STATEMENT BY
TOMMY G. THOMPSON
SECRETARY
DEPARTMENT OF HEALTH AND HUMAN
SERVICES
BEFORE THE
COMMITTEE ON FINANCE
UNITED STATES SENATE
MARCH 12, 2002
Mr. Chairman, Senator Grassley and members of the Committee,
I am honored to appear before you today to discuss the
next phase of welfare reform. Together our work has had
a profound impact on our nation's most vulnerable families.
We have exceeded the most optimistic expectations by assisting
millions of families in moving from dependence on welfare
to the independence of work; we have provided a strong
commitment to child care to ensure parents can go to work
without worrying about the safety and well-being of their
children; and we have succeeded in collecting record amounts
of child support on behalf of children with a parent absent
from the home. I am confident that together our work in
reauthorizing the Temporary Assistance for Needy Families
(TANF) program and the Child Care and Development Block
Grant and Child Care Entitlement Programs, coupled with
several critical changes to Child Support Enforcement,
will lead to even greater achievements in the future.
President Bush has laid out a clear path for reviewing
all of the programs impacted by the historic, comprehensive
Personal Responsibility and Work Opportunity Reconciliation
Act (PRWORA). The President made a commitment to pursue
four important goals to continue transforming welfare
in the lives of those that it helped: strengthen work,
promote strong families, give States more flexibility
and show compassion to those in need. These goals formed
the guideposts in shaping the Administration's proposals
for TANF, child care and child support.
I would like to spend my time today sharing information
with you on the important progress we have made in strengthening
families under these three critical programs and highlighting
the specific areas the President has targeted for improvement.
I will begin with TANF, the cornerstone of our welfare
reform efforts.
Temporary Assistance for Needy Families
As a former governor, I can tell you that the Temporary
Assistance for Needy Families program - or TANF - has
been a remarkable example of a successful Federal-State
partnership. States were given tremendous flexibility
to reform their welfare programs and as a result, millions
of families have been able to end their dependency on
welfare and achieve self-sufficiency.
Since 1996, welfare dependence has plummeted. As of September
2001, the number of families receiving assistance, which
represents the welfare caseload, was 2,103,000 and the
number of individuals receiving assistance was 5,343,000.
This means the welfare caseload and the number of individuals
receiving cash assistance declined 52 percent and 56 percent,
respectively, since the enactment of TANF. Between January
and September of last year national caseloads actually
declined about two percent, and while the July to September
statistics indicate a slight increase, the figures are
still well below the previous year's caseload levels.
The general trend suggests the national caseloads are
not rising but, instead, have stabilized.
In New York City, where we are understandably most concerned
about job opportunities, the city achieved more than 53,000
job placements for welfare recipients from September through
December 2001. While the number of TANF recipients increased
briefly as a direct result of the tragedy of September
11, by January there were about 18,000 fewer TANF recipients
on the rolls than there were in August. Indeed, in December
New York City had its lowest number of persons on welfare
since 1965.
Some other positive outcomes we have seen since the law's
passage include:
-- Employment among single mothers has grown to unprecedented
levels.
-- Child poverty rates are at their lowest level since
1979. Overall child poverty rates declined from 20.5 percent
in 1996 to 16.2 percent in 2000. The poverty rate among
African American children declined from 39.9 percent to
30.9 percent - the lowest level on record. The poverty
rate among Hispanic children declined from 40.3 percent
to 28.0 percent - the largest four-year drop on record.
-- The rate of births to unwed mothers has stabilized.
But even with this notable progress, much remains to
be done, and States still face many challenges. Last year,
my Department held eight listening sessions throughout
the country to discuss the TANF program and understand
the new challenges ahead. The States overwhelmingly support
this program. States, administrators, recipients, employers,
and advocates have provided valuable insight into how
we could make the program even more responsive to the
needs of families, while keeping the basic structure and
purpose of the program.
