential book, The Tragedy of American Compassion, Marvin Olasky outlined the history of faith-based welfare provision in the United States, among other poignant findings in his book. Olasky (1992) points out that many of the seven marks of compassion employed by faith-based organizations (FBOs) a century ago are gaining influence once again. These marks of compassion include affiliation or seeking assistance first from family, neighbours and religious organizations; bonding or a willingness on the part of a charitable donor to become personally involved with a welfare recipient; and taking into consideration both the spiritual and physical needs of welfare recipients. These three elements have been incorporated into Section 104 of PRWORA, otherwise known as the Charitable Choice clause.

The Charitable Choice clause removed the barriers that prevented states from entering into partnerships with religious organizations in an effort to provide welfare-related services in the most effective way possible to TANF recipients. Charitable Choice allows states, for the first time, to include faith-based organizations in the competition for welfare provision. That is, for the first time, organizations of faith are able to participate in the delivery of welfare and welfare-related services.

Fears have been expressed by a number of individuals and organizations as a result of forging relationships between FBOs and government. In an attempt to address these concerns, the Charitable Choice provision prevents the federal government from infringing upon the religious nature of any organization administering assistance. Moreover, under the law these religious organizations retain their independence from all levels of government. That is, faith-based organizations are not expected to alter their programs or dull the religious foundation upon which the programs are based to appease secular concerns.

Concerns of beneficiaries are addressed by precluding FBOs from refusing to serve people who do not embrace their religious beliefs. Individuals cannot, therefore, be discriminated against for refusing to participate in a religious ceremony or for not having belief in the underlying religion. This ensures accessibility by welfare recipients to any and all programs provided by faith-based organizations. States must also provide an accessible alternative for a recipient who is uncomfortable being served by a religious organization. In other words, participants cannot be refused service based on differing religious beliefs while at the same time the providers, namely the faith-based organizations, are not required to alter the nature or tone of their service delivery.

Finally, the Charitable Choice provision includes protections for states. Under this provision, FBOs are prevented from using government funds for sectarian worship and protections also exist to ensure that states are free from having to spend any state funds on faith-based welfare reforms.

Section 104 outlines two specific ways in which the provision of assistance to beneficiaries by faith-based organizations may be accomplished. Under the purchase-of-service contract model, the state remits payment to faith-based organizations for delivery of services. Such contracts involve government provision of assistance to welfare recipients through contracted providers.

Another model involves government-issued certificates, vouchers, or other forms of disbursement, which a welfare recipient redeems for service at whichever eligible provider he or she may prefer. In both instances, the Charitable Choice provision allows both secular and faith-based service providers to offer a range of services including employment-related, food, medical and health, and housing services.

Currently, arrangements between government and faith-based organizations are being carried out in 20 states at all levels of administration that serve welfare recipients. These programs vary in size and scope and most have come into existence as a result of PRWORA. Dr. Amy L. Sherman estimates that approximately 2,000 to 2,500 welfare recipients at any given time are being served by faith-based organizations (1999). At the same time, she also points out that a vast majority of the services provided by the faith community in serving the needs of the poor are still done outside any formal cooperation with government. According to a 1997 study by the Aspen Institute, FBOs spend approximately $15 to $20 billion dollars each year on social service outreach not including religious hospitals or schools (Sherman 1999a). This study also revealed that religious congregations spent about 20% of private funds on direct social assistance for tens of millions poor families annually (Sherman 1999b).

Issues surrounding the constitutionality of the Charitable Choice provision have arisen. The debate surrounds the allegation that the provision violates the Establishment Clause of the American Constitution that separates church and state. Section 104 states that "No funds provided directly to institutions or organizations to provide services and administer programs . . . shall be expended for sectarian worship, instruction, or proselytization" (Etindi 1999). Many questions have subsequently arisen as to whether, for example, religiously oriented activities can occur as long as they are not being funded by federal dollars or if participation is strictly voluntary, or whether the mention of God or any other biblical figure during a counseling session constitutes sectarian instruction?

A vocal opponent of the Charitable Choice provision, the American Civil Liberties Union (ACLU), cite the Supreme court case of Bowen v. Kedrick. In this case, the judiciary stated "[o]nly in the context of aid to pervasively sectarian institutions have we invalidated an aid program on the grounds that there was a substantial risk that aid to these religious institutions would knowingly or unknowingly, result in indoctrination" (quoted in American Civil Liberties Union 1996). Nevertheless, proponents of the provision claim that the Establishment Clause of the First Amendment is not violated if government funds are expended for general public purposes that are not inherently religious and recipients maintain the freedom to choose a secular provider over a faith-based provider.

