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1994.03.01 : Demonstration Project in California

FOR IMMEDIATE RELEASE                   Contact: David Siegel
Tuesday, March 1, 1994                           (202) 401-9215

     HHS Secretary Donna E. Shalala today approved a welfare
demonstration in the state of California which is designed to
promote self-sufficiency for recipients of Aid to Families with
Dependent Children.

     "Providing states with flexibility remains an important part
of our broad efforts to encourage creativity in the administration
of welfare programs.  A key aspect of the California demonstration
is to encourage young AFDC recipients to stay in school or work. 
We will continue to work with California and other states to test
ways that recipients can achieve self-sufficiency," Secretary
Shalala said.

     Major elements of the "Work Pays Demonstration" include:

     o    Teen-age AFDC parents who maintain at least a "C" grade
point average or ultimately graduate from high school will be
eligible to receive cash bonuses of $100 and $500, respectively.
Conversely, parents who fail to maintain a "D" grade point average
could have their monthly AFDC payment reduced by up to $50 for each
of two months.

     o    AFDC families will be allowed to accumulate $2,000 in
assets and have $4,500 equity in an automobile.  The current asset
and vehicle equity limits are $1,000 and $1,500.  Additionally,
AFDC recipients may deposit up to $5,000 in savings so long as the
funds are used to purchase a home, start a business or finance a
child's post-secondary education or training. 

     o    Recipients who work but have relatively low AFDC benefits
can opt out of the program and still remain eligible for health
care under the Medi-Cal program as well as other services -- such
as child care -- which are available to regular AFDC clients.    

     o    Certain AFDC parents with children under the age of three
can be required to participate in the Job Opportunities and Basic
Skills Training (JOBS) program.

     Mary Jo Bane, HHS' assistant secretary for children and
families, said the demonstration "contains several innovative
policies that are designed to help facilitate the participation of
young AFDC parents in the labor force.  I look forward to reviewing
the results of the demonstration."  

     The California demonstration will operate for five years.  It
will include a rigorous evaluation utilizing random assignment to
control and experimental groups.