The Administration's proposal to reauthorize TANF would
build upon our stunning success by:
-- strengthening the Federal-State partnership;
-- asking States to help every family they serve achieve
the greatest degree of self-sufficiency possible through
a creative mix of work and additional constructive activities;
-- helping States find effective ways to promote healthy
marriages and reduce out-of-wedlock childbearing;
-- improving the management and, therefore, the quality
of programs and services made available to families; and
-- allowing States to integrate the various welfare
and workforce assistance programs operating in their States.
I would like to offer some detail on each of these elements.
Strengthen the Federal-State Partnership
Our proposal seeks to strengthen the Federal-State partnership
by maintaining the Federal financial commitment to the
program and by making some key policy changes to increase
State flexibility. We provide $16.5 billion each year
for block grants to States and Tribes and an additional
$319 million for annual Supplemental Grants to States
that have experienced high population growth and had historically
low funding levels. We will also reauthorize and improve
the $2 billion Contingency Fund. Authorization for both
the Supplemental Grant program and the Contingency Fund
expired in 2001, but one year extensions for both were
recently enacted into law as part of the economic stimulus
package signed by President Bush this past Saturday. We
continue the current maintenance of effort (MOE) requirement
to retain States' contribution to assistance for children
and families. Finally, we will restore over five years
the policy permitting the transfer of up to 10 percent
of TANF funds to the Social Services Block Grant.
In addition to these basic funding provisions, we propose
a number of policy changes on the use of funds that will
provide States increased flexibility in managing their
programs.
- We ease limitations on services for the unemployed
by clarifying the definition of "assistance" so that
rules tied to such spending would not apply to child
care and other non-cash support services.
- We allow States to designate "rainy day funds" and
clarify that such funds would be reserved by States
for future TANF use.
- Further, we revise current restrictions on carried-over
funds by allowing such funds to be spent on any service
or benefit that achieves a TANF purpose.
Maximize Self-Sufficiency Through Work
The second element of our reauthorization proposal is
to maximize self-sufficiency through work. First and foremost,
States would be required to engage all TANF families with
an adult in self-sufficiency activities. States must approve
activities as part of self-sufficiency plans and regularly
review case progress.
And in addition to the requirement
for universal engagement, we will increase the direct
work requirement. In order for a case to be counted as
participating, our proposal requires a full 40 hours per
week participation in monitored, simulated work activities
by welfare recipients. Cases counted as participating
would be required to average at least 24 hours per week
(of their total required 40 hours) in direct work, including
employment, on the job training, and/or supervised work
experience. States will have the flexibility to decide
which activities should make up the remaining 16 hours.
These could include a variety of services the States determine
are needed by the family.
On a temporary basis, certain cases could be counted
as participating even if they did not average 24 hours
per week in direct work. These cases would still be fully
participating - defined as 40 hours per week - but could
be in work-related training, short term substance abuse
treatment, or rehabilitation for up to three months within
any 24-month period. When calculating participation rates
States will be allowed to exclude parents with children
under 12 months of age. As in current law, teen parents
who are heads of households and maintain satisfactory
school attendance will be deemed as meeting all participation
requirements.
We will also gradually increase minimum participation
rate requirements. In FY 2003, at least
50 percent of all TANF cases headed by a parent will be
required to participate in combined work and other activities
designed to help them achieve self-sufficiency. This percentage
will increase five percent each year until reaching 70
percent in 2007. Calculation methods will be improved
to recognize practical challenges States face in keeping
recipients involved and participating in the program.
There will be no separate standard for work participation
for two-parent cases.
The current penalty structure will apply when a State
fails to meet either, or both, of the universal engagement
or participation rate requirements. Potential penalties
will be limited to a maximum of five percent of a State's
TANF grant, as under current law. States subject to a
penalty will have the opportunity to develop a corrective
compliance plan and no penalty will be assessed as long
as they are making progress toward meeting the requirements.
The current caseload reduction credit will be phased out
so that States still receive full credit against participation
targets in the first year, 50 percent of credit in the
second year and no credit thereafter. The five-year cumulative
lifetime limit for TANF cash assistance will be retained.