However, there is another important debate surrounding faith-based welfare reform. A number of studies and interest groups have highlighted the inherent dangers for religious organizations that become intimately involved with government through the delivery of social assistance. Joe Loconte, author of Seducing the Samaritan: How Government Contracts Are Reshaping Social Services, notes that often government funding results in "organizational mission creep" that confuses the focus of an organization and its mission as it chases public dollars (Loconte 1997).

Associated with this idea is that government funding often encourages an organization to shift its focus away from delivering quality results to simply delivering services. Loconte, among others, argue that government contracts tend to ignore actual results of programs and seek to quantify the services delivered. Consequently, organizations receiving funding will ultimately shift their emphasis towards providing easily quantifiable results to ensure future government funding, regardless of the actual results achieved.

Another criticism that is often advanced is that government funding produces a large amount of paperwork that reduces the capacity of a ministry to perform its obligations to its clientele. In addition, government often dictates that groups receiving funding only hire staff members with specific credentials or degrees, which can often undermine the informal, relationship-centered approach of FBOs, particularly with respect to volunteers. Lastly, staff and volunteers of FBOs are often very concerned about the threat of secularization because the toning down of the religious elements of a ministry may reduce the significance of the very element that makes FBOs so successful in assisting welfare recipients with various social problems.

Nevertheless, despite many of the concerns surrounding issues of constitutionality and the potential risks involved in receiving government funding, many states are forging ahead with faith-based welfare reform. This is a result of the fact that states must comply with the Charitable Choice requirement not to discriminate against faith-based providers if they choose to use federal welfare funds to contract with, or to provide vouchers redeemable by, any non-governmental social-service provider. In the end, many states have come to the conclusion that the goal of ending welfare dependency will require more than just the government acting alone.

Examples of partnerships
with faith-based agencies

Mississippi

The State of Mississippi was among the first states to establish a public program that utilized religious congregations to assist with welfare recipients' transition from assistance to work. In 1994, Governor Kirk Fordice unveiled his statewide program, "Faith and Families of Mississippi." The motivation behind the program was a belief that "religious organizations will be more effective providers of social services than government agencies because of both the grass-roots character of congregations and the unambiguous moral values they embrace" (Bartkowski and Regis 1999: 7). As a result, the mission of Faith and Families centered around the states' 5,000 church congregations adopting needy families on welfare assistance.

When a congregation volunteers to assist a family under this program it selects a family from a list of eligible families from the local community. It then assists the family with childcare, transportation, job and life skills, as well as offering counseling-related services. The "Faith and Families" program had 338 churches developing direct relationships with 504 families in March of 1999 (Welfare Peer Technical Assistance Network 1999). This initiative has been influential in shaping other state faith-based welfare reforms.

Texas

The State of Texas, under the leadership of then-Governor George W. Bush, was a leading proponent of the Charitable Choice provision of PRWORA. Governor Bush appointed a 16-member task force to look at ways of expanding the relationship between FBOs and government, rewrote state procurement rules, and redesigned the procurement process and spending programs to foster a more open relationship with FBOs. According to Governor Bush, "Government should welcome the help of faith-based institutions. Church and state should work together with respect for our differences and reverence for our shared goals . . . The state should not be so process-oriented that it stifles good programs that produce results" (Castelli 1997: 11).

John Sharp, the Texas comptroller of public accounts, established the Family Pathfinders program after implementing state welfare-reform legislation. The program is modeled after Mississippi's Faith and Families program and is operated statewide. A diverse group of community volunteers, including business people, civic activists, and religious ministers, in teams of 3 to 8, join with welfare families to assist them with the transition from assistance to employment.

Some of the services offered through Pathfinders include transportation, on-the-job training, housing assistance, childcare, life-skills training, and continuous encouragement. Volunteer teams do not give direct cash contributions to families but rather may decide to assist with the purchase of items such as school supplies. Team members complete monthly mentoring reports that are reviewed by Pathfinders staff, who are on call to assist with concerns that may arise. Moreover, regular meetings in the local community are held in order for different teams to get together to share resources and exchange success stories. Team leaders often keep in regular contact with welfare recipients to offer encouragement and advice. The June 1999 figures for the Family Pathfinders program reveal that of 527 program participants, 399 or 75.7% of total participants were off TANF, and 287 or 54.4% of total participants were employed and off TANF (Williams and Garcia 1999).

