Welfare as We've Never Known It

Calculating the real impact of the welfare bill for Minnesota.

           The people in the small, stuffy hearing room at the state capitol were scratching their heads. It was four days after President Clinton had announced he would sign Congress's welfare reform bill: Supporters called it an act of tough love, opponents called it barbaric, and everyone speculated about how it would play in the elections.

           But for the state politicians and social-service types at the Senate Finance Committee hearing August 4, none of that mattered too much. To date, no one there had even seen the legislation, the 1,000 pages that get down to details like how much a toddler's subsidized lunch at a family daycare is supposed to cost (95 cents, down from $1.57). But they knew that when it came to actually implementing the thing, they were looking at a bureaucratic nightmare of potentially very expensive proportions. Sen. Pat Piper, DFL-Austin, who chairs the Senate Family Services Committee, called it "a giant octopus," the reach of whose tentacles no one could quite figure out.

           Start with the part everyone has been talking about: work. Under the bill, AFDC recipients would have to either find jobs or participate in publicly administered free-labor programs. Hennepin County welfare reform coordinator Suzanne Gaines has been running some numbers on that kind of program; she found that requiring AFDC parents to work would cost the county a full $10.3 million in addition to what it now spends--just for the first year. The Minnesota Association of Counties projects that its members would have to cough up $44 million to pay for the bill's requirements in 1997 alone.

           Most of the cost is for administration. Even the most stripped-down project--sending people out with a few bus tokens and the want ads--costs government $25 per person per month, Gaines explains. Say you have 1,000 recipients job-searching each month, and you're at $300,000 per year. And most people on welfare won't find a job that easily; so they'll need to be counseled, trained, cajoled, or punished, all of which requires staff time, paperwork, and money. Not to mention the money it takes to create or run free-labor programs through which recipients would work off their grants. One widely accepted figure is $250 per person per month. (The average AFDC grant in Minnesota is $150 per individual.)

           And of course, there is no new money to pay for all of this--or else the federal bill would never get its projected $55 billion in savings. Instead, the reformers propose that states take the money for job programs out of existing social-service funding. "A state could say, 'AFDC is now going to be a program that provides $100 per month in cash benefits, and all the rest is going to job training,'" Gaines says. "Or they could take some of the existing jobs-and-training money [such as funds set aside for displaced workers] and put it into training welfare recipients."

           A similar problem arises with childcare. "The cheapest thing," Gaines notes, "generally is to have the parent stay home and take care of the kids." But under the reform plan, that's not an option except for parents of very young children. The federal bill appropriates some additional childcare money, but no one claims it will be enough; thus, working poor families could lose coveted sliding-fee childcare slots as room is made for welfare-to-work clients. Some of those people could then lose their jobs, end up on welfare, be required to look for work--and so on.

           Even with all that money spent, it's not clear that workfare will make much of a dent. In Hennepin County, says Gaines, about 11 percent of AFDC participants are already working; the new programs, her team estimates, would raise that share to 18 percent. Of the remaining clients, about one-third would be exempted, mostly because they have very young children; another third would be punished for failing to comply by having their benefits cut; and some 16 percent would remain unemployed and without a community-work slot despite their and the county's best efforts. The figures are based on the results of Riverside, California's GAIN, often called the most successful welfare-to-work programs in the country.

           The feds, however, have something more ambitious in mind. Half of all AFDC recipients, the reform bill says, must be working by 2002. If states can't achieve that ratio, they have two options: Face funding cuts, or kick people off the rolls. Though the bill doesn't out-and-out recommend the second approach, it does steer officials in its direction by offering bonus points for "caseload reduction."

           Generally, caseload reduction is big in the new welfare system-- though the feds leave some of the toughest choices for states to make. The bill, for example, cuts off welfare for people who have been convicted of narcotics felonies. State Department of Human Services welfare-reform watcher Ron Hook says the thus-required background checks would cost $50 per case, or $5 million per year--far more than could be saved by denying benefits to a few hundred people. States can opt out of that particular codicil, but only after a vote in the Legislature--ready-made campaign fodder.

           In a similar vein, states have the option of continuing welfare benefits to legal immigrants who, under the bill, are slated to be cut off from all assistance next summer. Some 14,400 families, most from Southeast Asia and Russia, would be affected by this in Minnesota; in addition, an estimated 5,000 elderly or disabled immigrants will lose their Supplemental Security Income benefits. They could continue to get benefits if they become U.S. citizens, but many are unlikely to make it through the required language exams and civics tests. If Minnesota lawmakers vote to continue sending them checks, they--not the feds--will be responsible for coming up with the money.

           And that's just the beginning of the political headaches. State lawmakers have to decide how long a family can get welfare (one year? two? five?); how much the benefit should be; and what to do with the people who, eventually, are cut off. Current estimates by the federal Office of Management and Budget estimate that at best, 40 percent of parents kicked off the rolls will end up finding permanent jobs, not all full-time, at average wages of $6 an hour.

           One safety net that won't be there for welfare reform's losers is food stamps. In the new system, those cut off from AFDC will no longer qualify for food stamps unless they participate in yet another welfare-to-work program. And many others, including seniors on Social Security, will see their food stamps reduced by as much as 25 percent. "That was one of the biggest shocks to me," says state Sen. Piper. "I don't know what people are supposed to do. I checked with the food shelves here in Austin, and they are empty."

           Like Piper, most local and state politicians appeared dazed by the welfare-reform news last week, and none had much to offer by way of a response. Minnesota could choose to make up for part of the estimated $1 billion-plus it's estimated to lose with its own money. The Legislature will have to consider that question, along with reform's other wrinkles, next spring. But, notes Piper, "with people also begging us for property-tax reform, begging us on education finance, and so on... I don't think the political will is happening right now." Besides, there's the new system's built-in deterrent against generosity: With states free to slash benefits, no one wants to stick out as a haven.

           Which leaves the people at the bottom of the political pecking order--county and city governments--very worried. Of Minnesota's 60,000-plus welfare recipients in 1994, one-third lived in Hennepin County, and a full one-fifth were in Minneapolis. Some outstate counties also have reported having more than half their population on food stamps. Previous experiences with welfare cutbacks (like the wave of GA cutoffs that swept states, including Minnesota, a few years ago) indicate that homelessness, suicide, and petty crime like panhandling all rise; locally funded services like shelters, emergency rooms, and food shelves are already bracing for the coming wave of new business. So are police.

           In the meantime, officials say, it's time to "get very, very creative." As always with such initiatives, welfare reform's effects won't hit all together; they'll drip out bit by bit, one turn of the screw at a time. There will also be plenty of administrative loopholes, accounting tricks, programs, and paperwork--whose costs, in turn, could further squeeze the benefits actually doled out to people. "If you really want to know what this is," says one Hennepin County worker, asking not to be named, "it's something that looks good for the politicians and provides job security for administrators. We'll still be spending money on ourselves, while we're putting people through all these new hoops."

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