States may also continue to exempt up to 20 percent of
their cases from this limit.
Finally, understanding the significant barriers that
tribes face to self-sufficiency, HHS will undertake a
major new technical assistance effort for tribal organizations
to help them build and administer effective Tribal TANF
programs.
Promote Child Well-Being and Healthy Marriages
Our proposal embraces the needs of families by promoting
child well-being and healthy marriages. To this end, we
establish improving the well-being of children as the
overarching purpose of TANF. This meaningful change recognizes
that the four current goals of TANF are important strategies
for achieving this purpose. Similarly, we clarify and
underscore that the fourth goal of TANF is to encourage
the formation and maintenance of healthy, two-parent,
married families and responsible fatherhood.
In addition, we will target $100 million from the discontinued
Illegitimacy Reduction Bonus for broad research, evaluation,
demonstration and technical assistance, focused primarily
on healthy marriage and family formation activities. Funds
previously used for the Illegitimacy Reduction Bonus could
be spent far more effectively on developing innovative
approaches to support family formation and healthy marriages.
Strong and stable families are good for children and must
be a central goal of our next steps in welfare reform.
Research shows that both adults and children are better
off in two-parent families. It is no criticism of single
parents to acknowledge the better outcomes for children
of married-couple families. Rather it supports the underlying
principles to redirect our policies to encourage healthy
marriage especially when children are involved. Our approach
to promoting healthy marriage is to provide financial
incentives for States, often working together with private
and faith-based organizations, to develop and implement
innovative programs to support family formation and healthy
marriages. Those demonstration programs will be carefully
evaluated and information about successful programs will
be broadly disseminated.
Along those lines, we also redirect $100 million from
the current-law High Performance Bonus to establish a
competitive matching grant program for States and Tribes
to develop innovative approaches to promoting healthy
marriages and reducing out-of-wedlock births. State expenditures
will be matched dollar for dollar and TANF funds may be
used by States to meet their matching requirement.
We require States to discuss in their State plans the
efforts they will make to accomplish the family formation
goals of the TANF program, including the promotion of
healthy marriages, and their efforts to provide equitable
treatment for two-parent married families.
And finally within the context of our goals to strengthen
family formation and reduce illegitimacy, we will reauthorize
the Abstinence Education grant program to States and territories
at $50 million per year.
Improve Program Performance
Our fourth reauthorization
element focuses on improving program performance. We will
replace the current High Performance Bonus with a $100
million Bonus to Reward Employment Achievement for meeting
the employment goals of TANF. We also will require States
to establish and report on performance goals related to
each of the four major goals of TANF and to describe in
their State plans how they are addressing each. Likewise,
States will be required to describe particular
strategies and programs they are employing to address
critical TANF challenges. We will research the best ways
to construct performance measures that relate to the TANF
goals, collaborate with States to identify key performance
measures, and build uniform data support and reporting
methodologies.
Program Integration
For any organization to succeed, it must never stop asking
how it can do things better. Using the flexibility under
programs such as TANF and the One-Stop Career Center system,
States have made great strides towards transforming and
integrating their public assistance programs into innovative
and comprehensive workforce assistance programs. But,
with greater flexibility even more can be accomplished.
The final key element of our TANF proposal seeks to enable
far broader State welfare and workforce program integration.
In our proposal, we establish new State program integration
waivers to permit States to further integrate welfare
and workforce development programs in order to improve
the effectiveness of these programs. Broad flexibility
to design new strategies and approaches will be provided.
The proposed waivers could apply to all aspects of selected
Federal programs, including funding and program eligibility
and reporting rules, enabling States to design fully integrated
welfare and workforce development systems that could revolutionize
service delivery.
I would like to turn now to another program that offers
a vital connection to a family's ability to achieve self-sufficiency:
child support enforcement.
