FOR IMMEDIATE RELEASE:
Friday, August 13, 1993
Contact: David Siegel (202) 401-9215
Iowa Welfare Demonstration
HHS Secretary Donna E. Shalala today approved a major welfare
demonstration submitted by the state of Iowa. Elements of the plan
will encourage recipients of Aid to Families with Dependent Children
to take jobs and accumulate assets through a new program of
"Individual Development Accounts."
"Last February in Washington, President Clinton met with the
nation's governors to talk about his commitment to welfare reform.
As part of this process the president made it clear he wanted to
encourage state creativity and flexibility in the administration of
public assistance programs," Secretary Shalala said.
"Our action today in approving Iowa's demonstration is further
evidence of our support for this concept. We look forward to
working closely with the state of Iowa as it tests a number of new
strategies for promoting independence and responsibility for those
families now on welfare."
Under the demonstration, Iowa's AFDC program will be
restructured in several major ways:
- AFDC recipients will be able to accumulate and build assets
by establishing Individual Development Accounts. Funds deposited in
the accounts will not be counted as ordinary income and can be
withdrawn only to pay for education, training, home ownership,
business start-up or family emergencies.
- Recipients will be encouraged to take jobs under a new
formula which disregards 50 percent of their earnings in the
calculation of welfare payments. During the first four months of
employment, all income will be disregarded for individuals who do
not have significant work histories.
- The current law limiting each family's assets to $1,000 will
be substantially changed to enable each member of an AFDC family to
possess up to $5,000 in assets. The vehicle asset ceiling will also
rise from $1,500 to $3,000 per automobile.
- A Family Investment Program is created for most AFDC
parents, who will be eligible for enhanced training and support
services in exchange for an agreement that welfare receipt will be
temporary or time-limited.
HHS' action today clears the way for the state to begin
operation of the program immediately. The demonstration will
operate for a period of five years and will include a rigorous
evaluation utilizing random assignment to control and experimental
groups.
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Note: All HHS press releases, fact sheets and other press materials are
available at http://www.hhs.gov/news.
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