Faith-based contracting

Michigan

Following the Texas lead, Michigan implemented a six-county pilot program called Project Zero on April 1, 1996. Project Zero was quite unique among faith-based programs operating in the nation. The state's Family Independence Agency contracted with the Campfire Boys and Girls in one county to develop childcare for awkward hours of employment. Further, when the state closed a number of mental-health institutions, Project Zero administrators seized the opportunity to use its 9- and 15-passenger vehicles for transporting welfare recipients to their jobs.

However, what truly makes Project Zero stand out from similar faith-based programs is that it contracted with Good Samaritan Ministries, a founding organization of a national network called Love, Inc. (stands for "Love In the Name of Christ"). Upon receiving a referral from a county welfare office, Good Samaritan Ministries assesses the needs of the family and connects them with a local church. Government officials in Ottawa County, Michigan (the first county in the nation to reduce its welfare case load to zero) have credited much of the success of the program to the $99,000 contract they established with Good Samaritan to recruit, train, and monitor churches that adopt families receiving welfare. Good Samaritan was able to mobilize over 50 churches in only a couple of months (Hein 1999).

Ohio

Cuyahoga County, Ohio has also experimented with "adopt-a-family" programs similar to those offered by Mississippi and Texas. Cuyahoga county decided to award contracts to the Catholic Charities Association (CCA) and the Jewish Family Services Association (JFSA) for delivery of its "job placement" programs. The contracts are performance-based; however, the contract under the JFSA provides cost reimbursement because the organization provides a large range of services while the CCA focuses on job placement.

Maryland

In Maryland, state laws have enabled non-profit agencies to receive payments on behalf of welfare recipients who are receiving three months or less of transitional assistance before being taken off the welfare rolls. The non-profit agencies, many of which are religious congregations, use the recipients' transitional assistance to provide counseling, childcare, and other non-financial aid.

Anne Arundel County in Maryland initiated a pilot project called the Community-Directed Assistance Program (C-DAP), which offers welfare recipients the option of having their cash benefits transferred to a community agency that spends the money on behalf of the recipient. To date, a majority of the agencies involved are congregations who work with the recipient to teach them responsible financial practices, provide counseling, and other assistance.

Conclusion

Unfortunately, very little empirical research into the results of faith-based welfare reform has been completed. Scientific surveys and longitudinal studies do not exist although case studies, which are admittedly anecdotal, and some recent quantitative data are available. For a good overview, state by state, of the current status of compliance to Charitable Choice, visit the website of the Center for Public Justice, www.Cpjustice.org. According to a study by Dr. Amy L. Sherman, research in nine states reveals that faith-based welfare reform is accomplishing its goals. Dr. Sherman states that:

Charitable Choice has made church-state collaboration plausible to public officials and religious leaders. Religious groups accepting government funding are not having to sell their souls and clients' civil rights are being respected. Charitable Choice is also stimulating new collaborations. Over half of the FBOs currently working formally with government in new initiatives to serve the poor had no previous history of such relationships. The traditional social services network is being broadened with the inclusion of "new players," and, importantly, these new players are doing new things. That is, in their collaboration with government, churches and FBOs are offering low-income citizens services they had not previously offered. In most instances, these religious groups have shifted from merely providing commodities to the poor... to working with struggling individuals intensively, face-to-face, through mentoring and job training programs (Sherman 2000).

Hence, although faith-based welfare reform initiatives are in their preliminary stages, the limited amount of information available suggests that they can be quite successful in assisting with the transition from welfare to work.

Table 3: Number and percentage of recipients of Temporary Assistance for Needy Families (TANF)
since enactment of new welfare law

Note: Several states made changes in the definitions of their caseloads: California removed two-parent families, Texas added families enrolled during a month, Wisconsin added child only cases. Source: U.S. Dept. of Health & Human Services Administration for Children and Families

Source: U.S. Dept. of Health & Human Services, Administration for Children and Families; U.S. Census Bureau;
calculations by the authors.

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