Child Support Enforcement
Child support is a critical component of Federal and
State efforts to promote family self-sufficiency. For
the low-income families who receive child support, it
makes up a significant portion of the family budget (26
percent).
PRWORA instituted a number of important child support
enforcement measures. Tools such as increased automation,
the National Directory of New Hires and Federal Case Registry,
the passport denial program, the financial institution
data match, and license revocation have made a tremendous
difference in improving State performance and strengthening
child support collection efforts. Equally important, PRWORA
streamlined paternity establishment, particularly voluntary
paternity establishment, to encourage fathers to take
the first step toward providing their children with financial
and emotional support. The impact of these changes has
been dramatic. The number of paternities established or
acknowledged has reached almost 1.6 million. Of these,
nearly 700,000 paternities were established through in-hospital
acknowledgement programs. In FY 2001, with a caseload
of 17.4 million cases, a record of nearly $19 billion
in child support was collected.
Like TANF, our proposals for child support enforcement
build on our success under PRWORA. These proposals will
increase child support collections and direct more of
the support collected to families, moving the child support
program toward a focus on families and away from the historic
purpose of recoupment of Federal and State outlays.
Directing More Support to Families
Under current law, States and the Federal government
can keep some of the child support collected on behalf
of current or former TANF recipients to defray costs of
welfare. We are proposing to change that law and give
States an incentive to give more of the child support
directly to the family. Families and children will benefit
financially and, equally important, the children will
see that their parents support and care for them.
Today, more families receiving assistance are working
and the assistance they receive is more temporary. The
Wisconsin W-2 waiver demonstration has shown that when
TANF families receive the child support paid on their
behalf, fathers are more likely to pay child support and
to pay more child support.
Currently, half the States pass through a portion of
child support collections to TANF families, entirely out
of State funds. Under our proposal, the Federal government
would share in the cost of amounts above a State's current
pass-through up to the greater of $100 per month or $50
over current State efforts. Federal contributions to passthrough
of collections to TANF families will provide a strong
incentive to States to begin to pass through additional
support to these families, or increase the amount of the
current passthrough. Effective October 1, 2004, this proposal
would increase collections going to families by $280 million
over five years.
Under a similar proposal to increase support reaching
families, States would be given the option to adopt simplified
distribution rules under which all support collected would
be sent to families that have transitioned from welfare.
This proposal would increase collections going to families
by $810 million over five years and eliminate the need
for States to explain and support complex distribution
decisions. This provision would also be effective October
1, 2004.
Increasing the Amount of Child Support
Collected
The second prong of our strategy for child support enforcement
is to increase the amount of support collected by adding
to our existing cadre of enforcement tools.
First, we would expand our successful program for denying
passports to parents owing $2,500 in past-due support.
The passport denial program, run jointly by HHS and the
Department of State, currently works to deny passports
to delinquent parents owing more than $5,000 in past due
support. In FY2000 alone, individuals with child support
arrearages paid $3.6 million in lump sum child support
payments to avoid losing their passports. An additional
number of these individuals have entered into payment
agreements under which support payments are made regularly
to children. Currently, passports are being denied to
60 delinquent parents per day.
We know of many examples of payments by parents who could
pay but don't until threatened with the loss of their
passport. One parent who had never made a voluntary payment
paid $67,000 in order to travel for work. Another parent
paid over $10,000 to obtain his passport to go to a family
reunion. And a parent in New York paid his account in
full -- $27,328 -- in order to go on a vacation. Under
our proposal, approximately one million cases could be
added to the passport denial program.
We also are proposing to expand the Federal administrative
offset program by allowing certain Social Security benefits
to be offset to collect unpaid child support in appropriate
cases selected by the States. Currently under the Federal
Debt Collection Act, Old Age, Survivors and Disability
(Social Security) benefits can only be offset for Federal
debt recovery. Our proposal would provide a limited expansion
to include child support debts and would be subject to
the same offset thresholds, or safeguards, as current
law.
Our final enforcement proposal would ensure that child
support orders are fair to both custodial parents and
children as well as the noncustodial parents by requiring
States to review and adjust child support orders in TANF
cases every three years, reinstating a pre-PRWORA policy.
Typically, the ability of obligors to pay child support
increases over time. Periodically reviewing and adjusting
child support awards to reflect current income can result
in increases in the amount of the support provided and
the economic security of single parent families. The five-year
limit on receipt of TANF creates a substantially different
environment than that which existed prior to PRWORA. At
least one review of a support order during a family's
receipt of TANF will help ensure that families leave the
welfare rolls knowing that they will continue to receive
child support at an appropriate level.
There also are legitimate reasons to reduce an existing
award, for instance, if the obligor has lost his job or
suffered a major decline in income. In those cases, periodic
review and adjustment means that the award amount is fair
and that the child support agency is assisting a low-income
father who does not have the current ability to pay support,
by helping the father avoid building up a large and unmanageable
arrearage.
Processing Fee
In addition to our proposals for increasing support and
directing more of the support collected to families, we
will require States to impose a $25 annual processing
fee on families that have never used public assistance
in cases where the State has been successful in collecting
support on their behalf. Because the fee is collected
only when the State is successful in collecting support
and represents a fraction of the cost of the services
families receive, we are confident it will not pose a
barrier to families seeking child support enforcement
services.
As States and the Federal government struggle to serve
all the needs of its citizens, it is imperative that we
find innovative ways to finance the program. This minimal
step toward contributing to the costs of the program is
reasonable and represents a firm step toward changing
the perception that the purpose of the child support program
is to recoup welfare benefits, building on the positive
message of our child support distribution proposals. While
it will raise expectations of customer service, I am confident
that these expectations will be met.
I would like to turn now to child care, a key support
service.
Child Care
In 1999, 20 million families in the United States had
one or more children under the age of 13 with an employed
mother. Thirty-two percent of these families were low-income.
For a number of reasons, including the high cost of child
care, many of these families have difficulty finding care
arrangements that they can afford. I can tell you from
my experience as Governor of Wisconsin, access to child
care assistance can make a critical difference in helping
low income families find and retain jobs.
Further, studies measuring the impact of child care subsidies
on employment in several communities and States across
the country show that receipt of subsidies substantially
increases the likelihood of employment. Eighty-three percent
of all families who received child care subsidies in 1999
did so because the parents were employed (with most of
the other parents receiving subsidies while in training
or education).
As we approach reauthorization of our child care authorities,
the Administration is committed to preserving the key
aspects of the program: parental choice; administrative
flexibility for States and Tribes; support for work and
job training; inclusion of faith-based and community-based
organizations; and healthy development and literacy skills
for children in care. The major restructuring of the Federally
funded child care programs under PRWORA remains an effective
and efficient method for distributing child care funds
to States. States were given flexibility to determine
the best use of those funds to meet the varying needs
of their low-income populations. Therefore, our proposed
reauthorization of the discretionary Child Care and Development
Block Grant (CCDBG) and mandatory Child Care Entitlement
programs, does not seek any changes to the underlying
structure and financing of these essential programs. Rather,
we enthusiastically support maintaining the historically
high level of funding for child care.
Our proposal includes $2.1 billion for the Child Care
and Development Block Grant and $2.7 billion for Child
Care Entitlement -- a total of $4.8 billion for what is
referred to as the Child Care and Development Fund or
CCDF. When combined with TANF and other Federal funding
sources, over $17 billion is available for child care
and related services for children.
Under our proposal, States continue to have flexibility
to use Temporary Assistance for Needy Families (TANF)
funds for child care both by transferring up to 30 percent
of TANF funds to CCDF and by spending additional TANF
money directly for child care. In recent years, States
have used significant amounts of TANF funds for child
care, including $2.3 billion for transfers to CCDF and
$1.4 billion in direct spending in FY 2000. In addition
to CCDF and TANF, other programs in my Department also
fund early childhood care and education, including the
Social Services Block Grant and Head Start. And the Administration's
education bill, recently passed by the Congress and signed
by President Bush, includes additional flexibility and
funding for school age care and literacy programs. Taken
together, all of these funding opportunities have substantially
increased the amount of resources available for quality
child care and related programs.
Funding available through our child care programs and
TANF transfers alone will provide child care assistance
to an estimated 2.2 million children in FY 2003. This
is a significant increase over the number served just
a few years ago; in 1998 about 1.5 million children received
subsidized care.
The overall goal of TANF reauthorization is child well-being.
Child care supports this goal as well as being a vital
work support. Our child care reauthorization proposals
complement our expectation that all families will be fully
engaged in work and other meaningful activities by ensuring
that resources are available to support safe, affordable
child care when necessary.
Promoting Child Development and Literacy
through Child Care
In addition to supporting working parents, quality child
care promotes early childhood development and literacy
skills. To improve quality and support the child development
component of child care, States support a range of strategies
and the Department manages a broad portfolio of training
and technical assistance activities to support their efforts.
According to the latest plans submitted by States, the
most common approaches include grants and loans to providers
for specific quality improvements, training and technical
assistance for providers and staff, monitoring of compliance
with regulatory requirements, strategies to improve retention
and compensation of child care providers, and a special
focus on improving the quality of care for infants and
toddlers.
The President's budget maintains funding for quality
child care. A minimum of four percent of the CCDF must
be spent on activities to promote quality. In addition,
the budget proposes to retain set-asides for infant and
toddler care, school-age care and resource and referral
services, additional quality expenditures, and ongoing
research to identify and promote effective child care
practices. My Department is providing technical assistance
to equip States to make the best use of their quality
funds, including activities that promote literacy. At
the same time, we are promoting systemic partnerships
between child care, Head Start, family literacy, and other
school readiness and reading programs.
State Flexibility
States have significant flexibility to decide how child
care funds will be used and what will be emphasized in
achieving the overall goals of improving access to care
and the quality of care. For example, within basic Federal
requirements, States determine eligibility criteria and
co-payments for families as well as provider reimbursement
rates.
The Department convenes State child care officials and
other experts to assess needs within the child care system
and to plan remedies where they are needed and improvements
where they are possible. Further, to add to this dialog,
this year we are funding the first federally sponsored
child care policy demonstrations that will be rigorously
evaluated.
Promoting Parental Choice
Along with State flexibility, parental choice is a key
element of a successful child care program. Families must
be allowed to choose the care that best meets their needs,
whether with a relative, neighbor, child care center,
faith-based program, or after-school program. In FY 2000,
over 78 percent of CCDF subsidy payments were made using
certificates or vouchers. Using these vouchers and other
child care payments, 56 percent of children were cared
for in a child care center, while 31 percent were in family
child care homes, four percent were in group homes, and
nine percent were in the child's home.
To help parents make these critical child care decisions,
CCDF funds parent education and outreach. Nationally,
my Department funds the Child Care Aware web-site and
toll-free hotline to link parents to information about
child care in their local communities.
We are on the right track with CCDF and we must maintain
a high level of Federal funding commitment to ensure our
child care resources continue to meet the needs of working
families.
Conclusion
Mr. Chairman, the proposal I bring before you today contains
many different elements. What binds these fundamental
elements together is the desire to improve the lives of
the people and families protected by America's social
safety net. As noted by the President, "We've made progress,
there's no question the doors of opportunity that were
shut and sealed have now been opened…. Yet there is no
acceptable level of despair and hopelessness in America.
We will not leave people in need to their own struggle,
and we will not leave them to their own fate." The President
has publicly stated his commitment to the next phase of
welfare reform; and this committee demonstrated its desire
to succeed when you made the hard choices on the original
precedent-setting PRWORA legislation and in your on-going
interest in the impact of these changes. It is time to
take the next steps in welfare reform and the President
and I stand ready to work with you to achieve even greater
successes for America's neediest families.
I would be happy to answer any questions you have.
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